Monthly Archives: February 2014

Small businesses and profits

While government officials can waste large amounts of tax payer money for their private interests often without being held accountable in any way, if a small business has to continue to exist, it has to be profitable. Hence the main focus of a small business is on making profits, increasing revenues and minimize expenses. If a business has been very profitable , it is always advisable to use these profits to build reserves, which can be used to tide over financial emergencies.

The business conditions for a business can change any time, due to circumstances beyond the business owners control, and it may take some time for the business to develop alternate revenue sources. For example the customer may turn hostile making fake complaints or shut down their business, new competitors offering lower prices may emerge, or a large company interested in a hostile takeover of a business may employ negative tactics to force a smaller business to sell out. Hence a business owner planning to be in business for long should always make a provision for bad times, when cash flow is poor.