What Kind Of Business Is The Most Profitable?

A problem almost always lingers in every businessman's mind: "what kind of business is the most?"

There is no doubt that people will answer: real estate, education, cars, energy, IT digital products.

Obviously, such an answer is meaningless, because the vast majority of businessmen are already on board, so it is not easy to switch to another pirate ship. Besides, these "most profitable businesses" only make practitioners more likely to make money.

What we want is the practical significance of this question: how can businessmen earn more money than others in the industry they are engaged in?

Because this is the dream of every businessman's whole life.

The correct answer to this question should be: "capital turnover is fast."

The rapid turnover is the result of the times.

In the era of commodity shortage, "hoarding" has made a fortune. But today, whoever does so is a fool. Today, when commodity surplus cash is king, the most important way to get rich is to sell quickly and sell more before the product is replaced. The most effective one is low price.

In the past, the most effective way to make money was to sell high prices - increasing profit margins.

Today, the most significant way of making money has become selling low - raising turnover.

In the past, the profits were high but eventually they made less money because they sold less. Today, the profits are low but they make more money because they sell more.

The price war has been blamed for damaging the interests of other firms that have not yet followed the traditional profit model, but no doubt received the most ardent pursuit of banknotes.

"Turn to earn" is the most important business feature of this era.

"Earn = pfer" is the business rule that more and more rich people follow in this era.

Of course, different industries have different turnover modes and turnover cycles.

Real estate can only be interchanged for several years. The thermal underwear is in a one-year period. The catering industry requires that the turnover rate be reached several times a day.

You can increase productivity, reduce costs, speed up turnover, such as Galanz; you can increase brand gold content, stimulate purchases to achieve turnover, such as Haier; you can flatten like beauty; can be zero stock, such as DELL; or Lenovo can use ERP.

In short, in this era of "fast fish eating slow fish", you must be careful and have to be fed up with food. You must do something to change the turnover rate.

If the essence of an enterprise is execution, the essence of business is turnover.

In fact, execution and turnover are skills.

Then, try to make them move faster with better skills. Jack, Welch of American GE is thinking about this problem, and vendors selling dried fruits and vegetables in remote villages in China are also facing this problem.

From this perspective, Welch and stall vendors have the same business nature. They share the same business intelligence and face the same everlasting business challenges.

So how can money turn faster than low prices?

One sand, one world.

Some seemingly insignificant small businesses often contain the greatest truth in the business world.

Stan Shih, chairman of Taiwan Acer computer, used to help his mother sell duck eggs and stationery during her boyhood.

Duck eggs 3 yuan, 1 jin, can only earn 3 cents, only 10% of the profits, and easy to deteriorate, do not sell in time will be broken, resulting in economic losses; stationery profits, 10 yuan business can earn at least 4 yuan, profits more than 40%, and stationery will not be bad.

It seems that selling stationery is more profitable than selling duck eggs.

But in fact, Stan Shih later told the experience that selling duck eggs is much more profitable than selling stationery.

Although the profit of the duck egg is thin, it can be turned at most in two days. Although the profit of the stationery is high, sometimes it can not be sold for half a year or even a year.

The profit of the duck egg is much larger than that of the slow turnover stationery.

Stan Shih later applied the experience of selling duck eggs to the macro and established the "small profits but quick turnover mode", that is, the price of the product was lower than that of the peers, although the profit was low, but the customer volume increased, the capital turnover was fast, the inventory was small, the operating cost was greatly reduced, and the actual profit was greater than that of the peers.

Stan Shih and his mother sell ducks' eggs, behind which there is a general theorem of business: assets yield ratio = profit rate * turnover rate.

Young Stan Shih's business intelligence is reflected in his ability to consider both profitability and turnover.

{page_break}

But many Chinese do not have such commercial intelligence. They often ask, "what kind of business is the most profitable?"

No doubt they have focused their eyes on profit margins and ignored turnover rates, which are concentrated in large profit margins (industries).

However, the projects with large profit margins tend to turn slowly because of the high price. At this point, once the funds can not be turned into a benign and fast turnover, the terminal retailers themselves will not only be crushed by inventory, but also the whole industrial chain will be in crisis.

In the He Boquan era, he had suffered such a disaster.

In 1997, he decided to take a share of the jelly market.

In August, the market reaction in the early days of the launch was really warm, and the sales channel was crying out: goods!

Goods!

Before and after the Spring Festival in 1998, the market seemed to have reached the peak of madness.

He Boquan's brain was hot, he immediately expanded production capacity, and the production line increased from 2 to 4, 6 and 8.

When the 48 machines on the production line are all installed and put into operation, the terminal suddenly declares all slow-moving sales.

The original Le Baja jelly is crowded in the channel, not to consumers.

Normal capital turnover did not take shape, and he quickly fell into the sweet jelly whirlpool, and the market quickly collapsed.

Hundreds of millions of dollars are lost.

Why is this happening?

Obviously, this is another version of the "beer game".

The famous "beer game" clearly tells people how the capital in the whole industry chain is overstocking in inventory.

Retailers found a "lover beer" to sell, so they increased the volume of weekly demand to wholesalers.

However, wholesalers are required to increase the shipment to the manufacturer for 4 weeks before they can be satisfied (as the manufacturer expands the production time).

As a result, retailers waited in the 5 weeks waiting to increase their demand.

At this point, the wholesaler will mistake the terminal for sale, so he will have a fever of mind and magnify the quantity demanded to the manufacturer. At that time, the manufacturer will also be restless to think that the terminal is selling well, so he will also greatly enlarge the capacity and expand the output.

The whole industry chain was stimulated by a kind of erroneous information that was gradually amplified.

When the goods are finally pressed to the terminal, the retailer will find the actual demand of the market, and only a small part of its stock.

At this point, he will suddenly stop the demand, but the wholesaler's stock has already increased several times, and the manufacturer is still accelerating production day and night.

The final result is that the liquidity in the whole industry chain has become a terrible "sinking capital", turning into a "dead product" that nobody wants, but not a turnover.

The failure of the bait jelly is defeated by the backlog of inventory caused by the "information escalated" effect.

For the same reason, the Chinese household appliance industry is crying hard.

In 2004, there were more than 8 million air conditioning inventories in China, and the accumulated funds in the whole industry were more than 12 billion yuan. Some people predicted that such inventory would inevitably lead to a large number of enterprises' capital chain breaking.

As expected, the air conditioning brand in 2004 decreased by nearly 90 compared with that in 2003, and a large number of dealers were buried behind every failed brand.

Therefore, the United States believes in the saying: "rather sell less than stock."

With more stocks in stock, capital turnover will slow down.

More inventory, capital turnover is a dream.

We believe that the essence of different businesses is the same.

The same is true for Stan Shih and He Boquan, which is to grasp the essence of turnover through confusion.

However, most people are so indifferent to turnover that even authoritative expert Cheng Xiaohua has repeatedly vociferous: "this is the most easily ignored by most enterprises, but it is a very crucial and even fatal problem."

Today, competition in capital turnover has become the core of modern business competition, so you must always be aware of: first, how much money do you have to sleep in the warehouse every day?

What is the effective utilization of stock funds?

Second, how many times do you turn your capital every year?

How much profit do you make once a week?

In a word: how can you make your capital flow faster?

This has become a historical proposition.

The 7 day super high speed inventory turnover makes it earn money. Inventory is over 7 days and products are disposed of immediately.

"IT products are always on the decline.

If the goods are not sold in 3 months, that is the loss; if sold in 7 days, the best price and the best profit can be sold.

Turnover is about speed.

The fastest speed on land is the maglev train.

Speed is also the most attractive secret trick of the grand triad.

Founded in Nanjing for only 3 years, the company has 35 branches in East China, with a turnover of up to 2 billion 500 million yuan, becoming China's largest IT retail outlet.

In July 2004, it created an industrial miracle of 7 days retail sales exceeding 120 million yuan.

All the foolish competitors are left behind.

In what way did the big three companies achieve faster turnover than their competitors?

As we all know, the traditional computer city is all over the world.

They are the biggest competitors of the grand triad.

But the mode adopted by the computer city is often the lease system, that is, the computer city only provides the venue, and the products and logistics are resolved by the leasing dealer themselves.

Under this mode, it is difficult for individual distributors to form scale effect, and they also lack the right to speak in logistics.

Scattered business ultimately makes the interests of manufacturers, computer cities, distributors and consumers all hard to satisfy.

But the big picture three cell is different, it will position itself as a large terminal retailer, the entire store itself manages.

This is because the strong channel represented by WAL-MART, Carrefour, Gome and Suning has become a brand symbol of quality and credibility for many years, and has great appeal and influence to the terminal market.

Similarly, if IT manufacturers want to enter the East China market, they will not be able to ignore the huge control of the 35 big chain stores.

At this point, manufacturers have no choice. To enter the market, they must enter the grand triad.

Different strategic positioning results in different scale effects.

Manufacturers supply large quantities and low prices.

This is the most important condition for the three companies to speed up their turnover at a lower price than their competitors.

(2) more favorable accounts.

Cash holdings are greatly increased and cash turnover is more benign.

(3) product buyout.

The huge sales volume allows manufacturers to sell the new products exclusively.

(4) special products.

Customized products from the three diagrams to the manufacturer.

These benefits are not possible for dealers in the traditional computer city. When their products are not ready to sell, they will not know how many times they have worked.

Just because the strategic positioning of policy makers is different, the two formats have totally different fates.