Hello! This is Orsel Saito.
Which is more important: sales or profits?
Of course, both are important, but if you had to choose just one, which would it be?
When I ask people at seminars, the answer is roughly half and half.
For me it's definitely profit.
Even if sales increase, if there is no profit, it is still free work, but conversely, if there is profit even when sales are zero, then profits are coming in without you having to work.
Zero sales and profit of 100 million yen.
It's truly a dream life.
Of course, there is no such business.
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Our predecessors have provided the correct answer in the form of a framework.
This is called the "life cycle."
For example, when you first launch your online store or when you are growing, you need to prioritize sales over profits.
This is because the "baby" shops that are not yet independent need to grow bigger.
Even if it means sacrificing profits, by generating sales, the number of customers for the online shop will increase, which means the online shop will become larger and create a source of future profits.
On the other hand, if you only aim for profits from the beginning, your sales will stop at 50,000 yen or 100,000 yen, and even if your profit margin is good, your profit will only be 10,000 yen or 20,000 yen, which will end up being counterproductive.
On the other hand, when sales growth stops or starts to decline and a company reaches the "adult" stage, it will prioritize profits over sales.
Once the body has reached full growth, it is time to harvest.
We will try to avoid dropping sales as much as possible and change our structure to one that can make a profit.
If all goes well, it could even lead to increased sales.
However, if things continue as they are, sales will gradually decline and profits will no longer be made.
So you need to introduce new products, open stores in different markets, or create stores in different categories.
This is a framework created by our predecessors called the "business life cycle."
At the last seminar,
A product that originally had zero sales was sold for three months with an operating profit margin of 3%.
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Once sales had increased to a certain level (about 1.2 million yen per month), the cost of the products was suddenly increased.
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As a result, although sales decreased (just under 1 million yen per month), the profit margin was 38%.
I talked about an example of a business life cycle.
This shop is having a sale this month, so they have lowered prices by about 5% in terms of profit margin, but as of five days, sales have reached about 700,000 yen, and sales are expected to be about double what they were last month.
There are many different business frameworks, and learning about them may be the catalyst for improving the management of your online shop.
"Because there is a form, it is unconventional. Without a form, there is no form," are the words of the 18th Kabuki actor Nakamura Kanzaburo.
People who have the basics do original things and are successful.
If you ignore the basics and do whatever you want, you will fail.
So, first of all, you have to stick to the basics.
Doing things your own way is a recipe for failure.
I guess I'm not the only one with ear pain.
Sales and profits. Formless and unconventional.
