Monopoly: what is it in simple words
How to make a business successful and make a profit
On the way to becoming in business, every entrepreneur goes through several mandatory stages, at each of which the company faces certain tasks and difficulties. To overcome them with minimal losses, planning should set short-term goals that will allow you to reach the next level as soon as possible.
Stage Break-even point
The first stage of business development is one of the most difficult. During this period, you should be ready to work at a loss, and your main goal should be the self-sufficiency of the enterprise. In simple words, you must reach a break-even point when the company's income covers the cost of products (services). The latter is determined by the following types of expenses:
- Permanent (not dependent on production volumes) - rent, administration salaries, depreciation, loan payments, payment for communications, advertising and marketing, insurance payments.
- Variables (directly dependent on the volume of production) - the purchase of raw materials, salaries of production employees, transportation costs, taxation (if it is expressed as a percentage of profit), payment of utilities.
The break-even point is calculated roughly in the business plan of your enterprise and allows you to determine:
- the required volume of products or services;
- the required number of working days per month.
Accordingly, this indicator is presented in two formats and is time-bound:
- Cash equivalent - how much you need to earn per month (per day, taking into account the number of working days).
- Commodity equivalent - how many goods must be produced or services provided.
The cost of running a bag making business is $ 2,000 per month. One bag costs $ 20. So to break even, you have to produce 100 bags a month. Provided that your business is open 20 days a month, you need to produce and sell at least 5 bags per day to break even.
If a company produces a number of products or provides various services, the calculation of the break-even point is carried out in a complex for all positions. At the same time, the plan can include various volumes for each category.
If, with a decrease (increase) in demand for certain positions, in the future you change volumes, you must also re-determine the break-even point, since the cost of production will change accordingly.
Subsistence minimum stage
Today we will talk in simple words about what a monopoly is and what is its essence. In economics, the idea of monopoly is important in the study of governance structures. There are four main types of market structures in traditional economic analysis: perfect competition, monopoly competition, oligopoly, and monopoly.
Monopoly is a market structure that is characterized by one seller who sells a unique product with restrictions on the entry of new firms into the market. Simply put, a monopoly is a form of a market where there is one seller selling a specific product for which there are no close substitutes. But there is also monopoly competition - this happens when there are many sellers in the industry or many close substitutes for the goods produced.
What is Monopoly
Let's consider in more detail the question of what a monopoly is and what are its characteristic features. "Mono" means a unit and "poly" means a seller. Thus, monopoly refers to a market situation in which there is only one seller for a particular product.
This means that the company itself is an industry and its product has no close replacement. The monopolist is not concerned about the reaction of rival parties, since it has no competitors. Thus, the demand curve faced by the monopoly group coincides with the demand curve for the industry.
Could there be a complete monopoly in the real commercial world? Some economists believe that by maintaining some barriers to entry, a firm can act as the sole seller of a product in a particular industry.
Others believe that all products compete for a limited consumer budget. For example, in the business of developing and creating business card sites, it is impossible to become a monopolist, since there are a huge number of proposals on this issue on the Web.
What is the essence of monopoly
To better understand what a monopoly is about, you should list the key features of a monopoly market. Under a monopoly, the firm has complete control over the supply of the product. There is one vendor or manufacturer for a particular product, and there is no difference between the company and the industry. The demand curve in a monopoly market slopes downward, which means that the firm can only make more profits by increasing sales, which are possible by lowering the price of the product.
The monopolist is the sole seller of a particular product. Therefore, if you are thinking of developing your project based on business ideas in 2021, you will hardly be able to become a monopolist. Consequently, if the monopolist is to receive excess profits in the long run, there must be certain barriers to entry of new firms into the industry.
Such barriers can refer to any force that prevents competing companies (competing manufacturers) from entering the industry. Such barriers to protect the monopolist from the invasion of other firms using business ideas for women or men can be both natural and artificial (legal). In fact, the barrier to entry can take many forms.
Many of our citizens are interested in small business, what they can do and how to develop their business, they already know. Currently, as sad as it sounds, there are practically no unique and truly original ideas left. But why show miracles of creativity, when the main thing for us is to get our well-deserved profit and retire in a solid plus?
Small Business Ideas
We will not delay too much with the presentation of the most profitable and simple ideas for our own business, with a small start-up capital:
- Coffee shop.
- Online store.
- Sale of sports nutrition.
- Homemade soap making.
- Sale of hand-made goods.
- Pizzeria or small cafe.
- Accounting services agency.
- Sale of T-shirts and sweatshirts with original prints.
- A stall or small tobacco shop.
- Purchase of a franchise.
- Local band support.
Some ideas may not seem very fresh, others may not seem very profitable. But they all have the right to exist, and each of them has proven its viability.
Small Business Resale
Since we have decided to invest a little and get a lot, we will consider the most monetary ideas. Remember, this is still a small business. The age-old option for making a profit is to buy something cheaper, and sell it much more expensive.
The top three on this indicator will include coffee shops, sports nutrition and intimate goods, oddly enough. The prime cost of coffee is not that high, the main mark-up goes for the brand, the area rented by the coffee shop and for the salaries of the staff.
The owner, of course, should also have something left. Having just opened your own establishment, you can not hope for maximum mark-ups and solid profits, but selling a cup of coffee 10-15 times higher than its cost will be easy.
We treat sports nutrition with some mistrust, some even put it on a par with steroids and anabolic steroids. The situation is especially neglected in small towns, it is there that you can get good profits with a small start-up investment. And the best part is that you know your target audience in advance and there shouldn't be any special problems with distribution. If also the soil was "probed" in advance.
A few words should be said about Sex-Shop'ov:
- There are not so many of them, given the number of potential customers.
- The quality and range of products is often poor.
- All this makes it possible to raise prices at your discretion.
- The hypocrisy and curiosity of people will again allow you to make good money.
The first insurmountable difficulty on the way to realizing a business idea is an acute shortage of material resources. Of course, some entrepreneurs, nevertheless, make do with their own savings, but most people here are forced to resort to outside help. Moreover, finding an investor to start a business is often quite difficult. Let's talk about the nuances of this procedure.
For your search to be successful, it is important to understand the essence of the activities of people who invest in other people's projects. Everyone knows that only those resources that work are multiplied. As a rule, bank deposits become unprofitable due to rising inflation, playing on the stock markets has high risks, and investing in various startups will be an optimal and balanced solution. Private investors who are ready to give money for business development make a kind of long-term contribution to the future, hoping to increase their capital. Thus, by looking for a business partner and concluding an agreement with him, you take on a certain obligation.
To get the desired amount, an entrepreneur does not have to collect a lot of documents confirming his solvency. Lenders of this kind are also completely indifferent to your financial reputation. As a rule, money can be obtained only if it is secured with liquid property, which will become a collateral. Of course, your project idea should be attractive to the investor.
Usually, competent business planning will ensure that there are no problems with investments in the business. After all, the designation of an interesting concept, justification of the demand for the project by the population, analysis of possible risks, as well as detailed calculations of a specific amount of capital at the start and profit will play a major role here.
Of course, investors who are ready to invest in business will make final conclusions based on their personal vision of the situation. However, from an economic point of view, a potentially promising project, backed by certain guarantees, is always considered a rather interesting investment. After all, the ultimate goal of such people is a stable amount of passive income, and yours is a successful and working business. That is, such cooperation will be beneficial to both parties.
Where to start searching
The main problem for business newcomers is the wrong approach to the implementation of the intended business. It is important, even at the stage of developing an idea, to determine the specific size of the required investments and estimate the approximate terms of their return. It depends on the volume of investments, as well as the stage of implementation of the business, where to find an investor for a small business. After all, private sponsors, also called business angels, are often ready to support a startup even during the development of its concept.
You can find these people on special online portals, as well as various thematic conferences, communities and trainings. Of course, not all novice businessmen can become participants in such events or enter a closed club. Therefore, it is advisable to start precisely with searches on sites or business incubators created for such purposes.
Moreover, the network's capabilities allow you to remove geographic restrictions in order to search for an investor for business. You can contact both domestic and foreign patrons of the arts who may be interested in your work.
Hello! Today we'll talk about how to start your own business and how to become an entrepreneur. As a rule, this is what people who strive for independence want. Starting your own business offers a number of benefits, especially when compared to regular employment. But in order to start, you need to carefully weigh everything, assess your capabilities and think over the details as much as possible.
Let's analyze where you can start a business if the capital is minimal, or how to start your own business without initial capital:
- If you have knowledge, experience in any field of activity, you can use it as a platform to launch your project;
- You need to understand that running your business is hard work. Doing nothing and making millions will not work;
- In order to establish the whole process, they will have to be engaged 24 hours a day.
Let's compare a business without start-up capital investments and with start-up investments. For clarity, we will present it in the form of a table:
Criterion Business without capital investment Business with capital investment 1. expenses of funds at the start of the project None 2. Monthly costs None Significant present 3. organization falsity Low Medium, high 4. Competitiveness High Level High Level 5. bathing With first income Takes a lot of time 6. Demand level high high
The level of potential risk is also clear from the table: if there were no investments, the maximum that you can lose this time and effort. With significant financial investments, the risks are high: you can lose not only your own capital, but also other people's funds.
How to get funds for business development
- Invest your savings. By the way, it is considered the safest and most reliable option;
- Getting a loan from a bank. This is possible if you have something to provide as collateral to the bank. Without this condition, credit will be refused. A loan can be taken for uncertain purposes and for business development. Collateral is required in either case;
- Borrow from friends or family. If you are confident of success and the amount required is small, why not. If the business does not meet the expectations, there will be nothing to repay the debt, relations with loved ones will definitely deteriorate. Based on this, it is easier to get a loan;
- Find an investor. This may be one person who is interested in your project or organization as a whole;
- Find a partner who will invest his money in the development of the business;
- Start with a minimum (release one unit of goods or provide services to only one customer);
- Apply for a government subsidy (more on this below);
- Raise money through crowdfunding. This is collecting money from the population in any amount. For example, a fundraiser is announced for the release of a new album for a famous vocal group. Anyone can make an investment.
All the above tips will allow you to get the right amount of money available, and most importantly, by legal means.
Where to start your own business
A person who has decided to start his own business evokes ambivalent feelings: someone considers him desperate and insane, and someone admires courage and determination.