Business Structure & Goals - Keep It Simple..To Get To Becoming A Unicorn...

A Business Is Meant For Profit. Simple.

Function Defines Form.

So build the business to derive profits from it's services and products. There is no easy way out. Selling your service or products or services lower than your cost is just creating a downward spiral that you will never recover from. The customer always expects to get the best and pay the lowest price.

Logic dictates that the best is priced higher not lower. This dictum has intentionally been changed over the last so many years. Plenty of reasons have been given for the change of course but not many of those reasons hold merit or will hold valid against a logical argument.

For a business, there is only one truth and one benchmark that holds good. It is profit..! No profit means losses and that translates to loss of investor wealth, loss of jobs and a weakening economy.

I have seen many justifying a business with emotions, arguments about short term, mid and long term returns, market domination, growth and many other reasons. Most do not hold good and I will tell you why?

Loss is a loss. You can call it burn rate or term it in any way you wish. It does not change the fact that your business is bleeding and soon you will run out of capital. Mid Term and Long Term Returns considering a burn rate means you will continually keep losing money until you reach some kind of critical mass and the turnaround happens. That is one of the ways that business valuation is arrived at in multiples.

The valuation methodology however cannot foresee the x variable and that x could be changes in market demand, evolution of technology, change in laws that could impact business, lack of purchase power, etc. It also does not foresee any act of god or even a cultural change.

Example, if a huge section of the community became vegetarian, a company selling meat products would fail. Red Mammoth believes in working with people with vision and those that understand quality and patience go together. Most entrepreneurs look for bandage solutions and usually a bandage is only put on a wound. Why get to that stage is my question? Why not plan ahead?

Therefore never lose sight of the basics.

Now having said that and knowing that, you are at least as an entrepreneur free to make an informed choice - growth via profit or growth via burn. Both may make money in the long run for the entrepreneur but which do you think of the above will ensure you less stress and continual growth and sustenance.

Those startups that reach IPO's are a few out of thousands and that is why out of the millions of startups, we have only about a 100 Unicorns. To become one of those, you have to sustain the business whether you get funded or not and it is a tough road already to manage and run a company, don't make it tougher for yourself.

Common Sense and Logic will always win. Nothing else does.

Math cannot change. 1+1 = 2. That is the only constant. The Other Constant Is Change which is unknown territory. Depend upon Math. Be wary of Change. It could happen anytime. If your foundation is solid, you will have room to maneuver and grow. Other's weakness may become your opportunity.

Common Sense and Logic will always win. Nothing else does.

Math cannot change. 1+1 = 2. That is the only constant.

Do you agree? If yes, why and if not, why? I would love to hear your inputs on this topic. I am an open mind and love to learn, open to listening and discussing.

What Say? Talk to me...

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Raj Sukheja is the CXO of Red Mammoth Ventures LLP., Mumbai and consults for #business and #finance for small to large company's worldwide. He is an #author #writer #speaker #mentor calls himself #evolutioncatalyst #evocat and is a #thinktank cum #financialconsultant offering #consultingservices.

Disclaimer of Liability. The Author shall not carry any liability for any direct, indirect, incidental, special, exemplary or consequential damages arising in any way out of the use or distribution of this article as this article is a perspective of the Author and not to be deemed as any or specific advice to anyone from the Author. The Author is neither directly or indirectly implying any person, community, business or organization. All articles are meant to educate and examples are simply examples, any coincidence is incidental and purely that - a coincidence.

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