Does a factory make more money by producing a certain product? Or do wholesalers make more money? Or do retailers make more money? Why?

2010 What kind of business is the most profitable? 2010-02-08 23:58 There is no doubt that people will answer: real estate, education, automobiles, energy, IT digital products. Obviously such an answer is meaningless, because since the vast majority of businessmen are already on the ship, it is difficult for them to change careers and jump on another pirate ship; not to mention that these "most profitable businesses" only make it more likely for practitioners to make money.

What we want is the practical significance of this question: How can businessmen make more money than others in the industry they are engaged in? Because this is every businessman's lifelong dream.

The correct answer to this question should be: "Businesses with fast capital turnover are the most profitable. In other words, if your capital turnover is faster than others in the same industry, you will be the most profitable." In fact, this is true for all businesses. , once you are engaged in a certain industry, the target customer group is fixed. At this time, the core question that you think about day and night and regard it as important as your life should be: How to sell things faster? Because by turning it once a week, you can achieve the fundamental purpose of running a business - making money. The faster you turn around, the more money you make.

Quick turnaround, the times dictate. In the era of commodity shortages, people can make a fortune by "hoarding", but whoever does this today is a "stupid"; today, when cash is king due to excess commodities, the most important way to make a fortune is to "sell quickly and sell more" before the product is updated. ”, the most effective of which is: low prices.

In the past, the most effective way to make money was to sell at a high price - to increase profit margins. Today, the most obvious way to make money has become selling at low prices - increasing turnover rates. In the past, profits were high but you ended up making less money because you sold less; today your profits are low but you ended up making more money because you sold more. The price war has been criticized because it harms the interests of other manufacturers who are not yet enlightened and follow the traditional profit model, but it is undoubtedly the most enthusiastic pursuit of money.

“Transfer=earn”, this is the most important business feature of this era.

“Profit = transfer” is a business principle followed by more and more people who have become extremely rich in this era.

Of course, different industries have different turnover methods and turnover cycles. It takes several years for real estate to make a deal, thermal underwear lasts for one year, the catering industry requires multiple table turnover rates every day, and there are countless industries with a monthly cycle. You can improve productivity, reduce costs and speed up turnover like Galanz; you can increase brand value to stimulate purchases and achieve turnover like Haier; you can flatten like Midea; you can have zero inventory like Dell; or you can use ERP like Lenovo. In short, in this era of "fast fish eats slow fish", you must work hard, you must not be satisfied, and you must make a difference to change the capital turnover rate.

If the essence of an enterprise is execution, then the essence of business is turnover. In fact, execution and turnover are both skills, and skills are ever-changing. So, let’s find ways to use better techniques to make them turn faster. Jack Welch of GE in the United States is thinking about this problem. Vendors selling dried fruits in remote villages and towns in China are also struggling with this problem. From this perspective, Welch and the vendors' businesses are essentially the same. They have the same business acumen and face the same eternal business problems.

So, besides low prices, how can funds be transferred faster?

(1)

One grain of sand, one world.

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

When Shi Zhenrong, chairman of Taiwan Acer Computer, was a boy, he helped his mother sell duck eggs and stationery. Duck eggs cost 3 yuan per catty, which can only earn 3 jiao, which is only 10% of the profit. They are also easy to deteriorate and will break if not sold in time, causing economic losses; stationery is highly profitable, and you can earn at least 10 yuan in business. 4 yuan, the profit exceeds 40%, and the stationery will not be damaged. It seems that selling stationery is more profitable than selling duck eggs.

But in fact, Shi Zhenrong later told his experience that selling duck eggs was far more profitable than selling stationery. Although the profits of duck eggs are low, they can only be turned over every two days at most; although the profits of stationery are high, they sometimes cannot be sold for half a year or even a year. Not only does the backlog of costs accumulate, but the profits are eroded by interest earlier. Duck eggs have low profit but quick turnover, so the profit is much greater than that of slow-turnover stationery.

Shi Zhenrong later applied his experience in selling duck eggs to Hong Kong and established a "small profit but quick turnover model", that is, the price of the product is set lower than that of his peers. Although the profit is low, the number of customers increases, the capital turnover is fast, the inventory is small, and the operating costs are high. For the reduction, the actual profit is greater than that of peers.

The way Shi Zhenrong and his son sell duck eggs is based on a common theorem in business: return on assets = profit rate × turnover rate. The business acumen of young Shi Zhenrong is reflected in his ability to consider profit margins and turnover rates at the same time.

(2)

But many Chinese people do not have such business acumen. They often ask: "What kind of business is the most profitable?" No doubt they have their eyes on it. In terms of profit margin, the turnover rate is ignored, that is, it is concentrated on projects (industries) with large profit margins. However, projects with large profit margins often have slow turnover due to high prices. At this time, once the funds cannot be turned around in a healthy and rapid manner, not only will the terminal retailers themselves be overwhelmed by inventory, but the entire industry chain will also be in crisis.

Robust in the era of He Boquan once encountered such a disaster. In 1997, He Boquan decided to get a piece of the jelly market. The initial market response to the launch of Robust Jelly in August was really enthusiastic, and sales channels were clamoring for it! Want goods! Around the Spring Festival in 1998, the market seemed to have reached the peak of madness, with dozens of wagons in one province often asking for goods. He Boquan got excited and immediately expanded production capacity, increasing the number of production lines from 2 to 4, 6, and 8. When all 48 machines on the production line were installed and put into production - the terminal suddenly declared unsalable! The original Robust jelly was all crowded in the channels and did not reach the hands of consumers. Normal capital turnover failed to form, Robust quickly fell into a sweet "jelly vortex", and the market quickly collapsed. Hundreds of millions of dollars were lost.

Why does this happen?

Obviously, this is another version of the "beer game." The famous "Beer Game" clearly tells people how the funds in the entire industry chain are accumulated in inventory and cannot be turned around:

Retailers discovered that a "lover's beer" is easy to sell , so the volume of goods reported to wholesalers was increased once a week. However, the wholesaler's request to the manufacturer for additional shipments cannot be met until four weeks later (because it takes time for the manufacturer to expand production). Therefore, during the five weeks of waiting, retailers continued to eagerly increase their demand for goods. At this time, the wholesaler will mistakenly think that the terminals are selling well, so he will be enthusiastic and exponentially increase the volume of goods requested from the manufacturer. At this time, the manufacturer will also restlessly believe that the terminals are selling well, so he will also greatly expand his production capacity and expand Yield. The entire industry chain has been stimulated by a gradually amplified misinformation. When a large amount of goods finally arrive at the terminal, retailers will discover that the actual market demand is only a small part of their own mountain of inventory! At this time, he will suddenly stop asking for goods, but the wholesaler's inventory has increased several times, and the manufacturer is still speeding up production day and night!

——The final outcome is that the circulating funds in the entire industrial chain have turned into terrible "sunken capital" and become "dead goods" that no one wants and cannot be turned around. Manufacturers, Businesses all lose money.

The failure of Robust Jelly was due to the inventory backlog caused by the “information amplification” effect.

For the same reason, China's home appliance industry is in trouble. In 2004, the national inventory of air conditioners exceeded 8 million units, and the entire industry's inventory accumulated more than 12 billion yuan. Some people predicted that such inventory would inevitably lead to the breakage of a large number of corporate capital chains. Sure enough, there were nearly 90 fewer air-conditioning brands in 2004 than in 2003, and behind every brand that went bankrupt, a large number of dealers were buried. Therefore, Midea believes in a saying: "It is better to sell less than to have more inventory."

When there is too much inventory, capital turnover will slow down.

No matter how much inventory there is, capital turnover is just a dream.

(3)

We believe that the essence of different businesses is actually the same. This is true for Shi Zhenrong, and it is also true for He Boquan, that is to grasp the essence of turnover through confusing appearances.

However, most people are so indifferent to turnover that authoritative expert Cheng Xiaohua has repeatedly shouted: "This is the easiest issue for most companies to ignore, but it is also a very critical and even fatal issue!"

Today , the competition of capital turnover rate has become the core of modern business competition, so you must always be aware of: First, how much money do you have lying in the warehouse and sleeping every day? What is the effective utilization rate of inventory funds? Second, how many times does your capital turn over each year? How much profit will you make if you transfer it once a week? Taobao customers congratulate you on a Happy New Year, Tigers and Tigers are powerful ()

In one sentence: How can you make your capital turnover faster? This has become a historical proposition.

The ultra-high-speed inventory turnover once every 7 days allows it to make a lot of money; if the inventory exceeds 7 days, the products will be disposed of immediately. "IT products are always falling in price. If the goods are not sold for three months, it is a loss; if they are sold within seven days, you can get the best price and the best profit."

Be careful about turnover. is speed. The fastest on land is the "maglev train".

Speed ??is Hongtusanbao’s most attractive secret skill. Hongtusanbao, which was founded only three years ago and is headquartered in Nanjing, has 35 branches in East China with a turnover of 2.5 billion yuan, making it the largest IT retail store in China. In July 2004, it created an industry miracle with seven-day retail sales exceeding 120 million yuan! With a single stroke, all the dumbfounded competitors were left far behind.

What method does Hongtusanbao use to achieve faster turnover than its competitors?

As we all know, traditional computer cities are all over the world. They are Hongtusanbao's biggest competitors.

However, the model adopted by computer cities is often a leasing system, that is, the computer city only provides space, while the products and logistics are handled by the leasing dealers themselves. Under this model, it is difficult for each dealer to achieve economies of scale if it works alone, and it also lacks a voice in logistics. Scattered operations ultimately make it difficult for the interests of manufacturers, computer stores, dealers, and consumers to be truly satisfied.

Hongtusanbao is different. It positions itself as a large-scale terminal retailer and operates the entire store itself. Hongtusanbao chose this positioning because over the years, strong channels represented by Wal-Mart, Carrefour, Gome, and Suning have become a brand symbol of quality and credibility, with huge appeal and influence on the terminal market. Similarly, if IT manufacturers want to enter the East China market, they cannot ignore the huge control of Hongtusanbao's 35 strong chain stores that monopolize key markets. At this time, manufacturers have no choice. To enter the market, they must enter Hongtusanbao.

Different strategic positioning leads to different scale effects. In the end, the scale benefits obtained by Hongtusanbao are:

① The manufacturer has large supply volume and low price. This is the most important condition for Hongtusanbao to accelerate turnover at a lower price than its competitors;

② More favorable account period. Cash holdings have greatly increased, and cash flow has become more benign;

③ Product buyout. The huge sales volume makes the manufacturer willing to let Hongtusanbao sell its new products exclusively;

④Special supply of products. Unique products customized by Hongtusanbao from manufacturers.

It is impossible for dealers in traditional computer malls to obtain these benefits. When their products cannot be sold, Hongtusanbao has turned over countless times.

Simply because of the different strategic positioning of decision-makers, the two formats have completely different destinies.

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