OPERATING a well-run business is nowhere near as complicated as some people like to suggest.  If you are a true entrepreneur then your biggest focus will simply be the bottom line.

For some reason, which I have never really understood, there are commentators who use the most complicated and difficult language when they are talking about the way businesses work.

But in my experience the basic rules always apply and haven’t changed for as long as I have been creating and growing different businesses myself.

When looking at your company or organsiation, no matter what sector it’s in, the bottom line is the most important indicator of your progress.

Forget about turnover or revenue, the best way to really test if a company is serving the market place is to take a look at the profit margin.

If a business is making a decent profit then clearly it is answering a need or a demand in the market. And a healthy company means a healthy profit margin of between 20 and 30 per cent.

Once a company has been up and running for more than a couple of years then I would expect it to be turning in a decent profit within that range. If it’s not then I would start to ask some serious questions about the nature of the business and the way it is being run.

There are too many people out there who run businesses that don’t make a profit. What they tend to do is make enough money to keep themselves financially afloat rather than concentrate on building their revenue streams.

If that is the case for you, then you are not running a business.

There is a big difference between running a successful business and having a hobby and it is vital to be able to differentiate between the two.

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