Every new or prospective business owner asks the same question: “How long will it take for my company to turn a profit?” The specific answer depends on a few factors, but the range of answers is pretty wide, timewise. Some e-commerce businesses can be in the black from day-one. Larger enterprises that sell complex products or services in a competitive niche might wait four years before all the hard work pays off.
Most entrepreneurs have a backup plan or day job to pay bills while they wait for their new venture to bring in surplus cash. If a financial emergency strikes during the interim, many working adults turn to payday loans. Whether you’re in the midst of getting a business up and running or not, it’s easy find the best lenders online to apply for a payday loan.
Plus, the approval and funds transfer to your bank takes a matter of minutes if you qualify. How can you come up with a more accurate estimate for how long it will take your company to be profitable? Here are a few ways to hone in on a realistic answer based upon specific characteristics of your startup.
Type of Product
If you sell digital goods, as opposed to physical ones, you’ll be able to earn money faster. The main reason is that digital goods, as well as services like consulting, tax preparation, and academic instruction, avoid the need for inventory, which is a double expense. First, you have to pay to store items. Second, when a buyer orders a physical item, you need to locate it, pack it, address it, and ship it. Anything that slows down the process of conveying goods to a customer delays profitability, as do additional expenses, like maintaining inventory.
There are plenty of selling channels, but the two main ones are brick-and-mortal storefronts and online stores. Obviously, business owners who work exclusively with online shopping carts, even if the goods themselves are physical, can earn money faster than selling in an actual store. Commercial rental expense is a major cost for most owners, so if you can side-step it by selling directly from a website, you speed up the profit cycle.
Number of Employees
There’s almost a direct mathematical relationship between the number of employees you have and the time it takes you to earn money from your business venture. Namely, more workers mean more time to profitability. Consider that businesses with one employee, sole proprietorships, that sell digital goods from an online store are usually the first ones to turn a solid profit. Simplicity is the name of the game for entrepreneurs who want to put cash in bank. So, the short lesson here is to go solo and sell intangible products for quick earnings.
Selling or Reselling
If you make, create, or produce your own items for sale, there’s a time element involved. When you buy from others and act as a reseller, your company can be fully operational in a matter of a couple hours. Your biggest time investment will be building a website and launching a marketing campaign.