New Businesses

[Alison Jones]

Having read a few books about new businesses, in one think it said Amazon took 6 years to become a profitable business and some other companies did, just thought it would be interesting to find out other peoples views.

How long in normal times (not a recession) would you say it takes to get to a) break even point, b) profitable business and in a recession how different these timescales actually are.

Having opened a new business in the prime of a recession just was interested if people did not mind sharing there opinions on this.

Thanks

Alison

[Red Eye Media]

It all depends on your costs.
Some businesses require stock while service based businesses don't.
It all depends on your outlay.

[profitxchange]

work on the basis that it will take a year to Break even and at least 2 years to be sensibly profitable - this always presumes you know what you are doing!

What are the stats? 66% of start up businesses fail within 2 years!

The odds could be said to be against you!

[Alison Jones]

work on the basis that it will take a year to Break even and at least 2 years to be sensibly profitable - this always presumes you know what you are doing!

What are the stats? 66% of start up businesses fail within 2 years!

The odds could be said to be against you!

Thanks

Very helpful statistics to base things on.

Alison

[Philip Hoyle]

Depends on type and size of business.

If you're a "personal service provider" such as a one-person web-designer, lawyer, accountant, IT consultant, then you should really be showing a profit immediately.

If your business plan involves building a large customer base, such as a retailer, then you could be looking at a few years.

Also, you have to think about whether you mean "break even" on a profit basis or a cash basis. If you're a business that needs a lot of stock or equipment, you may be making a profit fairly quickly but still be in negative cash flow for years after, as you may be spending more cash than your bringing in to build up stocks and buy your fixed assets.

I don't really think it matters - as long as you have a valid business plan, and have resources available to cover it, then what matters is the long term and if you're trading according to your plan, it really doesn't matter and eventually you'll get where you wanted to be, whether it be 6 months or 6 years. I think it is very unwise to "force" a business plan to make a profit in a particular time scale - let it evolve and work with it.