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The sole objective of an entrepreneur is to minimize costs and maximize profits. Out of the total expenses that are incurred in a small and medium sized organization, a part is steady and unalterable. We call them fixed costs. They stay the same throughout, despite the profits being earned or not. Examples are rent/lease, mortgages, electricity charges, business insurance, and salaries of the staff. It is significant to know that out of these constant expenses, the salary of manpower constitutes around 60-70% of the total fixed costs. Most of the business owners try to acquire a good amount of staff thinking that the productivity is directly proportional to the manpower who perform various jobs. And as the productivity increases, so does the cost to be paid as salaries. This situation though apparently sweet works as a double-edged sword. Besides a higher fixed cost, it increases their break-even point - the situation where there is neither profit nor loss. This is because the amount of revenue to cover the total fixed and variable costs will increase. Only after covering these costs, a business is capable of earning profit.
To many of us, this practice of paying fixed higher salaries seems regular and inevitable. However, a change of pace is possible. Automation is the way to give strength to your business in a widely fluctuating economy. A streamlined structure of processes digitizes your task management systems reducing the requirement of the amount of manpower to perform the same job. Automated processes also help in improved training, increasing the efficiency of already existing staff. This brings down the break-even point to a lower level, giving your businesses access to more and more profits.
Automation reduces manpower expenses and leads to maximum profits.