Monday, June 17, 2024

Most important formula in business...

Every generation needs a revolution - an entrepreneurial revolution


    It is   sales - cost = Gross Profit






Your goals in every step you take:   are increasing sales   and reducing cost/expenses.
All other tasks are of secondary importance.

Investments projects loans should result in any two of these:  sales, collection.   Thus it is crucial that that efforts and resources should be invested here.  One wonders why some companies neglect these two items

Cost reduction is marketing/selling in reverse.  You save the revenues that will generate  the GP needed for the expenses.  

Lower priced products sell better than higher priced products

In his book Mind of Strategist by Kenichi Ohmae, he listed

How to Increase Sales:          1.  Increase number of units sold
                                               2.  Increase the number of sellers
\                                              3.  Increase the value of the product
                                               4.  Increase geographical area of coverage
                                               5.  Increase advertising support
                                               6.  Increase the number of channels

How to reduce cost                1.  Reduce material cost by VA/VE
                                               2.  Reduce cost of utilities
                                               3.  Reduce labor cost by automation or offshoring
                                               4.  Reduce labor time
                                               5.  Reduce the number of steps in production

No comments:

Post a Comment