Managing By Numbers

Managing By Numbers
September 23, 2018 Gary Shotton

Many business people make a very big mistake, when they managing by their feeling.  Learning to manage by understanding the numbers, qualify you to increase and growth by Gary Shotton #000233

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Managing By Numbers

By Gary Shotton

This text is in Extreme Rough draft and will be edited in the near future.

hello my name is Gary Shotton and we’re bringing you these teachings as a part of Inspiring Better Business, IBBTalks.   Today, I’m going to talk about “Managing By Numbers” and more elaborately managing your business mind by numbers managing your jobs by numbers you see when you’re especially when you’re getting starting in a business you you do a lot of managing by feeling and feelings are very deceptive Zoar can be deceptive and even as you go along in life and go along in your business you can learn that hey I feel like doing this and I look like this and looks like everything’s going fine my sight is I’ve got we got a good feel for it or it just looks good or I think things are going well well those are mistakes that you’ve got to overcome yeah they have a part to play they should bring a caution or warning if something’s not right but you shouldn’t manage by feeling managing by numbers is where you got to go when you’re owning and operating a business well let’s talk about two kinds of businesses both the service business and a product you sell those are two types of businesses and then let’s talk about the different phases of a business growth like when you’re getting started and when you’re getting bigger and then even when you’re quite big as a business now let’s talk with the the subject of of managing your business by knowing and operating your numbers when you’re providing a product a product for someone you’re you’re providing cakes to sell you’re you’re providing vegetables in a garden you’re providing pies or or restaurant or something like that where you have a product and that you’re making it and selling that well at first you want to experiment I’ve always told people you’ve got to do a lot of experimenting even before you start your business and when you’re starting and you’re going experiment around that should be done that’s another subject and you’re ready to kind of lock into maybe now starting my business after all lots of fermenting by the way while you’re experimenting you probably need a job someplace else you need income coming from someplace else to pay your basic bills but that’s another subject now you’re providing this product let’s say it’s a cake well you should measure out the amount of ingredients that it takes to make a batch of cakes how much flour how much sugar how much salt how much seasoning every little thing every little piece and you measure you get a little scale and you measure it and you know how much you paid for each one of those things by the pound or by the ounce or whatever measure you want to use you paid so many dollars per pound or shillings per ounce or whatever and then you must decide and measure how much of each one of those ingredients went in to making that batch of cakes and then you’ve got a count and say that batch of cakes makes a hundred biscuits or or whatever you’re making and now you’ve come up with the numbers related to every single cake every single piece let’s take pizza something like pizza or in the United States let’s take a hamburger if you’re gonna sell a hamburger you need to know what the bun costs you need to know what the meat cost of course that’s very important if you add cheese what does the cheese cost what is the pickles cost what is the mustard or ketchup cost you you know there’s a very famous hamburger store all around the world called McDonald’s and I’ll guarantee you they’re allowed to put only two pickles not three or three pickles not for the person making that hamburger knows not to put an extra pickle because somebody upline knows how much the cost of each pickle is and then you put your your numbers together add it together and that’s your cost of goods now of course you have your sale price and then we’re gonna skip way over a bunch of other things that would be your overhead that’s the cost of being in business but to start with you need to know what your basic cost of goods are related to the actual sale of that item and you probably gonna have to be at that point you probably can’t put any more than or forty or fifty percent into that sometimes even one percent I mean let me tell you if you add up all the ingredients of a meal you probably can’t have more than about thirty or forty percent I have I don’t know the numbers because you have so much other overhead involved before you can actually make a profit that’s kind of another subject well let’s talk about a service well in services you are usually selling mostly time well you’re selling your time and other people’s time so you’ve got to ask yourself even if you’re the person than doing all the work is what would be a fair wage for me what would be at the fair cost of my time in other words if I wasn’t here and I needed to hire somebody to do exactly what I’m doing what would be that cost well of course then you might have some products related you might have some service items you might have you might have if you’re a plumber I mean you might sell some some plumbing supplies when each one of those has a cost that you bought it like a product it’s a mixture of product and service and then you need to know what you’re selling it for so I’m not going into detail into each item I’m just telling you you must know your numbers in order to run you run your business well let’s talk about numbers at a higher level when you make all of your sales for the day then you could count the amount of profit that came in for the day and the amount of expense that came in for the day again this is probably in the category we call cost of goods it doesn’t include overhead at this time the overheads there but you need to know what your cost of goods that day was are your cost of service that day and then you need to compare and know and monitor that and check on that and be sure you’re in line with what’s a good cost on that well then you add the days together and you could look at on a week but but for sure you need to look at it at every month that month what was my cost of goods when I added up all managed by knowing your numbers and you added up all of the the products you bought all of the Aleut the the direct labor that you consumed you put a number in for you if you were working there and you were where where doing the labor you need to put that number in there because unless you’re willing to do this as a hobby or this is that a business that that’s all you’re doing doing just one person working then that’s a service business that’s a contractor it’s really it is a business owner but it’s a contractor if that person is just just all they’re doing is painting the fence and they’re the only one painting the fence they’ve got a job that’s what it really is so well at the end of the month though you need to add all of those together the job costing of each one individual ingredient of course that’s all added together and you know your numbers for the month of your your your cost of goods and your your revenue that came in and the difference would be what you have your net after cost of goods and now you’re being able to manage it but there’s where you start adding in your overhead the things that had to happen just to be in business the things that you need like maybe advertising maybe you’re in an office or a building and you’d pay rent or you have utilities or you have things that that are not directly related to that batch size that job size well let me go as an example here on myself I’m a pretty good numbers guy but I’m embarrassed to say I took my eye off my numbers in my own business and I was busy doing these reports for you and and talking to you and I wasn’t watching my numbers so close I thought everything was looking good I I looked around everyone was working but you know what they weren’t actually producing at the rate that I thought they did produce or we’re producing they kind of slacked off you better believe it in a kind way we use the term bend our culture back to line it up but don’t break everybody’s spirit we’re getting our numbers back in line so I can be profitable real profitable so that I can do this and more well I hope this is helpful to you I hope you enjoy listening to inspiring better business talks we thank you
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Gary Shotton
Founder | IBBTalks.com
The founder of IBBTalks.com which was formed to "Inspire Better Business."
As an astute businessman, he is passionate about helping others in the business world achieve maximum profits. He has a keen interest in international business. www.InspiringBetterBusiness.com

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