Business math is an everyday job of an entrepreneur. However, different viewpoints bring different results and different conclusions about possible directions.
The same percent of something is a lot less than the same percent of something more. However, different business elements make a different math that makes one entity more successful than another.
Let’s play with a simple with business math.
Business A is on the market with 100.000 people 10% market share. This is not the same as a Business B that is on the market with 1.000.000 people with 10% market share. Business A have 10.000 customers, and B has 100.000 customers. It is obviously that with this mathematics B is better than A.
However, what’s going on if average customers spending in one year for A is $5.000, and for the B is $100. In this case, A will have $50.000.000 annual income, and B will have $10.000.000 annual income. Obviously, in this case A is better than B.
What if the profit margin for A is 5% and for B is 35%? In this case, A will have $2.500.000 profit, and B will have $3.500.000 profit. Who is better? Obviously, B is much more profitable.
What can I say? Only that:
- Everything in the business starts from market and customers.
- Everything is about the math that we make.
- Everything is based on elements that differentiate one business from another.
- Everything must be evaluated to the end or to the finish line.
Start playing with numbers and different factors that affect that numbers. Use different viewpoints to look in different aspects. You will be surprised how different things around your company are.
What you think, how numbers can impact you?