Take-Aways
Taught two classes last weekend, one in Business Planning and the other in Business Finance.
Two take-aways from the day:
Buy insurance. A new warehousing business decided not to buy insurance on their (growing) inventory. Big mistake. Thieves got them in the first month for everything. They bought good insurance. Thieves got them the fourth month for everything. They discovered their insurance wasn't so good. They bought better insurance. The moral: make good friends with your insurance agent early on in your business and make sure that agent is a specialist in your niche - and I don't mean just for theft insurance.
Know what gross margin means. One of the students had a highly successful service business. Gross margins were high twenties. The owner's Dad kept telling him that his margins weren't high enough, but the son couldn't figure out what Dad meant. We did a quick calculation, essentially on an envelope. Dad was correct. Margins were twenty points low. Luckily, they're fixable. Moral: know how to calculate your margins. Otherwise, you are probably not as profitable as you thought. A hint: network with other owners in similar businesses to know what your margins ought to be. In a highly competitive business where folks don't share? Follow the trends of your information and make sure that your margins, at a minimum don't go down, and, better, that they rise continually over time.