Math and Running a Business Essay

I Know I have been to many towns in my life and noticed people trying to make a living at street vendors. There are many street vendors in many cities across the US as well as other countries such as Chicago, New York, and Cancun Mexico just to name a few. I have never had or thought to ever spoke to a vendor about business. â€Å"No matter where they live or what they sell they all talk about business just like any CEO or large company Executive would† ( Charan, 2001, P 1). They are all out to make a profit. They all need to find a way to make sure the product sells and quickly so a profit can be made. So a vendor will start his day with quality and quantity, he needs to make sure he will not have too much inventory at the end of the day so he may purchase more product for the next day. Say something like fresh fruits or vegetables. â€Å"The fresh products are placed in the front (retailers call this merchandising)† (Charan, 2001, P 23). Any vendor needs to watch their competition and look to see what their product is selling for. This will happen every day so as the vendor is watching he may also have to cut his prices so the value would increase for the customer. The next day and the day after will go the same way it’s all about how to make a profit. Being a one-person business may seem simple, it’s not there are many decisions that need to be made. Every business is the same one way or another they need to make money to survive. Math is an essential asset in the business world, without math no business would be able to operate. The business world revolves around math, from profit and loss statements, bookkeeping, taxes and employees’ salaries. Formulas and equations are used to determine how much product one might need. For example a vendor will start his day with quality and quantity. He needs to make sure he will not have too much inventory at the end of the day so he may purchase more products for the next day. Say something like fresh fruits or vegetables. â€Å"The fresh products are placed in the front (retailers call this merchandising)† (Charan, 2001, P 23). Any vendor needs to watch their competition and look to see what their product is selling for. This will happen every day so as the vendor is watching he may also have to cut his prices so the value would increase for the customer. The next day and the day after will go the same way it’s all about how to make a profit. Being a one-person business may seem simple, it’s not there are many decisions that need to be made. Every business is the same one way or another they need to make money to survive. â€Å"Business ownership requires more than skill in creating a product or talent at providing a service. Overseeing the finances of your company is the key to survival and success. Understanding basic business math is necessary for profitable operations and accurate record keeping. Knowing how to add, subtract, multiply, divide, round and use percentages and fractions is the minimum you need to price your product and meet your budget. If math is not your strength, partner with someone who can take over that role or hire a trusted employee to help your operation stay in the black and grow responsibly†. (Deeb, 2012, WS). Whether you are a sole proprietor, small business owner or corporation location is a big concern. Location shows us we need to do the math. Will I have enough customers to make this business work? Will my product sell? Am I going to make a profit? What are my expenses going to be? I have learned a lot about being a business owner from reading â€Å"What the CEO wants you to know† (Charan, 2001, NP). I find it very interesting that weather you are a street vendor, a sole proprietor, or a CEO of a large corporation it all comes down to one thing. â€Å"Show me the money† everyone in business for themselves or corporation needs to have the income to survive. I have learned the basic building blocks of a business and the hard work it takes to be able to run a business. Not everyone will succeed in the business world, but if you prove dedication and hard work dreams of being a sole business owner can come true. There are so many steps to follow to be a successful business man. Those steps are called the business acumen which include; cash generation, return on assets, making your margin meaningful, making velocity meaningful, growth and going in the right direction. You also need to make sure you have customers, and be able to know your customers. â€Å"Wealth is more than making money† (Charan, 2001, P 77 C 5). â€Å"The best business men know and understand that money making and wealth creation are linked through what is known as the price earnings multiply† (Charan, 2001, P77). P–E multiple is a number and it represents expectations about a company’s current and future money. Everyone in business for themselves has one goal and that is at the end of the day they need to deliver and make a profit. I like the way that â€Å"Ram Charon† uses in the book as he is teaching a class. â€Å"He asked the question Think of someone you consider being good with people? The students always come up with phrases like outgoing, enthusiastic, personality, or well liked. Personality alone is not what makes a company deliver. It takes knowledge and insight into how an organization really works†. (Charan, 2001, P94). I use that a lot every day in my own job as I work with students helping them build their resumes, talking about what they want to do after they graduate, and how to help them with interview skills. I coach each student just like any business man would coach their staff or team. Team + knowledge = success. Building you own company is the big picture; you need to know how to be a leader, and to stay focused. With the right tools and determination anyone can be a business owner. There are steps to starting up a business, first you need to write a business plan to form goals and objectives, register your business and file a (DBA), obtain a federal Identification number and satisfy business licensing requirements. The easy part but still very important part starts as to opening a bank account, purchasing insurance, establish a business presence, and in today’s day and age establish a website. Getting you name out to the community is the most important part without customers you will fail as a business owner. Advertising yourself is the key to a successful career. A business needs to advertise in the community join the chamber of commerce, flyers and the local church. Research is needed identify where to get help, smart business owners know where and when to seek advice from other sources. Identify accountants in the area who may be able to assist you with specific questions about a startup business. The question is answered with much difficulty. One could easily argue that in order to be good at business you simply need to have a good mind for management, decisions, and people skills. However, math is a big part of business and while you can always rely on other people to take care of it would you really want to? Only you can decide whether or not you feel math is important for you. Decide what to do, despite the clutter of day-to-day business and the complexity of the real world. Many people spend more than a hundred thousand dollars on an MBA without learning to pull these pieces of the puzzle together. Many others lack a formal business education and feel shut out from the executive suite. What the CEO Wants You to Know takes the mystery out of business and shows the secrets of success. What the CEO Wants You to Know by Ram Charan – CNET Download.com Building you own company is the big picture; you need to know how to be a leader, and to stay focused. With the right tools and determination anyone can be a business owner. Starting a new business can be fun and very rewarding at the same time. You become your own boss, and eventually, you might even be able to hire your own employees. Everything would depend on how successful your business is in making profits. So the next time you see a street vendor you might want to take a moment and talk to that vendor about his or her business. References: Carol Deeb. (2012). importance-basic-math-business-41097.html. In The importance of basic math in business. Retrieved October 13, 2012 from http://smallbusiness.chron.com/ Ram Charan (2001). WHAT THE CEO WANTS YOU TO KNOW Copyright  © 2001Ram Charan Designed and developed by FSB Associates What the CEO Wants You to Know by Ram Charan – CNET Download.com