Wake up and smell the profit. 7I glanced in a bemused fashion at my partner. “Errr. No.”
“I record what I buy every day and record my sales every day. At
the end of the week I count up all my wages and recount the
stock. So what do you think I have then?”
Like a naïve fool, with my fancy business studies degree, I
answered “errmmmmm, ehhhh ...’
“I have my profit. I just take off the rent and a few other things and I
have my profit. Every week. Every single week. I count at the start,
count at the end and record during the week. Now, is that hard?”
“No, well, I suppose not. But what about depreciation and
accruals?” I asked trying to pretend that I grasped the whole
thing and was at least as clever as he was.
“Forget ’em. They don’t matter for this. I can include them
afterwards. These are your fundamentals. These businesses are
simple but you gotta know your fundamentals. This is how it
works. You pay X for your food, Y for your wages and what’s left is
your profit contribution. Do that and we’ll know where you are.
Now will you do that for me?”
“Okay,” I mumbled. But I knew we wouldn’t, and I think he knew
we wouldn’t too. We could never do that over all our shops and
the factory. It would take up too much time and anyway you
couldn’t accurately tell how much money a business of our size
was making with that method. Or so I thought.