Biz Math ... How to revolutionize the way that you make business decisions.
Did you know?
Around 1% of businesses suffer catastrophic failure and bankruptcy each year. However, that is not the full story. Over the life of a business only about 40% are profitable, 30% break even and 30% lose money.
Even more revealing is the indication that over 90% of business failures are due to management error. Avoidable mistakes are being made due to failure to apply some basic math.
The most common serious but avoidable mistake made in business?
When setting product prices and production volumes business managers too often make a serious but avoidable mistake ... they fail to properly consider the impact of their pricing strategies on profit margins, the change in working capital requirements and the impact on the value of the business.
When setting prices and/or negotiating with customers managers need to forecast how the price change will impact on sales volume. This is the major unknown in any business and will never be known with complete certainty.
It is therefore necessary to quantify the impacts of a range of price/volume scenarios. It is only then that business strategies can be based on reason rather than hope.
This is not as onerous as it may seem to be. Time-consuming training is not required. A top-down methodology, Biz Math, has been developed to explain why and how management should apply the basic math essential to business success.
What makes Biz Math unique?
The unique features of Biz Math are rooted in the top-down methodology that permits the display and manipulation of data graphically.
The level of detail is appropriate to decision making in business.
Biz Math is a “top-down” methodology. What does that mean?
Top-down describes an analytical approach based on analyzing a subject with the so-called helicopter view. That is to rise above the detail of a situation and look at the big picture without being confused by unnecessary detail.
The user is able to manipulate fundamental business parameters comprising product price, production production volume, productivity and inflation assumptions by the use of 'sliders'.
Business strategies should always be considered in terms of whether or not the proposed changes will increase the value of the business.
Business valuations are updated and displayed as changes are made to the business parameters.
This ensures that when setting price and production volume decisions that the impact on the value of the business is taken into account.
Productivity improvement strategies need to be ongoing if only to offset the ‘hidden tax’ of inflation. Inflation is always a factor to be considered.
Changes in production volume will impact on working capital requirements. Trading Working Capital should be re-calculated whenever production volume changes.
Trading Working Capital is recalculated automatically as changes are made to the business parameters. This provides an early warning of consequential increases in funding for trading working capital.
Cash Exposure Days are utilized to reflect the overall performance by management to control the trading working capital tied up in a business. Failure to control and fund trading working capital is frequently the final nail in the coffin of a failing business.
Cash Exposure Days represent the time from the payment for raw materials and services until payment is received for the sale of product.
The publication of the Biz Math book and delivery of the Biz Math computer program are currently being re-organised.
These will be available again shortly.
Please register your interest, or ask any questions that you might have, by emailing me via the Contact Me page.