Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Mon Sep 03, 2007 8:55 am Post subject: Achille, A Numerical Fable
Achille [pronounced - ah sheel] owns a fairly large automotive shop and is doing pretty good. He grosses $1M a year and has weekends and most major holidays off, life is good. On June 20th, 2007 he receives a flyer in the mail. There is going to be a business management seminar on Saturday, the 30th. The four-hour seminar promises to teach him all about business management for just $250.00.
Always eager to learn, Achille signs up. At the seminar the importance of tracking monthly sales is stressed. After the seminar he rushes to the shop to apply what he has learned. He added the first six-months sales and this totaled $498,000.00. Achille is now a bit concerned, because he feels his figures indicate he is down $2,000.
Achille goes to the local newspaper and takes out an advertisement. At the end of July he is eager to see the improvement. He totals his sales for the month and it comes to $82,353.00. He wonders if this indicates an improvement. He figures since $498,000.00 represents six months, his average sales per month must be $83,000.00. Now he’s really worried, this must be a recession, even advertising isn’t helping. Something must be done!
On August 1st, he buys a huge helium filled balloon and ties it up in front of his store. A month passes and today is Labor Day. The shop is closed, so he again tallies his sales. This time the total is $86,274.00 and Achille is elated. He figures, in a recession you must have to be seen, advertising just can’t help. The balloon did the trick. He is also glad he attended the class, without it he might never have known he was in trouble.
Joined: 19 May 2007 Posts: 206 Location: Camp Verde, AZ
Posted: Tue Sep 04, 2007 11:06 pm Post subject: Re: Achille, A Numerical Fable
louis wrote:
He is also glad he attended the class, without it he might never have known he was in trouble.
Questions:
Is Achille on the right track?
How might he feel at the end of September?
Louis, knowing you, there is more to the story, so I will help you and add in some of what you left out.
The seminar he attended also said that he was not charging enough, so he raised his parts and labor 30 percent. In order to make an accurate comparison he needs to take July's sales of $82,353.00, subtract the 30% increase to get $57,647.00. Then he needs to take out the advertising costs of $2500.00 to get a monthly sales total of $55,147.00.
He needs to do the same for August. Sales of $86,274.00 minus 30% equals $60,391.80, then take out the cost of the balloon ($2435.00) equals $57,956.80. He is in bigger trouble than he thought, but the balloon did increase total sales.
In September he put up two balloons, then he followed more of the management seminars advice. He fired two of his best, oops I mean, highest paid techs and replaced them with four young techs at half the cost. Then he started purchasing white box parts and selling them for the same price as the higher quality parts. Because of having two more techs the shop was able to produce a greater volume of work. September was a record month for sales, parts profit margin was huge, and tech cost was low. He sure was glad that he took the things he learned in the seminar and applied then to his business.
Now he has big plans for October, the over priced service writers are going to be replaced with a cute 21 year old go-go dancer. That will really bring in the guys. He is planning a two month cruise. Now all he really needs to do, is use the internet to connect to the shop on a daily basis, to see how much money he is making. The place can run itself. Life is really GOOD.
How do you think he is going to feel the end of November or December?
On a more serious note, Achille is wasting time being concerned about normal monthly changes in sales. He has much more important things to do.
We need to be careful when following advice. Some of it may look good in the short haul, but not be in our best interest overall.
Joined: 15 May 2007 Posts: 774 Location: Baton Rouge, LA
Posted: Wed Sep 05, 2007 8:02 am Post subject: Re: Achille, A Numerical Fable
Dave wrote:
louis wrote:
He is also glad he attended the class, without it he might never have known he was in trouble.
Questions:
Is Achille on the right track?
How might he feel at the end of September?
Louis, knowing you, there is more to the story, so I will help you and add in some of what you left out.
The seminar he attended also said that he was not charging enough, so he raised his parts and labor 30 percent. In order to make an accurate comparison he needs to take July's sales of $82,353.00, subtract the 30% increase to get $57,647.00. Then he needs to take out the advertising costs of $2500.00 to get a monthly sales total of $55,147.00.
He needs to do the same for August. Sales of $86,274.00 minus 30% equals $60,391.80, then take out the cost of the balloon ($2435.00) equals $57,956.80. He is in bigger trouble than he thought, but the balloon did increase total sales.
In September he put up two balloons, then he followed more of the management seminars advice. He fired two of his best, oops I mean, highest paid techs and replaced them with four young techs at half the cost. Then he started purchasing white box parts and selling them for the same price as the higher quality parts. Because of having two more techs the shop was able to produce a greater volume of work. September was a record month for sales, parts profit margin was huge, and tech cost was low. He sure was glad that he took the things he learned in the seminar and applied then to his business.
Now he has big plans for October, the over priced service writers are going to be replaced with a cute 21 year old go-go dancer. That will really bring in the guys. He is planning a two month cruise. Now all he really needs to do, is use the internet to connect to the shop on a daily basis, to see how much money he is making. The place can run itself. Life is really GOOD.
How do you think he is going to feel the end of November or December?
On a more serious note, Achille is wasting time being concerned about normal monthly changes in sales. He has much more important things to do.
We need to be careful when following advice. Some of it may look good in the short haul, but not be in our best interest overall.
Dave
Now that is hilarious. You are probably not too far off either. There is an even simpler point however. I'll post more this afternoon.
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Now that is hilarious. You are probably not too far off either. There is an even simpler point however. I'll post more this afternoon.