THE MATHS OF BUSINESS SUCCESS

There are a handful of simple, key formulas that every
business owner must master to achieve success. They aren't
mystical or magical, they are mathematical and they rule
with an iron hand.
The first is simply this:
        Profits = (Sales x (Price - COGS)
Your profits will always equal your number of units sold
(Sales) multiplied by the price you receive for each sale
minus your Cost of Goods Sold. When you know your true cost
of production, the total cost in terms of suppliers, labor,
time and advertising, you can calculate your profits for
any number of sales. Why is this important? Because too
many managers and owners don't truly know their total Cost
of Goods Sold! They under-estimate the cost of their time,
the cost of marketing, shipping and production. Be rigorous
about this.
The second formula helps you assess the potential value of
any given marketing or advertising strategy:
    Sales = (N x I - C)
This formula says that your Sales will always be the Number
of prospects you reach, times the Impact you have, minus
the Cost of advertising. If you can reach enough people (N)
and have enough Impact (I) at a reasonable Cost (C) the
advertising will be profitable. If your N or your I is too
small, the Cost will exceed any possible benefits. Always
run any prospective marketing plan through this formula
before you sign the contract! It'll save you a world of
hurt.
Business owners often get so busy running their business
that they neglect the basic math. Don't do that to
yourself! Every business owner or manager should know and
follow the basic formulas for success.