Chapter 6 - Understanding Key Cost Relationships

Too many people think only of their own profit. But business opportunity seldom knocks on the door of self-centred people. No customer ever goes to a store merely to please the storekeeper. - Kazuo Inamori

Reading this quote reminds me of my experience working in a small café for a less than desirable boss. Business opportunity unfortunately does knock on the door of self-centred people, but rarely does it stick around. The way this café was being run went against many of my personal views and opinions – it was very much profit-based over customer-based. There were many shortcuts and dodgy practices we as staff were made to do in order to maximise profit, like skimping out on ingredients in a smoothie, or only putting one slice of ham on a toastie then selling it for $8.50 – that’s right – EIGHT DOLLARS & 50c for one slice of ham, one slice of cheese, and some cheap white bread… I left after about 2 months, not for me thank you – I am not a scammer. Recently, however, it seems the customers have finally caught on to her dodgy deals and we are seeing the slow downfall of her business. Glad I got out of there… Back to the point, when running a business, customer satisfaction should be a top priority. If you look after your customer base, your customer base will look after you by spreading word and bringing in new business for you.

 

Managers are ‘behind the wheel’ and driving their firms. If they do not have a strong grasp on the reality of the cost relationships in their firms, they are likely to drive in directions where it may not be good for them to go.

Absolutely agree with this, relates to my first KCQ well. In my experience in management, cost management was required constantly; how much food are we wasting? How much money have we made? How much are we spending on staff labour? How can we optimise our operations to ensure we are getting the most out of our daily operations? Without the consistent management and tracking of all costs, a business can very quickly end up on a slippery slope of profit loss.

 

You tend to want to know where you are now so you can plan where you want to be in the future. This is because to get where you want to go in the future you must get there by going from where you are at present.

Before I enrolled in University, I had no idea what my future might look like. Will I still be working for a rental car company? Will I be stuck in retail forever? Eek… scary. It was my partner who encouraged me to enrol in Uni, it was a random weeknight and I he asked me what I want to do with my future (career-wise). I had no idea. I wanted to be a vet nurse for most of my life, but I had recently been dissuaded by people in the field – it is not as nice as it sounds and there is a reason behind the high suicide rates of veterinary workers. He suggested I maybe enrol in a Tafe course or see what is on offer at CQU. I did a quick google search and thought ‘hey, business looks good, I always seem to make my way up into management positions so I may as well put a degree behind me’. I signed up that night, thanks Bailey! During my enrolment interview I was convinced to enrol in accounting as well, so here I am! So, before that spontaneous decision to start University, my future was very undecided and largely ignored, but now I have multiple paths to choose from, and I can plan my future. So yes, I agree, you tend you want to know where you are now so you can plan where I want to be in the future. At this point, I am definitely leaning towards the business side of things since I seem to struggle so much with accounting, but I have a few years to decide yet.