Friday 30 August 2013

Quick thought on business

What are they for?

The simple fact of the matter is that a business is in the business of making money.  Ok so they're in the process of providing a product or service or whatever to their customer base, but when you come down to it they're existence is in order to make money that can be paid to the owners be they sole or shareholders.

Key to success

When a company has a product or service or whatever and they wish to increase their profitability there are essentially 3 things that they can do
  1. Increase the price it's sold for.
  2. decrease the cost of producing it.
  3. increase the number of 'it's that are sold
This is essentially a simplistic view on the equation that business owners are constantly trying to keep in check.

Where do I fit it?

In order to increase the number of items sold, salesmen (people sorry, don't mean to be sexist here) are hired.  There is an obvious connection between a salesman and the revenue coming in.  For this reason salesmen are remunerated handsomely.  To increase the price something is sold for is a bit of a tricky one since it is governed mostly by the customer base push it too high and people will buy a cheaper alternative, unless your company is apple of course.  Push it too low and you could end up with each item sold costing the company more money to produce than it's sold for.
Now here's the bit where I and most other people fit, the reduce the amount it costs to produce the item.  Here's another equilibrium or balancing act you want the best person for the job within a certain price bracket.  Pay too much and the added expense is obvious, pay too little and quite often the quality drops and with it the number of sales and this is a difficult downward spiral to pull out of.

What I don't understand 

the majority of staff other than salesmen are seen more of an expense than a source of revenue, yet without everyone doing their part there is no product or service to sell so no matter how good your salesmen are you still won't turn a profit.  So it's a rather short sighted view to treat the fabulous salesmen like royalty at the expense of anyone else, unfair bonuses for example are crazy.  I produce software and there's no way to know that a customer bought the application because of the fancy salesman or because of the clever feature that I wrote so at the end of the day the wrong person gets the gratitude, kudos and pay rise.  If nothing has changed between versions of the software and yet the salesmen sell it then yes that's their result, but if a lot of people put hard work into making it new and improved there really is little credit the salesmen can or rather should take and yet all too often the lowly workers are missed :( It makes me sad when I hear about the short sightedness of some CEO's luckily I don't work for a company like that.
 
Stack Overflow profile for Richard Johnson at Stack Overflow, Q&A for professional and enthusiast programmers