Joseph's "Just My Thoughts"

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Showing posts with the label costs

Just my thoughts #0562

‘ Capital ’ means ‘ Principal .’ What does ‘Principal’ mean in business ? The ultimate goal of any business is to create wealth. Wealth serves as the foundation for creating value, and that value must be generated solely through production. To produce, the cost must be invested first; the source of that cost is referred to as ‘Principal.’ In other words, the result of a transaction through trading is ‘ revenues ,’ and if costs and expenses are subtracted from sales, what remains is ‘ profit .’ If costs and expenses exceed revenues, it results in a losing trade; if they are lower, it results in a profitable trade. Therefore, principal serves as the benchmark for profitability ; in other words, it is referred to as capital. Whether a business is good or bad is determined by its profitability. If the principal is insufficient, borrowing capital becomes necessary, which is termed “ debt .” Just as the number of principals capable of producing tankers differs from those that can create ...

Just my thoughts #0540

Debt inevitably incurs costs: the interest and the usage fee . Borrowing means using someone else’s property as if it were my own. When the purpose of borrowing is achieved, or when the agreed time to return it arrives, it is returned to another person’s possession, and the borrowing cost is no longer incurred. Costs also serve as the basis for production and are the consideration for almost all debts, regardless of the borrowing purpose. The frightening aspect of debt is that it incurs costs and requires repayment of the principal. Originally, the principal was not mine. Thus, spending with other people’s money exposes you to significant risks, especially when you spend on perishable consumption that disappears after use. If you spend someone else’s money without differentiating between production costs and costs for extinction , you are on the fastest path to destruction. Therefore, luxury can ruin even the rich. - Joseph’s “just my thoughts”

Just my thoughts #0379

The prerequisite for working is to earn a profit. Profit is defined as revenues minus costs and expenses. In other words, you must incur costs and expenses before you can make sales. Profits arise when sales exceed costs and expenses. If I overlook this straightforward reason, the harder I work, the more I will struggle and negatively impact others. Behind the concept of generating significant revenue lies an oversight of the importance of making a profit. Increased revenue also leads to more significant expenses. The total costs and expenses associated with making sales are referred to as prime costs. Many businesspeople in this world are unaware of prime cost structures and focus solely on boosting sales. - Joseph’s “just my thoughts”

Just my thoughts #0312

Any business can succeed if it generates more revenue than it incurs in costs. When you achieve high sales volume with low expenses, a surplus occurs; only with a surplus can production and investment continue. “Replication” enables humanity to create surplus legitimately. Humanity has learned that surplus can increase if similar costs are incurred or if goods or services of equal quality are sold at minimal costs. The growth of a management organization demonstrates that it continues to replicate its members at the same level as the founder, and increased revenue indicates it can easily “replicate” the designated quality. The cells in our bodies also “replicate” to sustain life. For handmade products to thrive, they must prioritize scarcity over productivity since improvements in productivity can reduce scarcity. If you don’t grasp the principles of duplication, achieving success in your business becomes challenging. - Joseph’s “just my thoughts”

Just my thoughts #0301

Receiving an investment signifies that you are receiving a prepayment for future costs and expenses. To generate revenue, you must cover these costs upfront. If you lack the funds necessary to manage current expenses while aiming to raise revenue, you might need to borrow money or attract investments. However, as a recipient of these funds, you cannot use them freely; this money does not belong to you. Legally, your options for utilizing this money are limited: you can either receive it as a salary from your expense account, as a dividend from profits after deductions as a shareholder, or pursue official management incentives. This underscores that the invested funds are not your own. When funds are invested, it implies that profits will be derived from someone else’s money, which you will share with the investor. Although investment alleviates the immediate pressure of expenses, it simultaneously heightens your obligation to generate profits promptly. Being fully funded does not equat...

Just my thoughts #0154

The lower the trust, the higher the economic and relationship costs. If performance is low beyond costs, efficiency is reduced. Trust is the most important asset in all areas where human intervention involves value. Higher trust increases the efficiency of the money use. Some people get high satisfaction even if they spend the same amount of money, but others get complaints. Don’t make the mistake of thinking that all money is the same. - Joseph’s “just my thoughts”