To entrepreneurs, a college course in statistics may seem unexciting, but that is what finds special mention in ‘Chicken Lips, Wheeler-Dealer, and the Beady-Eyed M.B.A.: An entrepreneur’s wild adventures on the New Silk Road’ by Frank Farwell ( >www.wiley.com ).
Looking back at his bumpy journey, Farwell speaks of how gauging products to sell in magazine ads or catalogues depended on past sales statistics, though to an English major like him, ‘this was a sea of Greek.’ Thankfully, for the author, the statistics-oriented courses at Northwestern helped him appreciate and interpret the trend lines of data.
Enduring lesson
Farwell remembers the statistics class of ‘Dr. Balachandran’ for an ‘enduring lesson,’ that is, “Find out what your statistics are saying: Faster, slower, too high, too low, too much, too little, reversing direction – what was the real story?”
Relating to the lesson, the author narrates how in 1981-82, his total circulation of 70,000 catalogues was miniscule in the catalogue industry, though statistically viable, with only a moderate level of variance. “What we did on a small scale in the first two seasons could be cranked up a whole bunch year by year, with little extra risk – if all fundamentals were monitored along the way,” he adds.
Interestingly, however, the numbers of the past were an inertial force that was waiting to be released, realised Farwell. As a result, calculations constantly went on in his head. “I scribbled on available pieces of paper at meals, meetings, church, weddings, and funerals: the cost per catalogue mailed, divided by the average per-product gross margin, equalled the break-even point expressed as sales per catalogue mailed. God- awful boring stuff. But wait a minute – I was beginning to like it.”
Right course
Gratefully acknowledging the instruction to ‘follow the numbers,’ Farwell notes that seen from the right angle, the numbers can indeed steer one on a course not thought before. “Minimise costs, maximise gross profit margins and sales – as well as product quality and accurate, quick, friendly service – and life in the catalogue business could be very good indeed,” he observes.
And that can be said of many other businesses, too, because if on the contrary one were to ‘get sloppy with internal accounting and record keeping,’ rapid, debilitating losses will blindside the perpetrator, as Farwell cautions.
Educative material for the enterprise-avid.
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