Managing stock, credit, and expenses effectively ensures a business runs smoothly. Digital Masterjee Professor Vishal Thakkar shares valuable insights on making informed business decisions using data.

Key Takeaways

• How to produce as per demand and reduce wastage.
• How to prevent customer loss.
• How to improve business efficiency.

Making the Right Production Decisions

Business owners must decide how much stock to produce to avoid wastage and financial loss. Prof. Thakkar explains this using an example of a cake shop. Since cakes are perishable, stock management is crucial. Here are key questions a cake shop owner should ask:

1. Is the product inefficient?
2. Is marketing weak?
3. Is lead generation low?
4. Is customer footfall lower than expected?
5. Can variable pricing attract more customers and reduce wastage?
6. Are fewer customers coming late at night?
7. Are more customers visiting only during the day?

Answering these questions helps businesses adjust their operations efficiently.

Three Key Business Decisions

Based on data, every entrepreneur should focus on:

1. Stock Management – How much stock to maintain to avoid overproduction or underproduction.
2. Credit Management – How much credit to offer without harming cash flow.
3. Expense Control – How much to spend while maintaining profitability.

Massive Action Plan

1. Data is King

• Make all business decisions based on data, not assumptions.

2. Convert Data into Information

• Analyze business operations to draw meaningful insights.

3. Study Variations in Operations

• Understanding variations helps in better forecasting and decision-making.

4. Use Regression Analysis

Regression helps predict future trends based on historical data. The formula for regression is:

R = T + S + C + I

• T (Trend): Indicates growth or decline.
  • Positive Trend: Numbers increase.
  • Negative Trend: Numbers decrease.
  • No Trend: Numbers fluctuate.
• S (Seasonal Variation): Changes in business due to seasons.
• C (Cyclical Variation): Business cycles affecting demand.
• I (Irregular Variation): Unpredictable changes in business.

Conclusion

A successful entrepreneur studies these four data points to make informed decisions. Data-driven decisions improve operational efficiency, reduce wastage, and boost profitability. Always base your strategies on facts, not emotions, to ensure long-term success.