Something for you to think about.
You own a cafe, you manage to get some nice coffee beans at pretty low price, and selling a cup of coffee with normal market price. But, your cafe is located at some odd location. And you only have a couple of office workers patronize during working days, and absolutely quiet during weekend.
So your profit margin is high, but sales figure is low. Is this a good business to continue running? What would you do now?
Think about this in term of your trading. How does it relate to your trading? uhm….
Food for thought from Gav.
If your target market is people around your coffee shop’s vicinity and your shop is making profit, I don’t see why it wouldn’t be a good business to continue running.
Looking at it through a trader’s perspective, I’d rather have high profit margins on a few trades than make relatively less profit margins on more trades.
Basically, the overall net profit is what matters to me. I’ve seen different people employ different strategies and be successful whether its trading a few stocks a month or scalping dozens of stocks.
If your target market is people around your coffee shop’s vicinity and your shop is making profit, I don’t see why it wouldn’t be a good business to continue running.
Looking at it through a trader’s perspective, I’d rather have high profit margins on a few trades than make relatively less profit margins on more trades.
Basically, the overall net profit is what matters to me. I’ve seen different people employ different strategies and be successful whether its trading a few stocks a month or scalping dozens of stocks.
To continue with your analogy, the first thing that makes sense is to see if there are ways to squeeze more profit out of your existing coffee sales. There are often ways to do this.
The next thing to try is to offer an additional product or service (bagels and pastries, maybe?). It might turn out to be as profitable or more than coffee – who knows.
Also, I’d see if there were times of the day where I simply wasn’t selling any coffee. If that was the case, I’d considering closing the shop during those hours and doing something more fun or productive.
Nice post, Gav.
Hi Dave,
‘closing the shop during those hours and doing something more fun or productive.’
I really like this idea. 🙂
To continue with your analogy, the first thing that makes sense is to see if there are ways to squeeze more profit out of your existing coffee sales. There are often ways to do this.
The next thing to try is to offer an additional product or service (bagels and pastries, maybe?). It might turn out to be as profitable or more than coffee – who knows.
Also, I’d see if there were times of the day where I simply wasn’t selling any coffee. If that was the case, I’d considering closing the shop during those hours and doing something more fun or productive.
Nice post, Gav.
Hi Dave,
‘closing the shop during those hours and doing something more fun or productive.’
I really like this idea. 🙂
Dave said it, when the shop is closed you can do other things like writing a coffee blog 🙂
The way I look at it is this way, if you can maximize your margins in the least of time, you’re doing good. Time is the most valuable resource we all have.
Dave said it, when the shop is closed you can do other things like writing a coffee blog 🙂
The way I look at it is this way, if you can maximize your margins in the least of time, you’re doing good. Time is the most valuable resource we all have.
To take the time idea a step further, you could automate the delivery of your coffee drinks to your customers using a robot. There are, of course, many benefits to doing this. Your products would be more consistent and you wouldn’t have to wrestle with deciding whether to serve every customer that walks in the door. You could just stop in every now and then and view your performance reports. The ultimate in time savings!
ah..nice. automated delivery. But I, for one, do not support the idea of automated trading….uhm….You basically lose all the fun of trading:D
To take the time idea a step further, you could automate the delivery of your coffee drinks to your customers using a robot. There are, of course, many benefits to doing this. Your products would be more consistent and you wouldn’t have to wrestle with deciding whether to serve every customer that walks in the door. You could just stop in every now and then and view your performance reports. The ultimate in time savings!
ah..nice. automated delivery. But I, for one, do not support the idea of automated trading….uhm….You basically lose all the fun of trading:D
I would sell it, it’s consolidating, it won’t get better soon, it won’t get worse soon. It shows a profit so some sucker would buy it, put it on the market during a high season, it looks busy and it looks like a great buy to someone else. Sell into strength! With the new cash and experience, purchase a coffee shop in a strong uptrend, buy it during a slow season (pullback).
I would sell it, it’s consolidating, it won’t get better soon, it won’t get worse soon. It shows a profit so some sucker would buy it, put it on the market during a high season, it looks busy and it looks like a great buy to someone else. Sell into strength! With the new cash and experience, purchase a coffee shop in a strong uptrend, buy it during a slow season (pullback).
Gaaaav,
Great blog and great point in your post…although mostly implied…which are the best kind of posts to get us thinking. I like to strike a balance that allows me to make a tidy profit on my trades and with a frequency that allows me to make high y/o/y returns…at the end of the year, I’d like to be able to say that I can beat the investment accounts I throw money into every month. 2008 shouldn’t be so hard, if all the doomsterism turns out to be accurate. Easy goal. 😛
Gaaaav,
Great blog and great point in your post…although mostly implied…which are the best kind of posts to get us thinking. I like to strike a balance that allows me to make a tidy profit on my trades and with a frequency that allows me to make high y/o/y returns…at the end of the year, I’d like to be able to say that I can beat the investment accounts I throw money into every month. 2008 shouldn’t be so hard, if all the doomsterism turns out to be accurate. Easy goal. 😛
Ah, Jay..the lonely trader. I guess you won’t be lonely in the blogsphere now. I have read a couple your blog posts, nice work.
Yup, 2008 is going to be great, I strongly believe. 😀
Ah, Jay..the lonely trader. I guess you won’t be lonely in the blogsphere now. I have read a couple your blog posts, nice work.
Yup, 2008 is going to be great, I strongly believe. 😀