And walk-and-jog-with-Baba-Bear day is back!
Last time we discussed taxes and figured out one of the reasons for taxation (to have enough money to run the government and offer various services to the citizens), worked out that a percentage tax is best, that tax exemptions for a lower level of income are fair, and that tax slabs, which make you pay more when you make a shit ton of money, make it even fairer. We also surmised (by ourselves, much to Baba Bear’s surprise) that if the tax rate is too high, people will try to lie and cheat; if it is too low, the government may not have enough money, and there might be a number at which it actually works (our guess was, in case you are wondering, 10%). It was a fun morning, and the discussion continued into breakfast.
Today, we wanted to know what ‘Business Plans’ are. Well, Baba Bear said we had come to the right place! We already knew the basic concept of profit/loss as the difference between revenue and expenditure, but we were fascinated by how one can go about building assumptions and estimates on which to build something that you could then invest your money into. So, we discussed the basic structure of a plan (including the need to plan at all), and then, one by one, we learnt about market sizing, costing, manufacturing, operations, marketing, sales, and accounting & finance.
A lot of it went over our head, to be perfectly honest. But the one thing that stuck was market size estimation and how, in the case we were discussing this morning (of a large empty commercial space in a metro station), the biggest assumptions are the footfall, the percentage of that footfall that actually stops by our store, and the percentage of those that buy (we learnt a new phrase: conversion ratio).
The one input we gave Baba Bear was that one has to price one’s products or services in such a way that the most number of people who visit our store can afford to buy them without thinking much because people travelling by metro are not looking to make well-thought-out purchases, and so we have to sell stuff that people buy on a whim, like food, drink, toys, books, accessories, or even hairstyling and nails.
And then, we came back, kissed Aaji, picked up our bag, and headed upstairs to Mamma Bear to begin our day.
Good morning, everyone! Have a great day.
