Thread by @c_shepherds

Are you ready for today's edition of #navigatewithidy with Mr. @IdyEnang on @LagosTalks913?

Today's conversation is quite an interesting one, if you run a business or know someone who does, please tune in & invite a friend to join the conversation.

See you at 3PM on 91.3FM!

Welcome to today's episode of #navigatewithidy on @LagosTalks913. Mr. @IdyEnang will be stirring the conversation on the meaning of the following concepts: "Overheads, Costs & Break-even."

Be sure to retweet & engage with us if you have questions.
#tuesdaymotivations

"Beware of little expenses, a small leak will sink a great ship." - Benjamin Franklin. This quote speaks to the things that we do - little expenses that become a mighty surge that could sink the ship called your business.

#navigatewithidy #businesstips @IdyEnang @LagosTalks913

Overhead represents the minimum ongoing resources required for a business to continue operations. Overheads are a key essential that will enable your business run.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

This includes all of the things you need to run your business every month regardless of whether you sell anything. That is salaries, rent, utilities, equipment repairs and so on.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

The lower your overhead, the less revenue the business requires to continue operations and the more quickly you will reach your point of financial sufficiency.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

If you don't spend much, you don't have to make much to cover your expenses.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

Overhead is critically important if you are building your business on a fixed amount of capital. A lot of venture capitalist and other forms of investments can provide seed capital.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

Seed capital is what you use to start the business. Many businesses are suffering today because the overhead is not managed.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

Your overheads can grow daily and if you are not tracking, your expenses can outweigh your revenue. In no time, the business will go under and fold up.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

It is important that the more money you raise in capital and the more slowly you spend it, the more time you have to make the business work.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

Nigerians are very positive, that is why they get into a venture and want to see it through but not every body is strong enough to carry on the battle the way it is presented.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

The faster you burn through your capital, the more money you need to raise & the more quickly you need to start bringing in revenue.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

If you burn through all of your startup capital & you can't raise more...GAME OVER! That is why savvy entrepreneurs & investors watch businesses' 𝐛𝐮𝐫𝐧 𝐫𝐚𝐭𝐞 very closely.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

If you have an entrepreneurial spirit, it is great but you need to have someone that is going to oversee the business and they could be the board of trustees, the Chairman of the board...

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

...these people allow you operate but they watch closely what your burn rate is.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

The slower the burn, the more time you have to create a successful business. The lower your overhead, the more flexibility you have and...

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

...the easier it will be to sustain your business operations indefinitely.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

You must understand your business' burn rate & you must ensure that it is very slow. The burn rate is the relativity of your capital.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

2. 𝗖𝗢𝗦𝗧𝗦: they are either fixed or variable. There is an old business adage that says: "𝒚𝒐𝒖 𝒉𝒂𝒗𝒆 𝒕𝒐 𝒔𝒑𝒆𝒏𝒅 𝒎𝒐𝒏𝒆𝒚 𝒕𝒐 𝒎𝒂𝒌𝒆 𝒎𝒐𝒏𝒆𝒚." There is actually some truth to that...

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

...statement but not all expenses are created equal. So, you need to understand that while you have to spend money to make money, not all expenses are created equal.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

Fixed costs are incurred no matter how much value you create.Your overhead is a fixed cost because no matter what you do in a month, you still have to pay your employees, lease/rent of your office space.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

Variable costs are directly related to how much value that you create & that is dependent on several things such as business model and type of business.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

Reductions in fixed cost accumulate but reduction in variable costs are amplified by volume.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

The better you understand your costs, the more likely you are to find ways of producing as much value as possible without spending everything you make...

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

...this is where efficiency comes in. Efficiency comes as a direct translation from the computation of your input and output at the expense of a percentage.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

If you don't understand cost management, there will be trouble because there are some things that are fixed while some are variable.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

𝐁𝐫𝐞𝐚𝐤-𝐞𝐯𝐞𝐧: When you create a new business, it typically takes awhile before you are able to bring in more than you spent. You need to create systems, employ people, train them & put...

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

...some efforts around advertising & marketing your business. Your marketing efforts that you launch before revenue starts coming in. Hence, you need to invest ahead of demand...

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

...If you don't invest ahead of demand at any phase of your business, then your business is not bound to grow.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

Break-even is where your total revenue to date is equal to its total expenses to date. It is the point where your business starts creating wealth instead of consuming it.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

Your break-even point will change constantly. Revenue naturally fluctuates as your expenses.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

Keeping a running tally of how much you spend & how much revenue you collect from the start of your business' operation is the only way to figure out whether or not you have actually made money.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

The more revenue you bring in & the less you spend on an ongoing basis, the more quickly you will reach break-even. Making your business truly self-sustaining.

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

Thank you for being a part of today's edition of #navigatewithidy. If you have questions, please send an email to @IdyEnang via [e-mail]

#navigatewithidy #businesstips #tuesdaymotivations @IdyEnang @LagosTalks913

@threadreaderapp unroll