Just before I received my Bachelors in History from good ol' Morehead State University in Kentucky, I was invited by the business school to study for an MBA. I scoffed at it. I had reason to - I had passed the GRE & been accepted to the graduate school in History & awarded a graduate assistantship, which at the time meant a stately sum of $240 a month, a very small (and shared) office, and you got to be gophers for the profs, all the while working towards a masters.
Sometimes I wished I'd taken up the business school's offer, because I have to tell you, the nuts and bolts of crunching numbers business style confuses me. In this piddly little eBay business we have going, all I can really say is we're not losing money. But that's about it.
Here's some stuff I do know.
I can tell you, from 2007 until May of this year how much of every dollar earned went toward fees and expenses. In 2007 it was 44 cents. In both 2008 & 2009 it was 63 cents. And so far in 2010 (due to eBay's lowest fees ever) it is 70 cents. Is that good or bad? Looked at another way, in 2007 we kept 56% of everything we earned, 37% the next two years, and so far this year 30%.
Another way I looked at it was the amount of money spent on inventory vs the amount of money we ended up with at the end of the year. I came up with my own little ratio - $$ spent on inventory divided by $$ left over after expenses, and I came up with these numbers: 2007 - .65, 2008 - .43, 2009 - .36 & so far in 2010 - .39.
IS THIS GOOD OR NOT? I don't know. Somebody tell me.
A large corporation will look you in the eye (they're people now, the supreme court said so) and tell you that they lost money because they didn't make as much as they did during the same period a year ago. I'm not that sophisticated - I feel that if my income exceeded my expenses, I made money. If I didn't make as much as I did the previous month, or the previous month a year ago, that doesn't mean I lost money. I just didn't make as much. I won't use that as an excuse to layoff Patti Anne.
So I'm going to leave it at that. If we earn more money than we spend to keep the business going, we made money. Simple.