Do the Math!

As I began to purchase an ice machine, this philosophy in life and business came to mind. We need to do the math. Modern society uses statistics to make better choices, this is how a professional poker player makes their choices as well. They know their chances, and they gamble based on their probability and calculations. This is how life and business should both be operated. We should do the math, weigh our choices and decide if the consequences are worth the risk and choice, individually, with our own free will.

To begin with what spurred this thought, my ice machine. As I began my business at the farmers markets, I would empty the ice machine in our refrigerator at home. It has a nice capacity, and would survive my slow markets. It was not fast to recover however if I had a second market in the day, or one the next morning. I began buying bags of ice for $3 a bag, with weights between 7-10 lbs. I would usually purchase 3 of these bags as well. $9 a market most days. As I began thinking about his, and the increases that are coming due to business growth and desires for cold drinks, I decided to do a little math and logic. This was actually something I learned in 6th grade, and questioned how much logic was needed in my life. 33 stores later and many moments of problem solving, I’ve learned the importance of math. I would even argue it’s a reason why our society struggles sometimes, we rely on computers instead of having to critically think and solve the problem ourselves.

With those basics, I did the math. I found an ice machine that produced 90 lbs of ice in a 24 hour span for $500. It was also a great size for a home. I was set to spend nearly $500 in ice by the end of the season, now instead I made an investment in something that if it lasts past 1 season, will pay dividends back to me, instead of some grocery store I buy ice from. I had a couple unexpected expenses I should disclose that brought the total cost to nearly $700, but again I have convenience with it in my home, as well as productivity.

I try to approach all things in my life like this, including my car. After paying nearly $2000 in interest last year alone, I am reminded of how car payments are some of the worst decisions we can make. While my vehicle is providing a mobility for my business, people are amazed at the equipment I am able to fit in my SUV and how I sell from the back of it. I am honest to myself in admitting I made a bad choice with this deal, and now accept the consequences. Not only do I waste money on interest every year, but I bought a warranty that was more expensive than the worst repair I would’ve had. In the end though, I will drive this car until the last mile, to ensure the math swings back in my favor. Trading it in would just further bury me in debt and waste everything I’ve already invested.

Again, do the math. You don’t need a brand new shiny car, but you do want to buy what you can afford and need. Previous to these car payments, my previous 4 out of 5 cars were paid off in a year or less for nearly no interest, and the other was a 2 year loan to minimize the interest. It was liberating to not have that car payment, and currently it’s the only thing that bothers me, as I like to live debt free. We need to return to this mentality as a country. My uncle use to always tell me how much he admired the Episcopalians who never built a section of their church unless they had all the money for it. I don’t know much about them in many operational respects, but I know they have some of the smallest numbers. In the end however they are able to work with what they have due to the low overhead and committed members. This is a philosophy of less is more. Sometimes we are just working to pay the bills. Do the math, and ask yourself do I really need this?

I want to close with a thought I will expand on next month, moral capitalism. There was a pope who’s name slips my mind right now. He praised capitalism and the church often has said it is the best system financially and morally around. It is a free exchange of goods and services done through free will and demand driven markets. If you are good at what you do, and provide a necessary service to the people, these free will exchanges grow and you experience prosperity and wealth that is not afforded by any other system. This pope goes on to recognize however, that greed can undermine this system, as it does any. He says once you have established a secure life for yourself and basic needs, which include enjoying your fruits, that you have a right to do, you then have a moral obligation to return your fruits to the society around you for betterment. This is not socialism however, which imposes on the free will. This is simply moral capitalism, where we use the abundance we have been given to the betterment of our community. If you do the math, you will see this achieves more, than allowing our government to wastefully spend money thousands of miles away from the problem and stealing your money in the name of frivolous taxes and debt. To be continued.

I should add, I just purchased my first 130 lb/ 60 kg bag of coffee from Vietnam. This is another moment of do the math. I am selling a lot of Vietnamese coffee, with an average Vietnamese Lotus bean. I have settled for this since it’s all I can get at the moment, but it’s nothing compared to what I brought back from Vietnam. I found a warehouse in New Jersey through Olam Coffee however, that sent me an amazing sample of Vietnamese coffee. I decided to do the math again, and realized I could buy another mediocre bag for a 1/3 of the price of the large bag, or I could make an investment in something special, and become a unique provider, for a reasonable price. With the way my sales and reputation are growing, I made the investment towards continued growth, and promotion of a country that was influential in my coffee business when they gave me a 45 lb bag of coffee to learn and share with.