The Iola register. [volume] (Iola, Allen County, Kansas) 1875-1902, 1884-02-08
Guessing and Knowing.

A writer in the Milling World says:
1.-The man who knows he is making fifty
cents per barrel on his flour is apt to be
better off than he who .guesses' he is
making about seventy-five cents"
There is great deal of wholesome truth
in the above statement. Too many
manufacturers allow themselves to
guess at what profit they are making.
instead of actually knowing that fact.
Instances are by no means rare where
men engaged in business think they are
making money when they are on the
very verge of bankruptcy. An old COM
mercial agency reporter relates an in.
stance in point. He was interviewing q
merchant in one of our Western towns.
In the course of his conversation he
asked the latter how much he consid-
cred himself worth over and above all
liabilities. The reply was that he
thought himself worth fully ten thou
sand dollars. His surprise was very
great when the reporter kindly informed
him that were he to be compelled to
close his business at once he would not,
after liquidating his outstanding obliga-
tons, be worth penny, and this asser-
ton was made upon facts which the
merchant himself had disclosed.
There is no excuse for such ignorance.
With a moderate degree of care a
man can keep himself at all times well
informed as to the status of his bust
ness.
1t would not be difficult to find man.
ufacturers who are actually selling their
productions at a loss, because they have
not properly estimated their cost. The
trouble is that the manufacturers either
do not understand what elements enter
into the cost, or. so understanding, ars
too negligent to make the necessary
computation. 1t is easier to guess that
materials cost so much, labor so much,
packing and shipping so much. and
marketing so much, than to trace oui
the actual expenditures in each de-
partment, and to finally arrive at some
thing approaching mathematical ex-
actitIde.
1t may be well enough to do this
guessing-work when the margins Of
profit are broad and the chances Of
making fatal mistake are not great;
but it is otherwise when goods must be
sold at close figure. Then it becomes
necessary for the manufacturer to be
fully acquaintanced with his affairs.
In close competition it is essential
that the actual cost of his goods be as
certained so that he may know how
close he can make his prices. Suppose
that he be maker of locks which actu-
ally cost eight cent apiece to produce.
If he is offered nj " cents for them he
can make the sale and still reserve
profit; but suppose instead of knowing
the cost he guesses that it is nine cents,
he may lose this trade by refusing an
offer which he thinks is below the cost
of production. On the other hand, sup
pose that he QueSSes that his locks only
cost seven cents and is offered seven
and half cents for quantity, which
offer he accepts because be thinks that
he may get out whole in the transac-
ton He will be likely to find himself
in the condition of tire old lady who
sold eggs for eight cents per dozen that
cost her ten cents, who, when interro-
gated as to how she could make money
in such a trade, replied that she did sc
by carrying on very large business.
If the manufacturer finds that he is I'M
able to compute the cost of his produc-
tons, it should be his first business tc
employ some one who can. 1t will not
do to make mistakes in such an impor.
tant matter.
Obviously we are speaking in this
article of but a small fraction OF the
manufacturing fraternity. The major
ity have an intelligent idea of not only
the cost of the completed articles OF
manufacture brought out in their works,
but also of the cost of the several parts
thereof and of the material of which
they are composed.
Indeed, there are many concerns
where it is absolutely essential that this
should be the case, and if all other man.
ufacturers were as particular, the list OF
failures, which now presents such for
midable proportions, would be greatly
decreased Industrial World.