Operations-Capacity

I heard a Japanese restaurant that is so popular and widespread on the Internet. Last weekend I finally found a time to go visit, and I soon discovered the secret of why it is so popular. The capacity of the restaurant is limited to 8 people!! The waiting line is always long at anytime, sometimes you have to wait for two hours to get a seat to eat. The food does not surprise me much , I can find the same quality in other place for sure.
I guess the capacity of this restaurant plays a little magic here.

There is another example plays the same trick. Two same size of scoop of ice cream are contained in two different size of cup. The scoop of ice cream on a smaller size sells better because it looks bigger than another one. I think the visual effect plays the role here.

Business is all about psychology. So study human thinking and behavior might help on business growth.

Operations-Quality

Couple days ago, I was talking to one of my client who is an owner of a Japanese-Chinese restaurant that sells hand-made noodle and dumpling. According to her, the flour she used to made the products is imported from Japan that costs much higher than the flour we buy locally. So the price is few dollars more than the regular noodle dumpling restaurant. She said many customers ever complained to her that the price is a bit higher compare to other restaurant, however, she believes better quality food worth more.

For many people, things made in Japan means quality, and some people are willing to pay more for that. For some people, instead of going shopping in Wal-mart, they prefer shop in department store. In my opinion, maintaining quality is a strategy for a long term business, there are always "some people" willing to pay more for quality.

Finance

Finance, for me, is all about how to use money. To own a business, money issue always comes first, such as how much capital you need to invest, how much you can earn from it, how much you might loose...So we must take precautions to increase the rewards and decrease the risk.

By reading the book, it says that higher risks are associated with higher returns. For example, opening a small cookie shop obtains only little risk because the cost is low and there is not much unforeseen events, however, the profit might not be high, and earnings might be slow as well. Opening a high class restaurant, for instance, contains higher risk because of more cost and more things that need to be taken care of such as getting alcohol license or having nicer dining environment. The profit is definitely higher than opening a small cookie shop.

But, there is no guarantee which one makes more money than the other, having a good business plan is the key. This is why I am taking MBA program!