Math Hacks for Your Business

Location

Due to mathematical clustering and conformity, the closer you are to your highest-grossing competitor, the more likely it is you will get half their customers upon opening. If you follow the rest of the advice in this blog and have multiple sources of income, to begin with, you ride out the zero-sum game until you are the only one left.

Your competitor’s revenue can be estimated by multiplying their traffic and their average ticket price.

Is it worth hiding cash/claiming questionable expenditures?

Risk<Reward x Probability of getting caught

In 2018, the answer is a clear NO.  The reward (~20% combined income & sales tax saved on underreported income) is far less than the risk (100% penalty of the taxes evaded + the taxes) multiplied by the high probability of getting caught by the Canada Revenue Agency’s advanced algorithms. Your accountant should be able to tell you which of your financial ratios/metrics would flag your return for a limited review.

Investing

the estimated benefit x the probability of gain = value of the transaction

You must take the chance of a 100x return if you had a 1/10 chance of success.  So if you have a 1/10 chance of something that would make you $100,000 better off, the value of the trade is $10,000.  For this reason, it is worthwhile to understand the underlying technology of crypto assets.   As an exercise, I  even built my own blockchain in Python.

For crypto assets, it is fairly common to have a 10% chance of a 100x return. Even at only $10,000, the value of the trade is $1,000. Even if you value your time at $500/hour, it will take less than 2 hours to set up your accounts on Kraken/Binance and begin buying.

In contrast to crypto investing, due to the normal distribution Brownian function of the stock market, unless you are “playing” with enough money it is often not worth your time.  If you lose 25% you need to gain back 33% just to break evenIf you are young, you are better off dollar cost averaging into CIBC’s balanced index fund (the one without the S&P 500) and anyone would benefit by loading up on small caps after a crash.

 

 

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