Numbers

byrollyp

230 followers

10 years ago

This is not really 100% relevant to WA but I feel it is something we also need to consider as we are building our respective businesses.

I am aware of two franchised retail businesses, that are local to me, that watch their sales numbers on a daily basis. My thoughts are that they are obviously trying to increase sales over last year.

They both watch the gross sales number in order to get this information. I personally feel that this is flawed. Here are the questions that I would also ask in order to get a better idea of and increase in profits.

Has there been a price increase in some of the products that you are selling? Is your margin the same? If so what is the actual profit dollar figure? (mark up is different from margin). Did you have to hire people in order to increase the sales, or productivity. Wage cost is one of the biggest factors, and expenses to a business.

Has there been an increase in product expiry on the shelf? What is the shrinkage? Is it higher or lower. For example: if you have a carton of milk on the shelf that has expired, what is the cost to you? Both of these businesses write off the retail amount, I don't think that this is an accurate accounting of costs, however, it may help when it comes to tax time in terms of write offs. If you have 5 products a week that cost you 5 dollars, the cost is 25 dollars. If this happens in 5 areas, the cost is now $125.00 per week.

In order to offset this cost the only variable in one case is to cut staff hours. The shelves must be stocked to capacity to comply with store standards, so you can not order less product. This can be one person's wage for an 8 hour shift.

To me the gross numbers mean nothing. The real measure of how you are doing, is what you have retained in the bank, or in your pocket at the end of the day.

How much did you really make today?

Feel free to comment, or correct me if I am wrong.