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  • Turning a wrench into turning a profit www.profitsplus.org 1
  • How many tools does it take to play golf?  How many tools does it take to service a bike? www.profitsplus.org 2
  • How many tools does it take to profitably operate a bike shop? www.profitsplus.org 3
  • The two most attended classes within the industry? How to sell How to repair The least attended? Anything to do with profitably owning a business www.profitsplus.org 4
  • www.profitsplus.org 5
  • Tools needed to properly operate a business #1 Profit and loss statement/income statement Created monthly Each location have own p&l plus p&l for business as whole www.profitsplus.org 6
  • Income Statement Cash Sales Cost of Goods Sold Gross Profit Gross Profit Percentage Problems No logical arrangement Not easy to read Historical and static Not easy to understand like a pie www.profitsplus.org 62,000 39,370 22,630 36.5% Operating Expenses: Wages Payroll Taxes Property Taxes Rent Telephone & Utilities Repairs Advertising Accounting & Legal Automobile Bank Charges Computer Operations Dues & Subscriptions Insurance - General & Workman's Compensation Licenses & Taxes (not sales tax) Office & Store Supplies Outside Services Travel 12,000 960 8,000 2,400 150 1,575 200 140 210 175 300 800 100 300 250 1,000 Total Operating Expenses 28,560 Operating Income (5,930) Other Income and Expenses: Miscellaneous Income Interest Income Interest Expense Net Income Before Taxes 265 (5,665) Federal Income Tax - Net Income (Loss) (5,665) 7
  • Sales Inventory Payroll Occupancy Advertising www.profitsplus.org 8
  • Month in dollars Categories in percentages Year to date Same month last year Year to date last year Budget for month Budget for year Variance in budget month and year www.profitsplus.org 9
  • Month Sales COGS Gross profit YTD Month last year YTD last year Budget 100% 100% 100% % % % % Accounting Balancing account Bank and merchant service fees Depreciation Dues and subscriptions Freight Business Insurance Legal Loss Meals and entertainment Miscellaneous Office expense Office supplies Merchandising Printing Postage and shipping Returned checks Software support Business & Personal Property Taxes Travel Total operating expenses % % % % Net income % % % % Variance 100% Operating expenses Advertising expense Advertising E-Newsletter Website Advertising subtotal Occupancy expense Building repairs Maintenance Rent Utilities and telephone Occupancy subtotal Payroll expense Benefits Owner draw Payroll taxes Wages and salaries Workman's Comp and Health Insurance Payroll subtotal 10
  • 12/31 ASSETS #2 Balance sheet Also monthly Also for each location Frequently incorrect due to current/long term allocation Current Assets: Cash on hand Checking Account Savings Account Accounts Receivable Bank Card Receivable Inventory Total Current Assets: Investments: Cooperative Stock Cooperative Notes $1,500.00 $17,500.00 $3,050.00 $14,215.87 $1,340.34 $275,654.23 $313,260.44 Total Investments: $23,125.46 $12,597.47 $35,722.93 Long Term Assets: Property and Equipment: Fixtures and Equipment Building Total Property and Equipment: $126,245.11 $325,465.88 $451,710.99 Accumulated Depreciation: $207,950.25 Total Net Property and Equipment: Other Assets: Utility Deposits $117,515.63 $1,700.00 Total Other Assets: $1,700.00 Total Assets: $468,199.00 LIABILITIES AND EQUITY Current Liabilities: Accounts Payable Building mortage - current Note payable - current $47,850.00 $24,000.00 $45,000.00 Long Term Liabilites: Building mortgage Note payable $62,000.00 $84,000.00 Total Liabilities: Stockholders' Equity Capital Stock Retained Earnings Current Income www.profitsplus.org $262,850.00 $65,000.00 $114,664.00 $25,685.00 Total Stockholders' Equity $205,349.00 Total Liabilities and Equity $468,199.00 11
  • Current asset/current liability Changed to cash within 365 days or bill paid within 365 days Current or fixed asset/long term liability Not to become cash within 365 days or bill paid after 365 days Only includes interest if past due Items can be split in current and long term www.profitsplus.org 12
  • Running a business with these two is like working on a bike with these three www.profitsplus.org 13
  • So what has been happening? Sales COGS Year 1 $ $ - Year 2 $ $ - $ Operating expenses Advertising expense Advertising Contributions Donations Other Other Other Other Race Team Telephone book advertising Website Advertising subtotal Occupancy expense Building repairs Internet Other Other Renovations www.profitsplus.org - % Current year $ $ - Year 3 $ $ - $ - % $ - % $ - $ $ $ $ $ $ $ $ - $ $ $ $ $ $ $ $ - $ $ $ $ $ $ $ $ - $ $ - $ $ - $ $ - % - $ $ % $ $ $ $ $ $ $ $ $ - - $ $ $ $ $ $ - - % $ $ $ $ $ $ - - % $ $ $ $ $ $ - - % $ $ $ $ $ - 14
  • #3 Giant multi-year analysis Look at three full years and year to date Looking at percentages; not dollars www.profitsplus.org 15
  • Three years plus year to date Input your numbers Sales COGS Advertising Payroll Other expenses Miscellaneous income/expenses www.profitsplus.org 16
  • Looking for trends in percentages in margins, advertising, occupancy, payroll, other expenses, income Analyze expenses according to Fixed, Variable, Controllable, Uncontrollable www.profitsplus.org 17
  • Tells you what aspects of business management you should be paying attention Looking at trends that might not be apparent month to month Looking for signs of discipline – payroll and advertising www.profitsplus.org 18
  • Net income $ 107,450.00 6.31% $114,203.00 6.28% $ 125,624.00 6.78% $137,686.00 6.88% Looks good in dollars; except that advertising + .25% occupancy +1.30% payroll +1.75% Total +3.30% Net would be 10.18% www.profitsplus.org 19
  • Annual Operating Expenses: Payroll: Benefits Incentives Office Wages Other Other Other Ownership Wages Service Wages Wages Workman's Compensation Insurance Total Payroll Expenses: Occupancy Expenses: Building repairs Internet Other Other Renovations Rent Security Telephone Telephone - cell Utilities Total Occupancy Expenses: Advertising Expenses: Advertising Contributions Donations Other Other Other Other Race Team Telephone book advertising Website Total Advertising Expenses: www.profitsplus.org Accounting Automotive expense Bad debt expense Bank service charge Other Other Other % of Sales $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 % $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 % $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 % $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 20
  • Sales 1 Sales 2 Sales 3 Sales 4 $0.00 $0.00 $0.00 $0.00 Other Outside services Postage and delivery Printing and reproduction $0.00 $0.00 $0.00 $0.00 Sales 5 Sales 6 Sales 7 Sales total Cost of goods sold Gross profit $0.00 $0.00 $0.00 $0.00 0.00% Credit Sales % $0.00 $0.00 #DIV/0! Maintained Gross Margin % Reconciliation discrepancies Taxes Taxes Tools shop Trade show Travel and entertainment $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Total operating expenses Net Profit Taxes Net Profit after Taxes #REF! #REF! #REF! #REF! #REF! Operating Expenses % Taxes % of Net profit #REF! Net Profit % Average Inventory on Hand Ending Accounts Receivable Other Current Term Assets Total Current Term Assets Long Term Assets Total Assets $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Current Liabilities Long Term Liabilities Total Debt Net Worth $0.00 $0.00 #DIV/0! $0.00 #REF! $0.00 #DIV/0! #DIV/0! #DIV/0! #DIV/0! 0 #DIV/0! #REF! Square footage www.profitsplus.org #DIV/0! #DIV/0! #DIV/0! #DIV/0! #REF! Total Operating Expenses Ending inventory Ending inventory Ending inventory Inventory turnover Ending inventory A/R collection days Ending inventory Ending inventory Gross margin return on inventory investment Ending inventory Ending inventory Asset Turnover Ending inventory Return on Assets Ending inventory Ending inventory Financial Leverage Ending inventory Return on Investment Acid ratio Current ratio Debt to equity ratio Owner's position Sales per square foot Payroll% to operating margin month 1 month 2 month 3 month 4 month 5 month 6 month 7 month 8 month 9 month 10 month 11 month 12 #REF! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 21 %
  • #4 Giant Financial Analysis Calculator Your total annual payroll by subcategory Your total annual occupancy by subcategory Your total annual advertising by subcategory Annual other expenses Ending monthly inventory from last 12 balance sheets www.profitsplus.org 22
  • Annual sales House charge accounts percentage COGS – Cost of goods sold Tax percentage Year end a/r balance Year end current assets (excluding inventory) Year end long term assets Year end current liabilities Year end long term liabilities www.profitsplus.org 23
  • Total square footage – include sales floor, office, restroom, warehou se, all storage www.profitsplus.org 24
  • Your maintained gross margin – Gross profit dollars / gross sales dollars Operating expenses percentage – Total operating expenses / gross sales dollars Net profit percentage – Net profit dollars / gross sales dollars www.profitsplus.org 25
  • Inventory turnover – Gross sales / average inventory Average a/r collection - 1.5 times your terms GMROII – Gross margin return on inventory investment – Sales/average inventory * maintained gross margin Asset turnover – Sales/total assets www.profitsplus.org 26
  • Return on assets – Net profit % * Asset turnover Financial leverage – Total assets / net worth Return on investment – Return on assets / financial leverage Acid ratio – Non-inventory current assets / current liabilities Current ratio – Total current assets / current liabilities www.profitsplus.org 27
  • Debt to equity ratio – Total debt / net worth Owner’s position – Net worth / total debt Sales per square foot - Gross sales / total square footage Payroll % to operating margin – Payroll % / maintained gross margin www.profitsplus.org 28
  • Taxable sales Non-taxable sales Sales COGS Operating expenses Advertising expense Advertising Contributions Donations Other Other Other Other Race Team Telephone book advertising Website Advertising subtotal Occupancy expense Building repairs Internet Other Other Property Taxes Renovations Rent Security Telephone Telephone - cell Utilities Occupancy subtotal www.profitsplus.org Month 1 $0.00 $0.00 $0.00 $0.00 Month 2 $0.00 $0.00 $0.00 $0.00 $0.00 % $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Month 3 $0.00 $0.00 $0.00 $0.00 $0.00 % $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 % $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 % $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 % $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 % Month 4 $0.00 $0.00 $0.00 $0.00 $0.00 % $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 % $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 % Month 5 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 % $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 % $0.00 % $0.00 % $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 % $0.00 % 29
  • Month 1 Net ordinary income Month 2 #REF! #REF! Month 3 #REF! #REF! Month 4 #REF! #REF! Month 5 #REF! #REF! Other income Other Other Other Total other income $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Other expense Other Other Other Total other expense 99 Net income www.profitsplus.org $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 #REF! $0.00 $0.00 $0.00 $0.00 #REF! $0.00 $0.00 $0.00 $0.00 #REF! $0.00 $0.00 $0.00 $0.00 #REF! 30
  • #5 Giant Budget and Cashflow planning Your profit and loss statements from the past 12 months and a pencil Row by row, change historical to your expectation of the next 12 months Sales entered by taxable and nontaxable Examine margins, subcategory totals, net profit (row 99) www.profitsplus.org 31
  • The budget is the same information that appears on your reformatted profit and loss statement www.profitsplus.org 32
  • Month 1 100 106 107 108 109 114 115 123 www.profitsplus.org Net income Sales tax rate Month 2 #REF! Month 3 #REF! Month 4 #REF! Month 5 #REF! #REF! 0.00% Cash on hand beginning of month Add Net Income Add cost of goods sold Add sales tax collected Add commission for sales tax collection Add cash infusion Add cash from fixture/equipment sale Add accrued expense amount not paid Add accrued expense amount not paid Add accrued expense amount not paid Add amortization (not a cash item) Add depreciation (not a cash item) Less cash from fixture/equipment purchase Less cash for inventory purchases Less cash for additional vendor payments Less inventory prebook payment Less inventory prebook payment Sales tax paid Less accrued expense actually paid Less accrued expense actually paid Less accrued expense actually paid $0.00 #REF! #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 #REF! #REF! #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 #REF! $0.00 $0.00 $0.00 #REF! #REF! #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 #REF! $0.00 $0.00 $0.00 #REF! #REF! #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 #REF! $0.00 $0.00 $0.00 #REF! #REF! #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 #REF! $0.00 $0.00 $0.00 Anticipated cash on hand end of month #REF! #REF! #REF! #REF! #REF! 33
  • B100 – Sales tax rate B101 – Cash on hand beginning of period Row 106 – Sales tax commission received Row 107 – Any input of cash Rows 108 and 114 – Fixtures/equipment sale or purchase www.profitsplus.org 34
  • Rows 109 – 111 Add accruals not paid Row 112-113 Amortization and depreciation added (noncash expense) Row 115 – Inventory paid for in month www.profitsplus.org 35
  • Row 116 – Any additional vendor payments Rows 117-118 Inventory prebook payments Cell B119 – Sales tax paid from previous month Row 120-122 Accruals actually paid Row 123 Anticipated cash end of month www.profitsplus.org 36
  • Month 1 100 106 107 108 109 114 115 123 www.profitsplus.org Net income Sales tax rate Month 2 #REF! Month 3 #REF! Month 4 #REF! Month 5 #REF! #REF! 0.00% Cash on hand beginning of month Add Net Income Add cost of goods sold Add sales tax collected Add commission for sales tax collection Add cash infusion Add cash from fixture/equipment sale Add accrued expense amount not paid Add accrued expense amount not paid Add accrued expense amount not paid Add amortization (not a cash item) Add depreciation (not a cash item) Less cash from fixture/equipment purchase Less cash for inventory purchases Less cash for additional vendor payments Less inventory prebook payment Less inventory prebook payment Sales tax paid Less accrued expense actually paid Less accrued expense actually paid Less accrued expense actually paid $0.00 #REF! #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 #REF! #REF! #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 #REF! $0.00 $0.00 $0.00 #REF! #REF! #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 #REF! $0.00 $0.00 $0.00 #REF! #REF! #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 #REF! $0.00 $0.00 $0.00 #REF! #REF! #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 #REF! #REF! $0.00 $0.00 $0.00 $0.00 $0.00 #REF! $0.00 $0.00 $0.00 Anticipated cash on hand end of month #REF! #REF! #REF! #REF! #REF! 37
  • With the completion of each month compare actual to budget Adjust future months as dictated by the variance in actual and budget Add one month so that the projection continues to be for 12 months www.profitsplus.org 38
  • 1 Re-aligned profit and loss statement 2 Properly categorized balance sheet 3 Multi-year comparison 4 Financial analysis 5 Budget and cashflow planning www.profitsplus.org 39
  • When you want to sell the business Five years advance notice Look for cycles as to when businesses sell for the most Prior to five years – minimize profits, delay profits for as many years as possible With the anticipated sale, with legal and financial consultation, make the business as profitable as possible www.profitsplus.org 40
  • Valuation of the business Landed cost of inventory Fair market value of fixtures and equipment Valuation of the lease 2-5 years of profit ‘Blue sky’ or ‘goodwill’ Additional explanations of financial statements decreases the valuation www.profitsplus.org 41
  • Collateral for any loan should not be the business itself Why would a buyer pay cash for a business when the cash can leverage? Delay/minimize taxes by way of a payout plan, consultation, restatement of valuation of individual items www.profitsplus.org 42
  • Category 3 Total categ Month Month Month Month Month Month Month Month Month Month Month Month ory 1 2 3 4 5 6 7 8 9 10 11 12 Sales % of Total Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0#DIV/0! BMX $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0#DIV/0! MTB $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0#DIV/0! Comfort $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0#DIV/0! Road $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0#DIV/0! Folding $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0#DIV/0! Frame MTB $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0#DIV/0! Frame Road $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0#DIV/0! Bike Gear $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0#DIV/0! Component $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0#DIV/0! Rider Gear $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0#DIV/0! Service Gear 14 Juvenile $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Anticipated total sales: $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0#DIV/0! Total Anticipated $0 Sales (retail) #6 Giant Inventory Booking The man who said dating was bad Sales plan by category and month (if possible) (Rows 3-14) www.profitsplus.org 43
  • 18 29 32 Sales percentage by vendor: Juvenile BMX MTB Comfort Road Folding Frame MTB Frame Road Bike Gear Component Rider Gear Service Gear 43 Juvenile BMX MTB Comfort Road Folding Frame MTB Frame Road Bike Gear Component Rider Gear Service Gear 44 Total Giant purchases (cost) www.profitsplus.org Giant 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Giant MGM Brand #2 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% $ purchase #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! Brand #3 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% % Prebook 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Brand #4 Total Sales (must equal 100%) 0.00% 0% 0.00% 0% 0.00% 0% 0.00% 0% 0.00% 0% 0.00% 0% 0.00% 0% 0.00% 0% 0.00% 0% 0.00% 0% 0.00% 0% 0.00% 0% $ Prebook #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! $ Reorder #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! 44
  • Percentage of sales plan by vendor in each category (Rows 18-29) Giant MGM plan and percentage of prebook plan (Rows 32-43) Totals in cells C44 and E44 www.profitsplus.org 45
  • Brand #2 47 58 59 Juvenile BMX MTB Comfort Road Folding Frame MTB Frame Road Bike Gear Component Rider Gear Service Gear Total annual purchases secondary brands Annual purchase MGM s 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! #REF! Brand #3 MGM 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Annual purchas es #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! Brand #4 Annual MGM purchases 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! 0.00% #REF! #REF! Maintained gross margin of secondary vendors and amount of purchase from secondary vendors (Rows 47-58) Row 59 - Total purchases from secondary vendors www.profitsplus.org 46
  • Just because someone extends you a line of credit, doesn’t mean you should use all of it Would you do it with a personal or business credit card? www.profitsplus.org 47
  • Take the information from rows 44 and 59 of the Giant Inventory Booking Calculator (Giant and secondary vendors total orders) to the Giant Budget and Cashflow Calculator to see if any changes are necessary to either. The total of rows 44 and 59 do not equal any cell on the Giant Budget and Cashflow Calculator but give an idea of inventory to be paid for. www.profitsplus.org 48
  • Cell O15 in the Giant Inventory Booking Calculator should be the same as cell Z5 in the Giant Budget and Cashflow Calculator www.profitsplus.org 49
  • D Month 1 Month 2 Month 3 Month 4 Month 5 3 Inventory - Beginning of Month $0 $0 $0 $0 4 Anticipated Sales P.O. P.O. Written # To: 6 Purchase Order #1 Purchase Order #2 Purchase Order #3 Purchase Order #4 Purchase Order #5 Purchase Order #6 Purchase Order #7 Purchase Order #8 Purchase Order #9 Purchase Order #10 Purchase Order #11 Purchase Order #12 Purchase Order #13 Purchase Order #14 www.profitsplus.org 50
  • #7 Giant Category Open to Buy Calculator Inventory is more an opportunity than something to control This is a category – not the entire shop Cell D3 – Inventory on hand at cost Row 4 – Anticipated sales Row 6-55 - Purchase orders number, vendor, dollar amount in correct month www.profitsplus.org 51
  • D Month 1 3 Purchase Order #42 Purchase Order #43 Purchase Order #44 Purchase Order #45 Purchase Order #46 Purchase Order #47 Purchase Order #48 Purchase Order #49 Purchase Order #50 Total Purchases 62 Inventory Available for Sale Maintained Gross Margin Cost of Goods Sold Inventory (Actual)- End of Month Desired Inventory - End of Month 64 Open to Buy for this Month 59 www.profitsplus.org Month 2 Month 3 Month 4 Month 5 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! 52
  • Row 59 – Anticipated gross margin Row 62 – Desired end of month inventory at cost Row 64 – Amount of inventory purchasing budget remaining Understanding that frequent purchases are not allocated on a single month basis www.profitsplus.org 53
  • #8 Giant Overview Open to Buy Calculator – 12 copies of the Giant Open to Buy Calculator with an ‘overview page’ to total all 12 copies N3 (anticipated total sales) needs to match Z5 of Giant Budget and Cashflow www.profitsplus.org 54
  • #9 Giant Advertising, marketing, promoting What is the purpose of your advertising? How do you measure the success of your advertising? How have you determined your advertising in the past? www.profitsplus.org 55
  • What components does your advertising budget include? How have you been making these decisions? The Giant multi-year Analysis Calculator shows a pattern over 3+ years www.profitsplus.org 56
  • B 3 Sales (Previous or anticipated) 5 Overall budget Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 $ $ - $ -$ - $ - $ - $ 0.00% As a percentage of sales - As a dollar amount 0.00% Percengage of overall budget set aside for unplanned opportunities $ - Total contingency budget for year Percentage of overall budget for traditional 0.00% advertising Total advertising budget for $ - year Percentage of overall budget for Image, cause, social 0.00% media Total marketing budget for $ - year 0.00% Percentage of overall budget for speaking only to existing customers $ - Total promoting budget for year 0.00% Must equal 100% $ 7 Contingency budget Advertising budget 11 Marketing budget 13 Promoting budget Total budget The money you save with the media by planning Sales – past or anticipated (Row 3) Percentage of sales (Cell B5) www.profitsplus.org 57
  • Traffic Price image Competition Store awareness Sales volume www.profitsplus.org 58
  • Contingency budget – % of overall budget (Cell B7) A deal comes along Do you budget for it or let the budget go into excess? www.profitsplus.org 59
  • Marketing budget – % of overall budget (Cell B11) Image – year books, donations, contributions, cause marketing, social media Other expenses? www.profitsplus.org 60
  • Promoting budget - % of overall budget (Cell B13) Speaking only to existing customers Advertising is talking to the public; promoting is talking to your customers How can you tell your existing customers the new models have arrived? What can you do to ‘talk’ to your customer? www.profitsplus.org 61
  • 65% of the customers that go elsewhere do so because they think you do not care www.profitsplus.org 62
  • What is a customer worth calculator 63
  • Budget for each month: Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 17 Contingency budget #VALUE! $ - $ - $ - $ - $ - $ - 18 Advertising budget #VALUE! $ - $ - $ - $ - $ - $ - 19 Marketing budget #VALUE! $ - $ - $ - $ - $ - $ - 20 Promoting budget #VALUE! $ - $ - $ - $ - $ - $ - Rows 17-20 give a month by month breakdown of contingency, advertising, marketing and promoting budgets www.profitsplus.org 64
  • Advertising budget - % of overall budget (Cell B9) Column A is where you name the individual media Divide the remaining ‘pie’ among the traditional media (Rows 23-41, column B) by percentage How do you select each? Why do you select each? www.profitsplus.org 65
  • A B Monthly advertising budget percentage 23 41 www.profitsplus.org Newspaper #1 Newspaper #2 Newspaper #3 Radio #1 Radio #2 Radio #3 Television #1 Television #2 Television #3 Direct mail #1 Direct mail #2 Direct mail #3 Groupon Living social Other #1 Other #2 Other #3 Other #4 Other #5 Total must equal 100% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! 66
  • For contingency, marketing and promoting How many cells have a budget too small to spend? Revising the monthly expenditures for advertising Column C through N, rows 64-66, can be combined, deleted, shifted so that the expenditure is significant Column O must equal Column B www.profitsplus.org 67
  • 64 65 66 www.profitsplus.org Newspaper #1 Newspaper #2 Newspaper #3 Radio #1 Radio #2 Radio #3 Television #1 Television #2 Television #3 Direct mail #1 Direct mail #2 Direct mail #3 Groupon Living social Other #1 Other #2 Other #3 Other #4 Other #5 Total monthly advertising Total monthly contingency Total monthly marketing Total monthly promoting Total monthly expenditure B Adjusted total #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! C Month 1 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! D Month 2 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! E Month 3 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! F Month 4 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! G Month 5 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! H Month 6 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! I Month 7 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! J Month 8 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! K Month 9 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! L Month 10 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! M Month 11 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! N Month 12 #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! O Total for media #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! #REF! 68
  • Create the weekly plans for the next 52 weeks Enter the dates for column B, Rows 69-120 Column D – Event name, details, comments, results www.profitsplus.org 69
  • A Dates 69 82 www.profitsplus.org D Event Week #1 (1st Quarter) Week #2 Week #3 Week #4 Week #5 Week #6 Week #7 Week #8 Week #9 Week #10 Week #11 Week #12 Week #13 Week #14 (2nd Quarter) Week #15 Week #16 Week #17 Week #18 Week #19 Week #20 Week #21 Week #22 Week #23 Week #24 Week #25 Week #26 70
  • Take this information to the Giant Budget and Cashflow Calculator to see if changes need to be made to either Total Sales (Cell O3) of the Giant Advertising Marketing Promoting Calculator should equal Cell Z5 of the Giant Budget and Cashflow Calculator www.profitsplus.org 71
  • Total Advertising Budget (B5) of the Giant Advertising Marketing Promoting Calculator should equal Z20 of the Giant Budget and Cashflow Calculator Row 67 of Giant Advertising Marketing Promoting Calculator should match row 20 of Giant Budget and Cashflow Calculator www.profitsplus.org 72
  • What is your time line for implementation? What percentage of sales did you allocate for the advertising budget? What percentage of sales did you budget for net profit? How much effort does it take to earn that net profit? How much time do you spend creating the advertising plan? www.profitsplus.org 73
  • 1 Re-aligned profit and loss statement 2 Properly categorized balance sheet 3 Multi-year comparison 4 Financial analysis 5 Budget and cashflow planning www.profitsplus.org 74
  • 6 Inventory booking 7 Open to buy 8 Overview open to buy 9 Advertising, marketing promoting www.profitsplus.org 75
  • What is your time line for implementation of these seven calculators? And reworking the first two? These are owner/manager responsibilities – not to be relegated to others; not to be put aside for other tasks You can make more money making the right decisions than you can as the best salesperson in your shop www.profitsplus.org 76
  • Being good in business is the most fascinating kind of art. Making money is art and working is art and good business is the best art. Andy Warhol www.profitsplus.org 77