tag:blogger.com,1999:blog-529575095156315075.post4593215338892664118..comments2024-02-09T12:12:37.636-08:00Comments on best minimum wage job a middle aged guy ever had: Huge sales = huge bonuses. But not profits....Duncan McGearyhttp://www.blogger.com/profile/02857388833850939721noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-529575095156315075.post-29967256479206753162008-10-30T07:43:00.000-07:002008-10-30T07:43:00.000-07:00No ax to grind bebb.The issue is the truth, the is...No ax to grind bebb.<BR/><BR/>The issue is the truth, the issue is a free and fair debate about our city.<BR/><BR/>The issue is the Source & Bulletin have had nada on this subject.<BR/><BR/>The issue is that the city has sold Juniper Ridge to Suterra in a secret deal, see juniper-ridge-info.blogspot.com<BR/><BR/>Regarding biology and axes to grind not one iota of content needed to be created, there are ten's of thousands of references of Suterra's handiwork all over the internet. Spraying on the google campus itself has created a cottage industry of websites dedicated to making Suterra's poisons public.<BR/><BR/>Many people who work at google commute to Santa Cruz & Monterey, which was especially hard-hit by Suterra poison.<BR/><BR/>The essential issue with Bend is that over 50% of the voting public voted for Bush/Cheney which funded this spraying operation, while the majority of the Bay Area hates Bush-Cheney. The majority of Bend loves Bush-Cheney. This is the reason for the silence in Bend.<BR/><BR/>This debate has NOTHING to do with Suterra BEBB, it has only to do with Bush-Cheney's secret projects, its just frosting on the cake that Suterra got a $500M no-bid contract from Gov Schwarznegger courtesy of USDA aka Bush-Cheney & homeland security.<BR/><BR/>It's just icing on the cake that Schwarzneggers largest campaign contributor "stewart resnick", OWN's Suterra.<BR/><BR/><BR/>These are all public facts that need to be TATTOOED on the ass of the Bend citizenry.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-529575095156315075.post-84265996525978012112008-10-29T12:55:00.000-07:002008-10-29T12:55:00.000-07:00Quote from Duncan:"Inventory gets old and stale an...Quote from Duncan:<BR/>"Inventory gets old and stale and frayed around the edges. That's where your loss is probably happening and it takes forever to see it.<BR/><BR/>But eventually, it catches up. You can't quite replace the inventory at the levels you used to -- because your margin isn't sufficient."<BR/><BR/>__________<BR/><BR/>If you replace the word inventory with debt you have a good look at our economies real problem. Debt we will never retire, always pay on using more debt we can sell for less and less. <BR/><BR/>__________<BR/>I've ran and owned restaurants for 20 years. Sold out 18 months ago and have been working as a consultant. The lack of understanding of basic business accounting and P and L statements never ceases to astonish me. Rarely do I find a restaurant that is managing their inventory or aware of the costs involved/wastage in turnover rate. <BR/><BR/>Inventory management is the secret of success or failure in most businesses.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-529575095156315075.post-31271343876851179382008-10-29T12:50:00.000-07:002008-10-29T12:50:00.000-07:00The previous amount on inventory turns relates to ...The previous amount on inventory turns relates to relatively minor variations in margins. Like going from 40% to 35% gross margin for example. I can accept a 25% margin if I can get sufficient inventory turns. A store that gets 12 turns with a 25% gross mrgin yields a cash flow of 300% of capital investment for the item.<BR/><BR/>On the other hand if I do 3 inventory turns then even at a 40% margin my cash flow is only 120% or just 20% return on the cost of the product.<BR/><BR/>That is why in mainstream stores their success is very much determined by product selection and why they do not take much risk in the variety of items offered.RDChttps://www.blogger.com/profile/13033979029490801023noreply@blogger.comtag:blogger.com,1999:blog-529575095156315075.post-65434699157626791162008-10-29T12:31:00.000-07:002008-10-29T12:31:00.000-07:00How many inventory turns was he getting?I usually ...How many inventory turns was he getting?<BR/><BR/>I usually use an estimate of 12 per year for a mass market store<BR/><BR/>Walmart does considerably better then that.<BR/><BR/>The margin calculation can be dramatically impacted by inventory turns. (if you have to sell somthing three times to break even of the original capital investment and you do 12 turns you are break even on a capital investment after 3 months and yield a 300% return at the end of the year on the capital investment. Spread that over expenses and well you get the idea)<BR/><BR/>I suspect your store is in the 2-4 range at best.<BR/><BR/>What kind of store was it and what kind of inventory turns do you think he is running?RDChttps://www.blogger.com/profile/13033979029490801023noreply@blogger.comtag:blogger.com,1999:blog-529575095156315075.post-4826893185120283962008-10-29T12:19:00.000-07:002008-10-29T12:19:00.000-07:00Or a 30% off price from a 40% margin. You have to...Or a 30% off price from a 40% margin. You have to sell 5 times more material. You have to invest (and risk) 10 times more money. Not to mention find space, time, and energy to deal with that much more material.<BR/><BR/>But your customers will love you.Duncan McGearyhttps://www.blogger.com/profile/02857388833850939721noreply@blogger.comtag:blogger.com,1999:blog-529575095156315075.post-44101374095352091472008-10-29T12:10:00.000-07:002008-10-29T12:10:00.000-07:00Another example, you lower the prices by 35% on a ...Another example, you lower the prices by 35% on a 50% margin. You have to sell over 3 and a half times as much product, and invest even more.<BR/><BR/>At 50% off for a 50% margin, you have to sell to infinity and never make a dime.Duncan McGearyhttps://www.blogger.com/profile/02857388833850939721noreply@blogger.comtag:blogger.com,1999:blog-529575095156315075.post-17764819254892421522008-10-29T12:08:00.000-07:002008-10-29T12:08:00.000-07:00But what about selling more at lower prices?The br...But what about selling more at lower prices?<BR/><BR/>The break-even formula takes care of that.<BR/><BR/>I haven't found it to be true, mostly. If you lower your prices by 20% on a 40% margin, you have to sell twice as much. And usually, 20% isn't enough to do that. <BR/><BR/>That works up and down the scale.<BR/><BR/>I think a mom and pop is better off shooting for quality not quantity.<BR/><BR/>Quantity requires a huge outlay, and tons of risk. Even when it works in the short term (every fad is in a sense a quantity formula) supply always catches up to demand, competition always rears its head, and suddenly you're stuck with a small margin without the large sales.<BR/><BR/>It's one of those things that goes against the common wisdom of the customers; who have had it drilled in their heads that the lower the price the higher the sales.<BR/><BR/>But only if the formula works. And you have to plan for when the formula might change.Duncan McGearyhttps://www.blogger.com/profile/02857388833850939721noreply@blogger.comtag:blogger.com,1999:blog-529575095156315075.post-73026302166067312402008-10-29T12:00:00.000-07:002008-10-29T12:00:00.000-07:00The irony is that my wife, is so much nicer than m...The irony is that my wife, is so much nicer than me in most ways, has never had a problem with getting the right margin. <BR/><BR/>We are a good combo in that way -- she's much more realistic.Duncan McGearyhttps://www.blogger.com/profile/02857388833850939721noreply@blogger.comtag:blogger.com,1999:blog-529575095156315075.post-39529586144309008172008-10-29T11:53:00.000-07:002008-10-29T11:53:00.000-07:00I know this, because I went through it too. The t...I know this, because I went through it too. The temptation to be a hero to your customers, to be nice by having the lowest possible prices.<BR/><BR/>I came to my senses just in time.<BR/><BR/>As I said to him, there is nothing wrong with making money.<BR/><BR/>It's not money that will go into your pocket -- as a mom and pop you'll make a modest living -- but money that you'll need for your store, for the future, to diversify, and replace, and so on...<BR/><BR/>Not only isn't there anything wrong with getting a proper margin, it's absolutely necessary.Duncan McGearyhttps://www.blogger.com/profile/02857388833850939721noreply@blogger.comtag:blogger.com,1999:blog-529575095156315075.post-80580107009423807342008-10-29T11:45:00.000-07:002008-10-29T11:45:00.000-07:00What brought this up was a conversation yesterday ...What brought this up was a conversation yesterday with a new store owner (not a competitor) who horrified me by telling me how much cheaper he was than the competing mass market store.<BR/><BR/>What horrified me was that his margin was a minimum of 1/3rd less than he should be shooting for as a mom and pop; and that he could raise his margin and still be very competitive with the mass market. (Something I usually can't do; I feel like I've succeeded if I can get within 10% over the mass market in price...)<BR/><BR/>I showed him the 'break-even' formula (fixed expenses divided by profit margin) and how he had to earn twice as much money as me to reach the same goal.<BR/><BR/>But he said he still had money left over at the end of the month. <BR/><BR/>I shrugged.<BR/><BR/>The 'break-even' formula is incontravertable. Either his margin is higher than he thinks, or....and this is what I suspect, his inventory is being squashed.<BR/><BR/>Inventory gets old and stale and frayed around the edges. That's where your loss is probably happening and it takes forever to see it.<BR/><BR/>But eventually, it catches up. You can't quite replace the inventory at the levels you used to -- because your margin isn't sufficient.<BR/><BR/>Being a nice guy to customers is useless unless you can stay in business, right?<BR/><BR/>I don't think he listened to me. But I didn't mind being the old crusty guy, because I think down the road, when it comes to the crunch, he may actually remember that someone told him about it.Duncan McGearyhttps://www.blogger.com/profile/02857388833850939721noreply@blogger.com