July '18

For the Business of Apparel Decorating

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2 0 1 8 J U LY P R I N T W E A R || 13 tion where the business owner has no choice but to begin exploring options. Using the Break-Even Formula will help. If the increase in rent causes fixed expenses to climb to $450,000, then the new break-even volume goes from $923,788 to $1,039,261—an increase of 12.5 percent. Some business owners might reach the inevitable conclusion that it's time to move else- where with this percentage increase. The beauty of the Break-Even Formula is how clearly it indicates the effect of any change to the organization. MOVIN' ON UP In an ideal world, a company's decision to change its physical loca- tion should be an integral part of its business strategy. For the brave, a move can trigger a radical cultural change in the business and how it part of the fixed expenses tally. Commissions and bonuses paid to salespeople are typically considered a variable expense. Once you have a total for variable expenses, divide that amount by the total income or gross sales revenue to come up with the variable expense percentage. Let's say the variable expense total, for the same example above, is $180,000. The variable expense percentage would be 15 percent or 0.15 ($180,000/$1,200,000). Finally, if the fixed expenses totaled $400,000, the break-even vol- ume would be $923,788 ($400,000/0.433). It is at this point that a smart business owner can play "What if?" provided only one factor is changed at a time. Let us suppose the above example describes a successful decorated apparel shop that will, in eight months, see its lease expire and face a rent increase of 75 percent because of new ownership. That's a situa- Texart series dye-sublimation printers provide non-stop graphics customization of sports jerseys, t-shirts, fashion items and more. Discover the right customization solution for you at TrueVIS series printers/cutters are ideal for producing short-run, heat transfer graphics for t-shirts, sweaters, backpacks and more. THE PERFECT FIT ROLAND APPAREL CUSTOMIZATION

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