July '16

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52 THE SHOP JULY 2016 RESTYLING/AFTERMARKET ACCESSORIES they will add up and help you maintain a healthy bottom line. COST OF GOODS Watching the bottom line of a business can be a challenge because of the many factors that make your profits fluctuate. Fixed and variable expenses are not the only expenses paid out. "Cost of Goods" is one of, if not the largest cost of doing business. This would include the products you bring in to sell and the many parts that go with those products to perform installations. For many companies in our industry, this could easily make up half of their total sales, so it is important to constantly work on maintaining this portion of the busi- ness. Here are some questions to ask when it comes to cost of goods: • Have we negotiated the best price for all the products we purchase? • Do we have backup sources to order goods from that are also reasonably priced? • What kind of shipping costs are we paying and have these been negotiated, even if it means paying as a third party? • Are there discounts when more popular items are purchased together instead of one item at a time? • Does our supplier have a list of older inventory items that can be purchased at a discount? Product manufacturers and suppliers like to sell products—but they also like to get paid on time and consistently. Having a good relationship with your suppliers includes being responsible when paying your bills. Being a good customer will help your overall relationship and can be valuable when you need help or a favor from time to time. It is the old adage: "Take care of those taking care of you." NO CLUTTER Inventory management is another key to success. Maintaining a good, clean inven- tory is valuable in many ways besides the bottom line. It helps a business and employees maintain a cleaner, less-cluttered work area. Employees will be more responsible when it comes to re t u r n i n g u n u s e d parts to the appro- priate vendor. Look f o r i t e m s l a y i n g around that need to either be put back in inventory as new, returned to the manu- facturer for credit or sold as a used item. Any of these are better than letting items sit in the corner growing cobwebs. Here are some other things to consider regarding inventory: • Are installa- tion supplies being purchased respon- sibly and effectively? (Installation supplies include items such as wire for 12-volt installations, screws, nuts, bolts, cleaners, waxes, paints, tape, towels, etc.) Keep parts that will be used immediately organized neatly and don't allow unused parts to accumulate behind boxes, in corners or underneath shelves. Watching the Bottom Line A sample profit- and-loss state- ment helps you keep track of both fixed and variable expenses.

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