Stevenglobal Forex
Business Learning

Business Improvement

Easy Methods for Making Your Business Worst

01. Profit Margin for a product getting less yearly.

Therefore, you would purchase a bulk order.
 

02. With bulk order, your customers tends to have longer period of terms of payment.

03. When terms getting big, you tends to loan due to bigger customer bigger appetite.

04. Once you have established these customers, there is a competitor arrived.

05. Once there is a competitor, your strategy on pricing getting worst.

 

06. The type of stock would get larger yearly, damage, missing or obsolete.
 

07. Cost of Products, and Expenses increases yearly due to inflation.
 

08. When the economy is good, you miss, be ready for the worst.
 

09. When the economy is bad, you might focus the wrong direction.
 

10. By following people without knowing what really meant by business.
 

11. By doing family business without the initial true meaning of business.
 

12. Using Emotion to run the business by influencing people and affecting people in the business.

Let's see some examples below:
 

Conditions	A		B		C		D
Sales	100,000		150,000		150,000		150,000
Buying Cost	-  70,000		-  125,000		-  125,000		-  155,000
Closing Stock	0		20,000		20,000		50,000
Gross Profit	30,000		45,000		45,000		45,000
Expenses	-  20,000		-  20,000		-  20,000		-  50,000
Net Profit	10,000		25,000		25,000		-  5,000
Cash In from Sales	100,000		30,000		120,000		30,000
Cash Out for Buy	-  70,000		-  87,500		-  37,500		- 108,500
Cash Out for Expenses	-  20,000		-  20,000		-  20,000		-  50,000
Balance in Cash / Overdraft	10,000		-  77,500		62,500		-  128,500
Cash / Bank	10,000		- 77,500		62,500		-  128,500
Debtors	0		120,000		30,000		120,000
Stock	0		20,000		20,000		50,000
Creditors	0		-  37,500		-87,500		- 46,500
Net Assets	10,000		25,000		25,000
Net Liabilities							-  5,000

 Condition A       : Sales with Cash Term.
                           Buying with Cash Term. 30% Gross Profit Margin.

 
Condition B       : Sales increase to $150,000 with 80% term, and 20% cash. Gross Profit Margin 30%.
                           Buying with 30% term, 70% cash
                           Stock $20,000
                           Debtor a Lot, Creditor very few.
                           Careful with Debtors which achieve 80% of the sales. Because
                              - 20% of the floating cash to cover 100% expenses, 70% of the purchase.
                         : Confusion:     Net Profit Nice.
                                               Financial is tight. Overdraft is used. Beware of Bad Debts.

 
Condition C       : Sales increase to $150,000 with 20% term, and 80% cash. Gross Profit Margin 30%.
                           Buying with 70% term, 30% cash
                           Stock $20,000
                           Debtor very less, Creditor A lot.
                         : Confusion:     Net Profit Nice.
                                               Cash in hand too much, could spend it elsewhere such as
                                                              - Fixed Assets and Expenses. 

Condition D       : Sales increase to $150,000 with 80% term, and 20% cash. Gross Profit Margin 30%.
                          Buying with 30% term, 70% cash
                          Stock $50,000
                          Debtor A lot, Creditor Less, Expenses A lot, Stock A lot
                         : Confusion:     Bank has facilities used to settle creditors.

           Therefore Amount owing to bank more than creditors.

 

Easy Methods for making the company getting worse when

a)    Condition A going into Condition B

b)    Condition B going into Condition D

c)    Condition C going into purchase Fixed Assets, and more stocks.

d)    Condition D going to cut down sales 20% of sales with 80% term,
  and increase only 5% sales of Cash.

 

Company getting more worse when

a)    All the debtors, half of it is bad debts

b)    Expenses is much more than Gross Profit

c)    Stock mostly obsolete.

d)    Loan from the other company.