Part 47 (2/2)

”On the ither hand,” continued Jock, ignoring altogether what I said, ”ye expected delivery costs tae be one-half of one per cent., or $150.00, whereas I dinna believe they'll exceed $100.00, so there is a wee bit saving. Salaries should hae been eleven per cent., or $3,300.00, whereas they're rather more than eleven and one-half per cent., or $3,450.00. That is where your two and one-half per cent. has departed.

I'll summarize those excess expenses:

Bad debts.......................................... per cent.

Advertising........................................ per cent.

General expenses .................................. per cent.

Depreciation and rent.............................. per cent.

Salaries........................................... per cent.

”Here's the poseetion,” continued Jock. ”The average mark-oop is thirty-three and one-third per cent. on stock, or twenty-five per cent.

profit on sales price. Expenses were planned tae be twenty per cent. of sales, and, had that been so, ye would hae had five per cent. profit after all expenses had been paid, for yourself.”

I began to listen attentively. Isn't it strange how one sits up and takes notice when one's own pocketbook is in discussion?

”As it is,” said Jock, ”expenses being twenty-two and one-half per cent., ye make only two and one-half per cent. profit, if ye do the amount o' business ye expect.”

”_If_,” I said scornfully. ”It's a cinch we'll do it.”

”I hope ye will that, but dinna brag aboot it 'til ye get it. Ye canna build your hoose 'til ye've got the bricks.

”Listen, noo,” he continued. Jock had begun to remind me of an inexorable fate, he went along so quietly, impartially, just as if he were pa.s.sing sentence on me. As a matter of fact, he was making me think of the finances of my business in a way that I had never thought of them before.

”If ye'd made five per cent. net profit on your $30,000.00 worth of business, ye would hae added $1,500.00 a year to your income, whereas, noo that ye may make only two and one-half per cent. on that amount, your income will be reduced to $750.00. It's just those wee bit half per cents. that hae taken $750.00 out o' your pooch.”

”If we increase our sales,” I said, ”of course that is equal to increasing our rate of turn-over, isn't it?” Jock nodded. ”Now, see if this is right: If we do make a little less profit on each turn-over, the actual dollars and cents profit at the end of the year may be greater than it would be if we made a larger net profit on each sale but didn't sell so much goods.”

”Ye reason that out well, lad,” said Jock, and somehow I felt quite chesty to think I had done something which pleased the old heathen.

”If ye keep your expenses as at present, and increase your sales, all the profit on the excess business above your quota is porridge. Ye dinna hae to pay any additional amount for rent, taxes, heat, light, depreciation, advertising, or insurance. In other wor-rds, your operating expenses on all business, over and above your sales quota, are reduced by these items. This saving would reduce your operating expenses eight per cent., meaning that this excess business over your quota would only cost ye twelve per cent. to secure, instead o' twenty per cent. As a matter o' fact, if ye can get more business than your quota calls for, wi'oot increasing your salaries, that would eleeminate all expenses except delivery and general expenses. Noo, if ye feel ye must give awaw your har-rd-earned money here's a proposition for ye:

”Plan tae keep your salary expense at its present figure, which is based on $30,000.00 worth of sales annually.

”Ye can afford to pay eleven cents for salaries oot o' every dollar ye get. Give eleven cents on every dollar ye take, above $30,000.00, to your salespeople, as a bonus and divide it among them according to their salaries. For example, suppose next year ye do $40,000.00 worth of business--and ye ought tae be able tae do this, because ye're selling at a slightly better rate than $35,000.00 a year noo. If ye do, ye secure $10,000.00 above your sales quota. Eleven per cent. of $10,000.00 is $1,110.00, which ye could deestribute among your folk.”

I referred to my note book of expenses, and said: ”Our salaries at present total $71.00 a week.”

”Including yoursel'?”

”Yes,” I answered.

”Weel,” continued Jock, ”that bonus would add $22.00 weekly to that $71.00. That means for every ten dollars o' salary now earned there would be added $3.14 bonus.”

”How would it work out in La.r.s.en's case?” I asked. ”He gets $20.00 a week.”

”His bonus would bring his salary to aboot $26.00 a week. Another way o'

putting it is that every dollar o' weekly salary seecures a bonus o'

$16.12 a year. I would suggest ye pay a bonus every quarter--if your quarter's quota o' sales is seecured.”

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