Improve Your Business: Workbook (ILO, 1986, 96 p.) 1. BUYING AND SELLING Part 1 - Questions Selling Buying to sell Stock control Handling cash Part 2 - Business practice Part 3 - Action programme How to construct your action programme Answers to business practice

Improve Your Business: Workbook (ILO, 1986, 96 p.)

1. BUYING AND SELLING

Part 1 - Questions

Selling

	Yes	No
1. Can you find out quickly the total sales of your business during the last month?
2. Do you know the names of your competitors?
3. Do you know how much your most important competitors sell?
4. Can you always offer the goods or services when your customers ask for them?
5. Are your customers generally satisfied about the price and the quality you offer?
6. Do customers know the range of different products or services which you offer?
7. When you have goods or services that are selling badly, do you use special ways of promoting them ?
8. Do you keep records of sales by both quantity and value?
9. Do you regularly check what products competitors offer for sale?
10. With regard to your competitors, do you know the special goods or services which they have that you do not have?

Buying to sell

	Yes	No
1. Compare your buying with other businesses in your trade. Do suppliers give you at least the same conditions on prices and discount and credit?
2. And do they give you the same quality?
3. Do you ask for competitive quotations from at least three suppliers each time you make a major purchase?
4. Are you happy with your present supplier?
5. Are you free to change suppliers if you are not happy with your present supplier?
6. Have you tried to find out about possible new suppliers?
7. Have you asked other possible suppliers to give you quotations?
8. Are you able to pay cash for what you buy if you want to?
9. Can you find out quickly how much of each type of product or material you have bought during the previous six months?
10. Can you think of three ways in which you could improve your buying?

Stock control

	Yes	No
1. Do you check your stock regularly?
2. Do you always have enough stock to satisfy the needs of your business?
3. Have you ever tried to reduce the average number of items held in stock?
4. Do you know how many of each kind of goods are in stock?
5. Can you see and count all your stocks easily?
6. Do you write down in a book details of what stock is received and what stock is used?
7. When you check your stocks, do you usually have the same number of items in stock as shown in your records?
8. Do you know how long you may have to wait for delivery of different items after you have ordered?
9. Do you know how much old, damaged and useless stock you have in your store?
10. Do you try to get rid of old, damaged and useless stock by extra promotion?

Handling cash

	Yes	No
1. Can you quickly calculate how much money has come into your business during the past month?
2. Do you or does a reliable employee handle all the cash?
3. Have you instructed all members of your family and your staff never to take money out of the cash box?
4. Does the way you are now taking care of the cash keep it safe and prevent losses?
5. Do you pay yourself and family members working in the business fixed wages?
6. Do you record all the cash you take in and pay out each day either in a cash register or a cash book?
7. Is the cash kept in a locked drawer?
8. Do you write a receipt for every cash sale?
9. Do you write out a voucher each time you pay out cash?
10. Do you ask your bank to send you a statement every month showing the balance in your business account?

Part 2 - Business practice

Figure

1. Assuming that you sell 100 products of a certain kind in one year, calculate what the gross profit will be if:

· you buy them at 70 NU each;
· you sell them at 100 NU each.

Figure

2. If you lower your selling price to 80 NU, you estimate that you will sell 200 in one year. Since you are buying more from your supplier, you will also have a discount. You pay only 55 NU each if you buy 200.

Calculate what the gross profit will be if you sell the 200 products.

Figure

3. Understanding steps (a)-(g) below can help you to improve your buying. Write down what you would do at each of the steps:

Step (a): Examine your needs

What I would do:
(i) ___________
(ii) ___________
(iii) ___________

Step (b): Find the supplier

What I would do:
(i) ________
(ii) ________
(iii) ________

Step (c): Ask for quotations from several suppliers

What I would do:
(i) ___________
(ii) ___________
(iii) ___________

Step (d): Negotiate terms and then buy

What I would do:
(i) _________
(ii) _________
(iii) _________

Step (e): On the day the goods arrive, check quantity, quality and price against delivery note

What I would do:
(i) ____________
(ii) ____________
(iii) ____________

Step (f): If you have any complaints, complain to the supplier immediately

What I would do:
(i) ____________
(ii) ____________
(iii) ____________

Step (g): Check your invoices against the delivery note when it arrives

What I would do:
(i) __________
(ii) __________
(iii) __________

4. Suggest four ways in which you could do simple market research:

(a) ___________
(b) ___________
(c) ___________
(d) ___________

5. Filling in and using a stock card

Figure

Jane has a small retail shop. She sells items like handicrafts and shopping baskets. She maintains a stock card for each different item that she deals in. Can you help Jane to fill in her stock card for baskets? Use the following information:

1 January 1986	83 baskets in store
1-15 January 1986	26 baskets sold
16-31 January 1986	23 baskets sold
15 January 1986	Jane places an order for 100 baskets
2 February 1986	Jane receives the order of 100 baskets.

Her cost price is 30 NU and her selling price 45 NU.

After you have completed the stock card over the page, try to answer the following questions:

(a) How many baskets did Jane have in store according to the stock card at the end of January 1986?

_____________________________________________________________

(b) And how many did she have in store on 2 February 1986?

_____________________________________________________________

(c) What was the value of her total sales during January 1986?

_____________________________________________________________

STOCK CARD
Item: ____________ Cost price: _______ Selling price: ______			Reorder level: _______
Date	Particulars	Stock in		Stock out	Balance

6. Keeping a cash book

Figure

Francis has a small retail shop. He sells basic items such as tea, soap, milk, bread and so on. He has never kept a cash book before, but he has now decided that he should start one, because he finds it difficult to keep check on where his cash is going. Can you help him to start the cash book? Use the cash book sheet opposite to make the following entries:

(a) Francis starts his cash book at the opening of business on 8 March 1986. He counts the cash in the cash box before opening his shop. There are 50 NU in the cash box.

(b) Francis thinks that this 50 NU is not enough to meet his expenses of the day. He therefore sends his shop assistant to the bank to withdraw 200 NU. He puts this amount into the cash box.

(c) During the day he sells six loaves of bread at 3.10 NU each, 15 packets of milk at 2.45 NU each, two bars of soap at 2.50 NU each and one tin of coffee at 30 NU.

(d) In the afternoon he is visited by one of his suppliers who collects his dues. Francis pays him the bills outstanding: 50 NU for toilet rolls, 120 NU for toothpaste and 76 NU for tea.

(e) His mother comes into the shop and takes away a tin of beans, without paying! Francis pays for the tin from his own pocket and puts the money into the cash drawer: 25 NU.

(f) Now total up all the columns. What is the total amount of cash in on 8 March 1986? _______

(g) Now subtract cash at start of day from total cash in. What is the total money from sales ? ________

(h) Finally, subtract total cash out from total money from sales. This gives you the net cash in for the day. How much is it? _______________

WRITE THESE AMOUNTS INTO THE CASH BOOK

CASH BOOK
Date	Details	Cash in	Cash out	Bank in	Bank out
8/3/86	Cash at start of day
Less:	Total Cash at start of day
Gives: Less:	Total money from sales Total cash out
Gives:	Net cash in

Now that you have completed the business practice exercises, turn to the pages which follow the action programme. There you will find the answers. Check your answers against the answer solutions which are given. How many correct answers did you get?

CHECK YOUR ANSWERS!

THEN GO TO THE HANDBOOK FOR MANAGEMENT IDEAS

Now go to the Handbook and read thoroughly the management ideas in the same section there. You will then find that all the business practice exercises become easier to answer.

Part 3 - Action programme

How to construct your action programme

Count the number of times you answered “yes” or “no” for each set of ten questions. How many times did you answer “yes”? The more “yes” answers, the better you are in business management. Now look again at those questions you answered with “no”. Those are possible problem areas in your business. Choose the one which you think is the most important for your business. Take the most urgent problem first. Don't try to solve everything at once.

Now write the problem into the action programme opposite, as we have done with the example. Then write in What must be done, By whom and By when in order to solve your problem.

Figure

Finally, go back to your business and carry out the action programme.

Problem	What must be done?	By whom?	By when?
Example:
I am tied to one supplier. I could buy more cheaply if I could buy for cash from another dealer.	Save up enough money so that I can pay what I owe my present supplier. Then I will be free to choose another supplier.	Myself	Start today. Finish in two months.

Answers to business practice

Figure

Figure

3. Step (a): Examine your needs

Figure

What I would do:
(i) Think how much I need.
(ii) Think what quality I need.
(iii) Think what price I pay.

Step (b): Find the supplier

What I would do:
(i) Look in telephone book.
(ii) Ask friends in trade.
(iii) Look in trade directory.

Figure

Step (c): Ask for quotations from several suppliers

What I would do:
(i) Telephone them.
(ii) Write to them.
(iii) Get written quotations.

Step (d): Negotiate terms and then buy

What I would do:
(i) Talk with each supplier.
(ii) Compare their prices.
(iii) Ask for a discount.

Figure

Step (e): On the day the goods arrive, check quantity, quality and price against delivery note

What I would do:
(i) Check all deliveries.
(ii) Examine their condition.
(iii) Check delivery note details.

Figure

Step (f): If you have any complaints, complain to the supplier immediately

What I would do:
(i) Contact the supplier himself.
(ii) Explain the problem.
(iii) Get the answer in writing.

Figure

Step (g): Check your invoices against the delivery note when it arrives

What I would do:
(i) Check the prices.
(ii) Check the quantities.
(iii) Check the additions.

4. Suggest four ways in which you could do simple market research:

(a) Talk to customers.
(b) Ask customers what they like.
(c) Look at competitors.
(d) Look at what people buy.

5. Filling in and using a stock card

STOCK CARD
Item: Baskets Cost price: 30 NU Selling price: 45 NU			Reorder level: 57
Date	Particulars	Stock in		Stock out	Balance
1/1/86	In store	83
1/1-15/1/86	Sold			26	57
16/1-31/1/86	Sold			23	34
2/2/86	Bought	100			134

(a) There were 34 baskets in store at the end of January 1986.
(b) There were 134 baskets in store on 2 February 1986.
(c) Total sales over January 1986:

26 + 23 = 49 baskets.
Total sales: 49 × 45 NU = 2,205 NU.

6. Keeping a cash book

CASH BOOK
Date	Details	Cash in	Cash out	Bank in	Bank out
8/3/86	Cash at start of day	50
8/3/86	From bank	200			200
8/3/86	Bread	18,60
8/3/86	Milk	36,75
8/3/86	Soap	5
8/3/86	Coffee	30
8/3/86	Toilet rolls		50
8/3/86	Toothpaste		120
8/3/86	Tea		76
8/3/86	Beans	25
Less:	Total Cash at start of day	365,35 50	246		200
Gives: Less:	Total money from sales Total cash out	315,35 246
Gives:	Net cash in	69,35