Plus ... and minus ...

Back in the days when I worked at the music shop one of my most important functions was managing our travelling sales team. Our business specialized in supplying musical instruments and sheet music to schools and churches, so unlike a typical retail shop, which is trying to 'catch' basically everybody out there, we knew who all our potential customers were. Every town had schools and churches, and over the years we had built up extensive and detailed lists of all of them, along with the names and contact information of music directors, purchasing agents, and other people involved with running music programs.

Our 'territory' was Western Canada - a vast area far larger than most countries on this planet, although of course not all that densely populated. This meant that our sales staff had to travel huge distances in order to make calls on our customers, and this was a major expense for us.

Our sales people were given budgets that reflected the size of their territory and the estimated costs of travel and accomodations, but making things balance was always 'mission impossible'. Most of the music directors had only small budgets with which to purchase music and supplies, and it seemed as though it was always costing us more to get each order than those orders were worth.

I specifically remember a conversation with one of the salesmen after he had returned from an extended trip and he and I were going over his 'books'. He was quite proud of himself - he had brought in orders that totalled a little bit more than the money he had spent. "My trip was profitable!"

Um, sorry, but no. I grabbed a sheet of paper and tried to show him a basic axiom of doing business - an 'expense dollar' and an 'income dollar' are not the same thing, not at all. An income dollar will actually add only a couple of cents - if that - to the company's bottom line; after all, we have to pay for the product being sold, the rent, the utilities, the staff, etc. etc. and always more etc. But an expense dollar comes straight off the bottom line, all 100 cents of it!

Far from being profitable, his trip had been extremely expensive for us. We simply had no choice though; if we didn't regularly contact and visit those clients, other companies would steal our lunch. It was an extremely competitive market, and looking back, I find it hard to believe how we were actually able to survive.

I think of these things now, because we are buried in the planning for the new shop we intend to open this fall in downtown Tokyo, and working out the budget - expenses vs (estimated) income - is the most important part of that bar none. If I get these numbers wrong, we are doomed before we even get started.

When the staff here hear me talk about this - about trying to minimize expenses, and finding less expensive ways to accomplish things, they tend to roll their eyes a bit. Perhaps some of them are even thinking that I am just trying to be stingy, so that when it comes time to talk about their pay rate, they will not feel free to ask for 'more'. Well, yes and no. I am not stingy as a person, and seen from a wider viewpoint, I would consider the welfare of the people working here to be pretty much our top priority.

But having said that, if our business itself does not come out 'in the black', then it'll be curtains for all of us, so I have to hold that as my most fundamental priority. The printers here would like to be paid more per sheet for the prints that they produce, but raising that number is a very difficult thing for me to do.

I think they mostly understand our situation; they see that there is no Mercedes parked outside my front door, and they also know that every month each and every one of them takes more cash out of here than I do. As far as is possible, they are all pulling together with me to make this thing work.

"Look Dave, this batch of prints was profitable!"

Well ...

 


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