Business discipline

Week 55.2 Business discipline

To be in business you must actually measure the profit in real terms and not what is displayed on a paper. There are four things you need to consider: Purchases, Sales, Expenses and Stock check.

Purchases

All the purchase you need to properly record it.  Normally, the purchase amount is big in volume thus very difficult to get wrong. Frequency of purchase is 10-100x lesser than sales transaction. Thus, an easy filing will be sufficient.

Sales

For every purchase made there may be 10 – 50x sales transactions as the sales tends to be smaller in nature. Thus, proper recording is much more tougher because most transaction buyer would like to see the product 1^st, then select the required quantity, pay in cash and go. Thus, may be difficult to write up a receipt up front for some deal. Then dealing is done in public places due to security reason. Most deal has to be quickly done to avoid attention. Buyer and seller has to quickly show them the goods, pay the $ or count the cash normally stack of RM50 then quickly move away to avoid attention. One must be very discipline in recording all the transactions.

Expenses

Just paste every damn single receipts U got over the last 3 days at most 1 week into a book. Then you will be able to keep track of it. All expenses payment should be best made electronic such as Touch&Go, credit card to purchase petrol. Have a monthly automatic credit for phone, electricity etc bills into your credit card or bank account. Just keep all your statement best if in electronic form.

Stock Check

This is the most difficult thing to do, once you have properly done all the purchase, sales and expenses recording, it’s now time to do a stock check. To do a good business, you must have variety of product and you cannot be holding some many stocks for each product. It is quite common you have at least 20-50 products in hand for sales. Taking inventory is time consuming. Then, since the product is so valuable you cannot be putting it in single location. It has to be in multiple location, thus stock check is hassle.

Then most of the time, you will have to take out extra stock for sales because customer may want to buy extra in case you just bring just enough stock, you end up losing some sales. In most cases, after you do the stock check, you will guarantee out some stock is missing. Try to do stock check every month then you can keep track of losses and respond more frequently. The problem made worst if you hire someone to do the business. Even worst and who to blame, how do you account for item lost. So, start with yourself 1^st, if you cannot handle yourself, let alone handling others.

Most of the time, item could be lost while U R travelling to do your COD. Collect the item from one place and COD 3-5 places on the same day. Sure something will get loss one.

So after you check the stock losses, then only you can determine your actual profitability and not the feel good profitability. If there is excessive stock loss every year then it’s time to quit and start buying and selling in bulk such as sell by tubes.