Run a profitable clothing store

Chapter 51 How to manage financial security in clothing stores (1)
Financial management plays a very important role in the actual work of a clothing store, but the premise of its function is that the owner must realize the importance of financial management in store operation that cannot be ignored.Finance directly reflects the book value, and the financial security management of clothing stores is particularly important.

Establish a sound financial system

The first step in financial management is to establish a sound financial system, which mainly includes the following parts:

1. Shorten capital turnover period

To shorten the turnover period of funds, it is necessary to manage the daily capital expenditure in a solid manner, and accurately predict the application of funds in each stage according to the actual situation.Raise and use funds in a planned way to maintain the image and reputation of the store.

(1) Do a good job in the management of cash and bank deposits.The store owner should coordinate the surplus and shortage of cash in stages, formulate a capital budget, and plan the amount of cash inflow and outflow in the future.

(2) Coordinate the credit relationship and ensure the timely acquisition of clothing circulation funds.

(3) Control reasonable inventory, expand sales, and increase capital turnover times.

(4) Maintain a balance of revenue and expenditure, and study countermeasures for raising funds and extending the payment period of checks and credit purchases.

2. Strengthen the control over inventory

Strengthening inventory management will help stores further reduce operating costs.Clothing in small shops has the characteristics of fast turnover, large flow, many varieties, and complete specifications, which requires clothing stores to increase their efforts in inventory management.

3. Improve the internal management system
The internal system is mainly divided into two aspects: job responsibilities and operating procedures.Job responsibilities clearly stipulate the job content and scope of duties of each job, as well as the connection relationship between employees.The operation process further standardizes the management and clarifies the authority.

4. Set up ledger report
Clothing stores should set up ledger reports according to their own specific conditions, such as journal accounts, ledgers, trial balances, profit and loss statements, balance sheets, financial status analysis sheets, expense analysis sheets, gross profit analysis sheets, etc.

Timely analysis of financial indicators
Each clothing store should be equipped with professional accounting and financial accounting.Although the store manager is not a professional accountant, the responsibility of the store manager is to ensure the profitability of the clothing store. The store manager needs to master the method of analyzing financial indicators, and understand the profitability of the store by analyzing financial indicators.The basic tools of financial analysis are the store's balance sheet and profit and loss statement.These two statements summarize the impact of the financial situation on the operating performance of the clothing store.As a store manager, you must master the analysis and use of these financial tools.

1. Balance sheet
Assets are divided into current assets and long-term assets, and liabilities are divided into current liabilities and long-term liabilities.A balance sheet can reflect the operating efficiency of a clothing store by showing the ratio of assets to liabilities.

2. Income statement

The income statement reflects whether the clothing store is making a profit.It consists of three parts: sales revenue, cost, and expense.Through a detailed analysis of the profit and loss statement, we can know that there are many ways to improve the profitable operation of a store:

(1) Increase sales, but make sure not to increase the cost of sales or operating expenses proportionally.

(2) Increased operating expenses.

(3) Reduce operating expenses, but make sure not to reduce sales or increase sales costs in the same proportion.The store manager should analyze the reasons for the increase or decrease of various expenses in different periods, and not simply rely on increasing sales to improve the operation of the clothing store.

3. Ratio
(1) Current ratio.Current ratio = current assets ÷ current liabilities × 100% The current ratio indicates whether the clothing store has the ability to use current assets to repay current liabilities.For example, a current ratio of 2:1 is considered a safe ratio, indicating that the clothing store can use 2 yuan of current assets to repay every 1 yuan of current liabilities.If the current ratio is less than 1, that is, current assets are less than current liabilities, it means that the clothing store's cash is beyond its means and it is not far from bankruptcy.

(2) Quick ratio. (Quick ratio = quick assets ÷ current liabilities × 100%) When the current assets of a clothing store are occupied by a large amount of inventory, it is necessary to use the quick ratio to test the ability of the clothing store to repay current liabilities.The quick ratio is used to illustrate the clothing store's ability to immediately convert into cash to repay current liabilities.It is generally considered that a quick ratio of 1 or more is an appropriate ratio.For stores, it's not wise to stress large amounts of cash on goods.

Nine Important Financial Metrics

After understanding the two basic financial statements of the balance sheet and the profit and loss statement, it is necessary to use the calculation formulas of various financial indicators to understand the specific financial status of the store such as the profit level and cost of expenses, so as to make countermeasures according to the situation.

1. Turnover achievement rate and gross profit margin
The turnover achievement rate refers to the ratio of the actual turnover of the clothing store to the target turnover.Its calculation formula is as follows:

Turnover achievement rate = actual turnover ÷ target turnover × 100%
The reference index of turnover achievement rate is between 100% and 110%.

Gross profit margin is the ratio of gross profit to turnover.It reflects the basic profitability of clothing stores.The calculation formula is as follows: Gross profit margin = gross profit ÷ turnover × 100%
The reference standard for gross profit margin is above 16% to 18%.

2. Operating expense ratio

The operating expense ratio refers to the ratio of clothing store operating expenses to turnover.It reflects the operating expenses included in each yuan of turnover.Its calculation formula is as follows:

Operating expense ratio = operating expense ÷ turnover × 100%
The lower the index, the smaller the cost in the business process, the more efficient the management of the clothing store, and the higher the profit level. 3. Achievement rate of net profit

The net profit achievement rate refers to the ratio of the actual pre-tax net profit of a clothing store to the pre-tax target net profit.It reflects the actual profitability of clothing stores.Its calculation formula is as follows:

Net profit achievement rate = actual net profit before tax ÷ target net profit before tax × 100%
The reference standard for net profit achievement rate is above 100%.

Net profit margin refers to the ratio of actual net profit before tax to turnover of a clothing store.It reflects the actual profitability of clothing stores.Its calculation formula is as follows:

Net profit rate before tax = actual net profit before tax ÷ turnover × 100%
The reference standard for net interest rate is above 2%.

4. Return on Total Assets
Return on total assets refers to the ratio of net profit after tax to total assets.It reflects the profitability of total assets.Its calculation formula is:
Return on total assets = net profit after tax ÷ total assets × 100%
The reference standard for return on total assets is above 20%.

5. Turnover growth rate and operating profit growth rate
The turnover growth rate refers to the change of the turnover of the clothing store in the current period compared with the previous period.It reflects the business development level of the clothing store, and its calculation formula is as follows:

Turnover growth rate = (current turnover - previous period turnover) ÷ previous period turnover × 100%
Generally speaking, the growth rate of turnover is higher than the economic growth rate, and the ideal reference standard is more than 2 times higher than the economic growth rate.For example, if the economic growth rate last year was 8%, then the business growth rate should be above 16% to be considered qualified.

The growth rate of operating profit refers to the comparison between the operating profit of the clothing store in the current period and the operating profit of the previous period.It reflects the changing level of profitability of clothing stores.Its calculation formula is as follows:

Growth rate of operating profit = (operating profit of the current period - operating profit of the previous period) ÷ operating profit of the previous period × 100%
The growth rate of operating profit should be greater than zero at least, preferably higher than the growth rate of turnover, because this means that the profit level of the clothing store in this period is better than that in the previous period.

6. Breakeven point

The break-even point refers to how much the clothing store's turnover is before its profit and loss can reach a balance.Its calculation formula is as follows:

Turnover at break-even point = fixed expenses ÷ (gross profit margin - variable expense ratio)

The higher the gross margin and the lower the operating expenses, the lower the break-even point.Generally speaking, the lower the break-even point, the higher the profit of the store.

7. Sales per square meter
Sales per square meter refers to the sales borne by the unit sales area of ​​clothing stores, which reflects the effective utilization of the sales area.Its calculation formula is as follows:

Sales per square meter = sales ÷ store area
Different types of clothing occupy different areas, sales unit prices, and turnover rates, and their sales per square meter are also different.

8. Labor efficiency per capita
Per capita labor efficiency refers to the ratio of the sales of clothing stores to the number of employees, which reflects the labor efficiency of clothing stores.Its calculation formula is as follows:

Per capita labor efficiency = sales ÷ number of employees
If there are fewer people in a clothing store, the higher the sales, the higher the labor efficiency per capita, and the higher the labor efficiency.

9. Total asset turnover
The turnover rate of total assets refers to the ratio of annual sales to total assets of a clothing store, which reflects the degree of utilization of total assets of a clothing store, and its calculation formula is as follows:
Total asset turnover = annual sales ÷ total assets x 100%
The higher the indicator, the better the utilization of total assets.In general, the reference standard for the total asset turnover rate is more than 2 times per year.

Main contents of the statement of financial situation
Statement of financial situation, which mainly explains the production and operation status of the clothing store, profit realization and distribution, capital increase and decrease and turnover, tax payment, and changes in various properties and materials; matters that have a major impact on the financial status of the current or next period; Matters that have a significant impact on changes in the financial status of the clothing store that occurred after the balance sheet date and before the reporting of the financial report, and other matters that need to be explained.

1. The basic situation of the production and operation of clothing stores
(1) The main business scope and other affiliated businesses of the clothing store, the distribution of industries engaged in business within the scope of consolidation of the annual accounting final statement; the reasons not included in the consolidation should be clearly stated; the number of personnel, employees and professional quality of the clothing store; Description of the reporting caliber for the report.

(2) The business situation of the year, including the main business volume, sales volume (exports, imports) and year-on-year increase or decrease, and its position in the industry, such as ranking by sales, etc.; changes in the business environment have an impact on clothing The influence of store production and sales (operation); the adjustment of business scope; the development and investment of new products, new technologies, and new processes.

(3) The expected progress of development and projects under construction and the final accounts of project completion.

(4) Problems and difficulties arising in operation, and other business conditions and matters that need to be disclosed.

2. Profit realization, distribution and loss of clothing stores

(1) The year-on-year increase or decrease of main business income and the main influencing factors, including sales volume, sales price, changes in sales structure and sales of new products, as well as types of unsalable clothing and inventory quantities that affect sales.

(2) The main factors of cost and expense changes, including the impact of raw material costs, energy costs, salary expenditures, and loan interest rate adjustments on profit increases and decreases.

(3) The increase or decrease of other business income and expenses, if the income accounts for more than 10% (including 10%) of the main business income, the relevant data shall be disclosed by category.

(4) Major events that affect other income year-on-year, including investment income, especially the amount and reasons for long-term investment losses; sources and amounts of subsidy income and profit after deducting subsidy income; major events and amounts that affect non-operating income and expenditure .

(5) Profit distribution.

(6) For items in the income statement, if the data in the two periods fluctuates by more than 30% (including 30%) and accounts for more than 10% (including 10%) of the total profit in the reporting period, the reasons shall be clearly stated.

(7) Reasons for changes in accounting policies and the amount of impact on total profits, and the amount of impact of changes in accounting estimates on total profits.

(8) Other matters that have a significant impact on the financial status, operating results and cash flow of the clothing store.

(9) Conduct a comprehensive analysis of the income and expenditure of the clothing store, explain the cause of the problem from the back of the data, obtain the operating situation of the clothing store from the analysis, explain the existing problems, and plan to improve management and improve business performance in the new year. measure.

Do a good job in the promotional budget of clothing stores
The promotional budget is the expense for clothing stores to engage in promotional activities. The promotional budget supports the promotional activities, and it is related to the implementation of the promotional activities and the size of the effect of the promotional activities.Therefore, the first step in making a promotion mix decision is to determine the promotion budget.In determining promotional budgets, two broad categories, traditional methods and measurement methods, are commonly used.

Traditional methods generally come from experience, or are countermeasures selected due to competition. Although some of them lack scientific nature, they are widely used in actual business. Here we only introduce traditional methods.There are mainly four traditional methods: the method of living within one's means, the method of sales percentage, the method of competitive equivalence, and the method of target tasks.

1. Live within your means

The method of living within one's means is a method of determining the promotional budget according to the financial bearing capacity of the clothing store.In times of economic prosperity, using the method of living within one's means to engage in large-scale sales activities is conducive to making full use of market opportunities and expanding the clothing market.However, this method of determining the budget ignores the impact of promotion on sales, which easily leads to the uncertainty of the annual promotion budget and makes it difficult to formulate long-term market plans.

2. Sales Percentage Method

The sales percentage method is to determine the amount of promotional expenses by a certain ratio of sales (sales volume) or unit product sales price during a certain period.The main advantages of using the percentage of sales method to determine promotional budgets are:

(1) Promotional expenses can vary due to differences in the financial affordability of clothing stores.

(2) Urge clothing managers to consider clothing management issues based on the relationship between sales costs, product prices and sales profits.

(3) It is conducive to maintaining the stability of competition among similar stores.

(End of this chapter)