Salt Lake Tribune | 1914-03-08 | Page 9 | How Growth Comes to Every Business

HOW GROWTH CIS ) I TO EVEfKINESS . I Merchant of Experience Gives ' tl Minute Details Sustaining Points Made. iH ADVERTISING A FACTOR H Firm Must Take Its Discounts 4 and Give Public Benefit of Results. Can a business be made to pay ale quato dividends when tho merchant IH adds to the cost of goods only the amount of operating expense? C. P. Adams ot tho Gardner & Adams company answers in tho affirmative. In a letter written by him in reply to tho inquiry given atfovc, Mr. Adams iH explains how modem, scientific mer- chandising makes this possible. ' It is IH noteworthy that Mr. Adams's appro- pnation tor necessary advertising is J- placed at 3 per cent of the gross sales, IH though in his .judgment -i per cent T IH should be expended by an established ' business and 5 per cent by a new busi- IH ness, ' Division of Expenses. His letter follows: IH If tho operating expenses of a busi-neas busi-neas were 20 per cent of gross sales t and the goods marked at 25 per cent above cost, the business would take IH care of Itself. If tho division of this 25 per cent were about 5 per cent to salesmen. 2 per cent to nonproduclng employees. 1 per cent to delivery of goods .sold. L per cent to general ex-pense, ex-pense, .1 p.ff cent to rent, 2 per cent to cxpresu and freight, 5 per cent to lights, 3 per cent to advertising, 1 per cent to taxes, insurance and Im-provements, Im-provements, 3 per cent to depreciation of stock and fixtures, 2 per cent to ll adjusting claims and alterations of goods sold, per cent to public cn- jl tcrpriscs and charity, 1 per. cent to supplies and miscellaneous expense, you have the summary of cost for conducting the business. It you get no other revenue from a salesman than just from his sales. in order to earn the 5 per cent, and IH his salary is $10 per week, he must sell 513.000 per year. To earn $1G per week he must sell $10,500; SIS, $2:i,-IOO; $20, ?2G.O0O; 530. $30,000; f35, $15,500. The salesman does not, in tM modern business, trade on the gen- IH eroslty of bis employer. By his lndl-vfdual lndl-vfdual efforts he raises his own sal- Must Take Discounts. If you have followed carefully you will observe 11m t goods have been IH sold at what they cost, plus tho cost of doing business, and the firm Is go-lng go-lng to make money by dotng .so. The capital stock ...$150,000 jH Annual pales 600.000 Purchases .... , 130,000 IH Tho cash discounts on these pur chases vary from 1 per cent to 10 per cent and average 7 per cent. H Cash discounts, 533.G00, or 22.4 per cent on capital stock; lb per cent for dividends, 5.4 per cent for reserve fund; 1 per Cent. $1500, p;ill to bank fM for interest on $25,000 borrowed at C per cent IH To compete in the business world tH today a firm must take its discounts; IH it redounds to Its advantago In every IH way. Such a business fears not hard IH times, nor competition; It lias no com- petltor. Such linns arc not even in IH competition among thoniBelves. IH How Increase Comes. Now, you do $700,000 the next year and you will have $5600 extra ills-count ills-count money that does not belong to you, but belongs to the public. There are certain fixed charges that do not chango with a certain increased busi-noss, busi-noss, snch as rent, light, etc., so that Instead of Its costing $20,000 to sell the extra $100,000 It should only cost $13. G00, or a profit of $b'400. which. nddod to $4600, makes $12,000 to be JM given to the public by selling mer-chandloe mer-chandloe 1.7 per cent nearly 2 per cent cheaper. Remember, you are not gqlug to re- H duce your advertising you aro go-lng go-lng to spend more. This year you spent $18,000, next year you will spend $21,000, but only 5 per cent on your gross eales. The public may be pay-lng pay-lng 3 per cent for advertising, as they figure It, but advertising helps to build up a business whereby you can give it back to them, and more, in better IH goods at a less price, and If you ara honest to yourself and to them you will see to it that they get it. That 1b the way a $15,000,000 buM- tM ness Is created. The man Is satis- IH fled. He was from Missouri.