Wednesday, April 29, 2015

COSTING / BUDGETING FOR APPAREL RETAIL OUTLET (FRANCHISEE PART)



Before starting apparel retail franchise business, you must know that how much investment you need for this business and how much it will require with the passage of time because in this business like many others you will not be started earning profits at least during first six months so you must have sufficient capital in hand in order to bear all running expenses easily at least for one and half year. Below chart will really help you to understand what are the areas where investment will be served initially and what will be the later expense as well as how much you can earn through this business but proper planning and knowledge of any business is mandatory before taking any risk!

Investment Type
Amt Rs
Remarks
Fixed cost
Security Deposit to brand
X1
It varies from brand to brand based on its fame and policies.
Furniture and Fixtures cost
X2
It depends on you that how attractive visual merchandising you want to keep for your outlet as well as the demands of your chosen brand.
Shop security deposit
X3
It depends on the location you selected.
Dealer cost (if applicable)
X4
If this is not your own shop and you get it through dealer.
Heat or cool plant / AC or heater etc
X5
If your plaza or mall is not centrally air-conditioned or heated
Total
sum(X1-X5)
Variable cost
Utilities + Maintenance charges
X6
Mainly electricity bill + if you have shop in Mall then you will receive the maintenance bill on monthly basis based on your shop size.
Shop monthly rent
X7
Based on the location and Mall foot flow
Salesmen salaries  + monthly commission + off days working
X8
Normal salary is Rs 15k + 1% commission
Fone / Internet Bills
X9
To entertain customer complaints or promotions of new collections
Marketing materials
X10
If it is not being provided by your brand regularly so you must choose an appropriate medium to market your brand / outlet
others/Misc
X11
(e.g. Stationary, cargo, alterations, salesman food etc)
Total monthly expense
sum(X6-X11)
Total monthly sale
XXXX
Depend on the customer foot flow
Total monthly commission to Franchiser
X65%
As per the contract ( 65-70% is normal)
Total monthly commission to Franchisee
X35%
As per the contract ( 30-35% is normal)
Total monthly Profit/Loss
sum(X6-X11) - X35%
Balance to breakeven
Sum of total profit/loss from start till current month (-)sum(X1-X5)

Please write us in case if you require any further assistance. We will be happy to help you.
Authored By HMS Khalid
Sohaib Khalid is the founder of "ThinkLikeGiant". He is an Apparel Merchandiser and have been working for Denim companies and brands since 2008. He loves blogging that's why started this blog with the aim to share his knowledge and experiences for the people associated with his field as well as for general public.
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