When you do a business, the Laws of Economics apply to that also. You buy things add your overheads, add profit and sell the product.
Or you sell a product and from that you deduct all your costs and what gets left is profits.
In the retail business – especially the book business – about which I am planning to write, there seems to be no justification to be in business. If you run a retail book shop – say of 400 sq ft, the economics works as under. Assuming that you have a sales of Rs. 300,000 a month (amazingly high figure, the real figure is more like Rs. 100,000), your profits would be Rs. 90,000 (assuming 30% GROSS margin). The MONTHLY profit and loss account would look as under:
Gross Margin Rs. 90,000
From this you need to deduct salaries (15000), rent (12000), electricity (5000), miscellaneous (4000).
This leaves you with a net profit of Rs. 44,000. Not bad, eh?
If you are reasonably qualified, you can earn this figure in your FIRST job. If you are just a graduate, this will be your salary in 4 years time. So the owner’s time is NOT being compensated AT ALL.
One of the comments that I heard is ‘they should match the price of the web stores’. Sorry most of the owners will rather shut down – though of course Strand book stall et al have created their own website, and do online sales. Not sure how popular it is…
so simple if your business cannot afford the rent at that place, cannot afford the salary that a promoter deserves (or is capable of getting for whatever reasons) …just shut it down. Sell off the shop – hey land makes money! So the shop which was not generating enough business cash flow is now the asset which is the CASH FLOW…LOL…
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