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Business Issues

Discussion in 'Picture Framing Business Issues' started by Wingz, Oct 16, 2002.

  1. Wingz

    Wingz Grumbler in Training

    I'd appreciate a bead or two on any industry analyses that are available, preferably online. The kind of quick 'rule of thumb' that is applied to costs/revenue. Like what precentage of revenue should rent be? Wages? Utilities? Etc. Have found a few for other industries, but noe for custom framing. Would really appreciate some help on this.
     
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  2. Jim Miller

    Jim Miller SPFG, Supreme Picture Framing God

    Jay Goltz has published just such a model document for you. All you need to do to get it is join Framer Select. It was among the perks that came with one of the monthly mailings.
    All very useful information.
     
  3. Wingz

    Wingz Grumbler in Training

    Thanks Jim, however I'm not sure if Framers Select would be of any value in Australia? Any other suggestions would be very muchg appreciated.
     
  4. North Framer

    North Framer CGF, Certified Grumble Framer

    There was a gov't study (StatsCan - stands for Statistics Cananada) done several years ago that I ordered when I was a commercial lender before I got into this business, that I will try and dig up (don't hold your breath). One area I do remember was that your total occupancy cost (rent, utilities, percentage rent if any, etc - your direct costs associated with the renting your space) should not exceed 20% of your sales, and generally fell between 12 to 15% on average. Obviously, the higher your sales per square foot (general retail industry sales comparison tool) the lower your occupancy cost psf once you surpass a high rent psf cost incurred in high traffic flow areas, but not always the case.
    Rules of thumb are just that - general, not fact for specific cases. The most important two financial analysis/projection tools are your break-even point analysis and your cash flow statement (monthly) - I've seen lots of small businesses get in serious trouble, despite glowing income statements showing good bottom (profit) lines, because cash flow was negative. i.e: You can become insolvent by growing too fast if you do not have the working capital to support the growth (i.e. get a corporate framing contract equal to 4 months sales, done in one month, tying up your resources, no deposit - and not get paid for 90 days after delivery - could be very profitable on paper, tell that to your suppliers after 60 days if your bank wouldn't finance the receiveable) - there are almost unlimited ways you can screw up your cash flow/liquidity on "good ideas at the time" in any industry, as many can attest on the Grumble, I am sure.
     
  5. Wingz

    Wingz Grumbler in Training

    Thanks for that advice; I'd sure appreciate you taking the time to search for that. Some of those kinds of 'rules of thumb' at least when comprised of industry averages (even better if broken down into sizes of business and specific to framing) can be invaluable as barometers for individual businesses. I guess I'm in the position you were at the time you first read that. Appreciate the gesture.
     
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