MoneyShop money
How much your shop must sell before you earn
Rent, power, help and your own household are paid before a single rupee is yours. Here is the sum that turns them into a daily sales target you can check.
Your shop owes rent, power, help and your own household before a single rupee is yours. Add those up, work out what you keep from every Rs 100 of sale, and divide one by the other. That gives the sales figure you must pass each month, and the daily target hiding inside it.
The number your shop owes before it earns anything
Ask a shopkeeper how the month went and he will tell you about the sales. Sales are the loudest number in the shop, and on their own they say almost nothing.
The reason is simple. Before any of a month's money belongs to you, it has already been promised elsewhere. The landlord is owed. The power company is owed. Your helper is owed on a fixed day whether the week was busy or empty. Your own house needs a similar amount every month, and pretending otherwise does not make it optional.
Add all of that and you have a line the shop must cross before it earns anything at all. Below the line you are working for other people. Above it, and only above it, the shop is paying you. Most shopkeepers have never worked out where that line sits, so every month is judged on a feeling: it felt busy, it felt slow, the drawer looked healthy on Friday.
This is not the same question as what the shop actually earned, which you can only answer afterwards. This is a target you can carry into the month, and check on a Tuesday afternoon while there is still time to do something.
First, what do you keep out of Rs 100?
Out of every Rs 100 that crosses the counter
Example figures. Work out your own from last month: total sales, minus what you paid for the goods that were sold.
Everything else here is arithmetic. This one figure has to come from your own shop, and it takes one evening with last month's numbers.
Take your total sales for the month. Take what those goods cost you to buy. The gap between them is what stayed in the shop. Divide it by the sales and you have the share you keep out of every Rs 100 that crosses the counter.
A general store keeps a thin slice, because everybody nearby sells the same packets at the same price. A shop selling clothes, hardware or repairs usually keeps a fatter one. Neither is better. What matters is knowing your own figure instead of the one somebody quoted at a wedding.
Two warnings. Use what the goods cost you, not what you wish they cost, and use recent buying rates rather than last year's, because the rate you paid in spring is not the rate you paid last week. And if you sell very different kinds of things, work it out for the two or three groups that carry most of your sales, then take a rough average weighted towards the biggest. An honest rough number beats a precise imaginary one.
The break-even sum, done once
Say the shop costs Rs 66,000 a month to keep open
The numbers are an example, not a claim about any real shop. Put your own rent and your own kept-out-of-100 into the same two lines.
Now write down every cost the shop has in a normal month, whether or not it moved this month.
Rent. Power and water. Help. Phone and internet. Tea, cleaning, small repairs. Any monthly payment on something you bought for the shop. And your own household draw, which belongs on this list even though it feels different, because a shop that cannot pay you is not breaking even in any sense that matters. If your house and your shop still share a pocket, separating them has to come before this sum will mean anything.
Then divide the total by the share you keep. In the example, Rs 66,000 of monthly costs against 12 kept out of every 100 needs Rs 550,000 of sales in the month. Not Rs 66,000 of sales. That difference is what shocks people the first time, and it is the whole reason a shop can look busy all month and leave nothing behind.
Do the sum once, on paper, and keep the paper. It will be wrong within a year, because rent moves and rates move, and that is fine. A number you revisit twice a year is a plan. A number you never worked out at all is a hope.
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Turn the month into a daily target
A monthly figure is useful for one evening. A daily figure changes how you run the shop.
Rs 550,000 across thirty days is about Rs 18,300 a day. That is a number you can hold in your head at four in the afternoon, when you can still do something about it: push the slow shelf, call the customer who wanted the big order, make sure the fast sellers are not out of stock.
Two adjustments make the daily target honest. If you close one day a week, divide by the days you actually open, not by thirty. And if your trade has a heavy season, do not spread the year flat; a shop that earns half its year in two months should carry a bigger daily target in those months and a smaller one in the quiet ones.
Then write your daily total down every single day, in the same place, without exception. Whether you use a register or the day view in Wasoolo matters far less than doing it every day, because the value is in the run of numbers, not in any one of them. After a month you can see which weekdays carry you and which ones you have been quietly paying to open.
Udhaar moves the line without changing the sum
Here is the trap that catches shops which are, on paper, doing fine.
Break-even is measured in sales. Rent is paid in cash. If a large slice of your sales leaves the shop as credit, you can pass your target comfortably every month and still be short of money on the day the bill comes. The sum was right. The cash simply has not arrived yet.
So carry a second, simpler line beside the first: how much money actually came into the drawer and the bank account this month. If that number is well under your costs while sales are above target, your problem is not the shop's earning power, it is the gap between selling and collecting. That gap is the whole argument behind running a cash shop or a credit shop, and most small shops sit somewhere in the middle by choice.
The fix is not to stop giving credit. It is to know the two numbers separately, so you can tell a bad month from a slow collection month. They look identical in the drawer and they need completely different responses.
Two ways to move the line down
Two ways to lower the line, on the same example shop
Illustrative arithmetic on the example above, not a target for your shop.
Once you know the line, there are only two levers, and most shopkeepers reach for the wrong one first.
The first is cutting costs. It is visible, it feels decisive, and it is limited, because most of your costs are rent and a helper you actually need. Cutting real capacity to save Rs 6,000 often costs more in sales than it saves.
The second is keeping a little more out of every Rs 100. Two extra rupees kept out of a hundred moved the example shop's target down by Rs 79,000 a month, which no cost cut in a small shop is going to match. That comes from buying better, from watching what each item really costs you, and from setting rates deliberately instead of copying the shop across the road.
Both levers are worth pulling, in that order of effort: buy better first, price honestly second, cut costs where they are genuinely dead weight third. And notice a third route that is not on the figure at all: selling more of what you already stock, on the same rent, with the same helper. Every rupee of sale above the line is worth far more than a rupee below it, because everything underneath has already been paid for.
Check it when anything moves
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Rent goes up. A helper joins. The supplier's rate changes and you did not move yours. Any of those quietly shifts your line, and nothing in the shop announces it.
So make it a habit twice a year, and immediately after any real change. Fifteen minutes: total the monthly costs, recalculate what you keep out of Rs 100 from last month's figures, divide, and write the new daily target where you will see it. If the new number is far above what you have been doing, that is not bad news. It is the first honest thing anybody has told you about the shop in a long time, and it arrived while there was still time to act on it.
Common questions
Should my own household money really count as a cost?
Yes. A shop that pays the rent and the helper but leaves you nothing is not breaking even, it is being kept alive by your unpaid labour. Put a realistic monthly figure for yourself into the costs. If the shop cannot cover it yet, at least you now know that in numbers instead of feeling it in a bad mood every month.
My sales change completely between seasons. Is a daily target useless?
Change the target with the season instead of dropping it. Work out the year's costs, then split them across the months in line with how the trade actually falls, so a heavy month carries a bigger daily figure. What you must avoid is judging a quiet month against a busy month's target and concluding the shop is broken.
What if I do not know what my goods cost me?
Start with your twenty best sellers and no more. Write today's buying rate against each, and work out what you keep out of Rs 100 for those alone. They usually carry most of the sales, so the answer is close enough to plan with, and you can widen it later.
Does stock count as a cost in this sum?
Not as a monthly cost. Stock you bought is money moved from cash into goods, and it comes back as those goods sell. It belongs in the cost of what you sold, which is already inside the share you keep out of Rs 100. Counting it twice makes your line look impossibly high.
I am below the line every month. Do I close the shop?
Not on one calculation. Check the figure itself first, then look at whether the shortfall is sales or collection, and give any real change three months before judging it. A shop below the line for a year despite honest effort is telling you something, but that is a decision to take with a year of numbers in front of you, not a bad week.
Is a rough number worth anything, or should I wait until my records are proper?
A rough number this week beats a perfect one next year. Estimate the costs you are unsure about on the high side, take the goods cost from your last few purchases, and accept that the answer is approximate. Then improve the record from tomorrow, so that in three months the same sum runs on real figures.