Checklist for Starting a Aluminum Can Recycling Business: Essential Ingredients for Success
If you are thinking about going into business, it is imperative that you watch this video first! it will take you by the hand and walk you through each and every phase of starting a business. It features all the essential aspects you must consider BEFORE you start a Aluminum Can Recycling business. This will allow you to predict problems before they happen and keep you from losing your shirt on dog business ideas. Ignore it at your own peril!
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A Step by Step
Guide to Starting a Small Business
This is a
practical manual in a PDF format, that will walk you step by step through all the
essential phases of starting your Aluminum Can Recycling business. The book is packed with
guides, worksheets and checklists. These strategies are
absolutely crucial to your business' success yet are simple and
easy to apply.
Copy the following link to your browser and save the file to your PC:
https://www.bizmove.com/free-pdf-download/how-to-start-a-business.pdf
Pricing
Much of your success in business will depend on how you price your services. If your prices are too low, you will not cover expenses; too high and you will lose sales volume. In both cases, you will not make a profit.
Before opening your business you must decide upon the general price level you expect to maintain. Will you cater to people buying in the high, medium, or low price range? Your choice of location, appearance of your establishment, quality of goods handled, and services to be offered will all depend on the customers you hope to attract, and so will your prices.
After establishing this general price level, you are ready to price individual items. In general, the price of an item must cover the cost of the item, all other costs, plus a profit. Thus, you will have to markup the item by a certain amount to cover costs and earn a profit. In a business that sells few items, total costs can easily be allocated to each item and a markup quickly determined. With a variety of items, allocating costs and determining markup may require an accountant. In retail operations, goods are often marked up by 50 to 100 percent or more just to earn a 5% to 10% profit!
Let us work through a markup example. Suppose your company sells one product, Product A. The supplier sells Product A to you for $5.00 each. You and your accountant determine the costs entailed in selling Product A are $4.00 per item, and you want a $1 per item profit. What is your markup? Well, the selling price is: $5 plus $4 plus $1 or $10; the markup therefore is $5. As a percentage, it is 100% ($5 markup = $5 cost of the item). So you have to markup Product A by 100% to make a 10% profit!
Many small firms are interested in knowing what industry markup norms are for various products. Wholesalers, distributors, trade associations and business research companies publish a huge variety of such ratios and business statistics. They are useful as guidelines. Another ratio (in addition to the markup percentage) important to small firms is the Gross Margin Percentage (GMP).
The GMP is similar to your markup percentage but whereas markup refers to the percent above the cost to you of each item that you must set the selling price in order to cover all other costs and earn profits, the GMP shows the relationship between sales revenues minus the cost of the item, which is your gross margin, and your sales revenues. What the GMP is telling you is that your markup bears a certain relationship to your sales revenues. The markup percentage and the GMP are essentially the same formula, with the markup referring to individual item pricing and GMP referring to the item prices times the number of items sold (volume).
Perhaps an example will clarify the point. Your firm sells Product Z. It costs you $.70 each and you decide to sell it for $1 each to cover costs and profit. Your markup is 43%. Now let up say you sold 10,000 Product Z's Iast month thus producing $10,000 in revenues. Your cost to purchase Product Z was $7000; your gross margin was $3,000 (revenues minus cost of goods sold). This is also your gross markup for the month's volume. Your GMP would be 30% . Both of these percentages use the same basic numbers, differing only in division. Both are used to establish a pricing system. And both are published and can be used as guidelines for small firms starting out. Often managers determine what Gross Margin Percentage they will need to earn a profit and simply go to a published Markup Table to find the percentage markup that correlates with that margin requirement.
While this discussion of pricing may appear, in some respects, to be directed only to the pricing of retail merchandise it can be applied to other types of businesses as well. For services the markup must cover selling and administrative costs in addition to the direct cost of performing a particular service. If you are manufacturing a product, the costs of direct labor, materials and supplies, parts purchased from other concerns, special tools and equipment, plant overhead, selling and administrative expenses must be carefully estimated. To compute a cost per unit requires an estimate of the number of units you plan to produce. Before your factory becomes too large it would be wise to consult an accountant about a cost accounting system.
Not all items are marked up by the average markup. Luxury articles will take more, staples less. For instance, increased sales volume from a lower-than-average markup on a certain item - a "loss leader" - may bring a higher gross profit unless the price is lowered too much. Then the resulting increase in sales will not raise the total gross profit enough to compensate for the low price.
Sometimes you may wish to sell a certain item or service at a lower markup in order to increase store traffic with the hope of increasing sales of regularly priced merchandise or generating a large number of new service contracts. Competitors' prices will also govern your prices. You cannot sell a product if your competitor is greatly underselling you. These and other reasons may cause you to vary your markup among items and services. There is no magic formula that will work on every product or every service all of the time. But you should keep in mind the overall average markup which you need to make a profit.
Say that you're the sort who is beginning
new small business. You Have given attention to the general
chances for success, and
have chosen the new business you
want to establish.
What technical problems will you face
in establishing the business? How Much money will you need for
beginning new small business?
Where can you obtain it? What
kind of business organization does one own? Where should you
locate the business? (start business
tips to follow)
The first question you want to answer is: How much money will I
need? However, this question can not be answered until several
other questions are answered and many choices are made.
To decide how much cash is needed to start a business, enter all
Of your prospective income and all your planned expenses onto a
work sheet or form.
Even though you might feel that This
Type of preparation is more than You need to start a simple
small business it's beneficial to
begin with this particular
approach to management which puts figures down in black and
white. You'll find exactly the same
approach valuable in an
established small business.
First, estimate your sales
volume. This will depend on the overall Quantity of business in
the area, the number and skill of
competitors now sharing
that business, and your own capability to compete for the
customer's dollar. Obtain assistance in making
your sales
estimate from wholesalers, trade associations, your banker,
along with other business-people. A number of business and
statistical publications could be useful in making sales volume
quotes.
In reaching your final quote of earnings do not
be over-enthusiastic. A new business generally develops slowly
at the beginning.
Should you overestimate sales you're most
likely to invest too much in equipment and first stock, and
commit yourself to heavier
operating expenses than your real
sales volume will justify. As you are just starting up you might
have no earnings for the first
few months. At any rate you
may expect your first few weeks to be very low.
You must
also decide what proportion of your earnings will be money And
what percentage will be sold on credit. If you guess that
a
particular portion of the earnings will be on credit then you
have to figure whenever you are going to have the money for all
these sales. 1 month? Two months? More? Never?
Next, in
our guide to starting new small business, estimate how Much
money will be paid out. Remember that in starting a company
you might be purchasing gear, paying fees and licenses, which
makes deposits on lease, utilities and so forth, several months
before you open the door. A few of these expenses are simple to
estimate. If you have decided to lease a building (more about
that
later) then you know what your deposits will be and how
much you'll need to pay out each month. You are probably able to
get the
cost of fees, licenses and utility deposits with a
couple of telephone calls.
Other expense figures might
take a little more work to get. 1 way Is to acquire typical
operating ratios for the kind of business
in which you are
interested. One of the resources for such ratios include Dun &
Bradstreet, Inc., trade associations, publishers
of trade
magazines, technical accounting companies, industrial companies,
and schools and universities. The normal ratios for your
kind
of company multiplied by your estimated sales volume will serve
as bench marks for estimating the several items of
expenditure. But do not rely exclusively on this way of
estimating each cost item. Verify and change these estimates
through
investigation and quotes in the specific market area
in which you intend to operate.
Don't forget to cover
yourself too. You Might Need money to live on if You have to
quit your job. If your partner is working and
can support the
family for a while you may not need to withdraw cash from the
business. The more time you can go without taking
cash from,
the faster you will develop a strong cash position. Now that you
have estimated your money receipts and expenses, write
down
the amount of money you'll put into the business to start. This
goes online 1 in the case below. Next, add lines 1 and 2 for
your first month to get line 3. Then add up all of the expenses
to find 5. Subtract line 5 from line 3 to get line 6. This money
in the end of month 1 then goes to line 1 for the beginning of
the following month, etc.
Should you continue this for
the Whole year, very shortly you'll find You have negative
amounts or even a negative cash flow.
About this time you
will also understand that you ought to be operating on this form
with a pencil that has a good eraser.
In this
overly-simplified illustration, you notice that from the end of
June you are minus $200 in cash. Two options can be tried
-
reduce your purchases in June by $200 or begin with $200 more.
You might be unable to reduce expenses (they will probably go up
as your business starts). So you will need to put in $200 more
to begin with. If all you have is $4000 then the extra $200 you
will need is capital you need to get from someplace else.
Do not be misled by this very simple illustration. Many
small businesses Begin with the $200, and try to acquire the
$4000 from
somewhere else. Since a Major reason for failure
in the early phases of a business is Under-capitalization, be
very careful in
your preparation at this point. You can
Almost always plan on several unexpected expenses and a few
flaws in expected income.
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