This week’s participants in a trial survey at the market have been asked to compare their daily sales with an “expected sales” figure for that day which raises some very interesting questions about how to calculate a fair return.
Calculating an “Expected Sales Return” is not difficult. There are probably three different components to the calculation.
1.COSTS - For starters you need to know the costs of running your business and most of the information is already available in things like your GST summary. By adding your standard retail mark-up to business costs you arrive at what sales are needed to cover costs.
2. A WAGE - Now, to add in a fair wage for your efforts. The minimum wage for an adult Shop Assistant is around $150 per day, while the average Australian wage is about $250 per day. You will need to decide on what you think is a fair wage. (I went for $200 per day and because I only trade 3 days at the market I multiplied the $200 by 3 to arrive at a weekly wage. I know, running our businesses requires working more than just trading days, but I am keeping it simple). You then add your standard retail mark-up to that figure to arrive at what sales are needed to support a wage.
3. PROFIT - Now, what about a business profit? We are independant business people, investing time and capital, taking more risks than the average wage earner, and entitled to a small profit. (Times are tough, so I kept my sights low and decided on $230 week (around $12000 per annum) as a profit over and above my wage.) Once again you add your standard retail mark-up to arrive at what sales are needed to support a profit.
By adding up the sales you need to cover costs, plus the sales you need to cover a wage, plus the sales you need to cover a small profit, you will be able to calculate a weekly “Expected Sales Return” for your stall at the market. Give it a try – it’s a little scary, and a little revealing – but you will be a wiser trader once you have done the calculation.
There are obviously lots of variables in an exercise like this and we would be interested in your thoughts on the above method of calculation. We would also like to know how your own calculations went.
Please Note: No actual sales figures are collected in our trader survey. Sales figures are quite rightly private and confidential. We don’t even collect names or stall numbers. All the information provided is anonymous. We do ask you for sales trends on each trading day which is a percentage figure of how your actual sales compared with your sales budget. For example, your return for a particular day may be - 80% - which tells us that you achieved 80% of the sales you expected for that day. By comparing sales trends with other data, like customer sources, we are able to form a picture of what drives our sales in the top end of the market.