November Trade

[Nick M.K. 574]

Chaps, brush up on what “fixed annual costs” mean, then ask me (if you don’t already know) IF I have them. 

I will admit to having TWO sets of trade plates, Lawgistics sub and insurance. 

A total of £2200. 

Sorry for being so low cost. 

[Arfur Dealy 823]

If you wear work clothes they are a work wear,, they are a fixed cost, if you run a vehicle for work that is a fixed cost, boots gloves, jackets, hats, socks, gimp masks, tea coffee sugar sweetener, these are all fixed costs.

If you buy a car for 5k without any prep and sell it for 7k you don’t make 2k minus VAT & tax, you have to know your actual running average fixed costs. 

6 minutes ago, Nick M.K. said:

Chaps, brush up on what “fixed annual costs” mean, then ask me (if you don’t already know) IF I have them. 

I will admit to having TWO sets of trade plates, Lawgistics sub and insurance. 

A total of £2200. 

Sorry for being so low cost. 

You don’t have public liability? You don’t have an office at home, you don’t travel to auction you don’t have a computer, you don’t have a printer, you don’t have ink, you don’t have pens, you don’t service your allocated car, you don’t have break down cover.....

[Area 51 33]

28 minutes ago, Arfur Dealy said:

If you wear work clothes they are a work wear,, they are a fixed cost, if you run a vehicle for work that is a fixed cost, boots gloves, jackets, hats, socks, gimp masks, tea coffee sugar sweetener, these are all fixed costs.

If you buy a car for 5k without any prep and sell it for 7k you don’t make 2k minus VAT & tax, you have to know your actual running average fixed costs. 

You don’t have public liability? You don’t have an office at home, you don’t travel to auction you don’t have a computer, you don’t have a printer, you don’t have ink, you don’t have pens, you don’t service your allocated car, you don’t have break down cover.....

Ooo you bean counter you...

Wasnt it Harry Rednap who had his dog on the payroll as a cleaner, bank account in Malta only Harry could use the cash card on?

 

Edited November 23, 2018 by Area 51

[Nick M.K. 574]

11 minutes ago, Arfur Dealy said:

You don’t have public liability? You don’t have an office at home, you don’t travel to auction you don’t have a computer, you don’t have a printer, you don’t have ink, you don’t have pens, you don’t service your allocated car, you don’t have break down cover.....

I do. And NONE of these bar the public liability (part of my trade insurance) are fixed ongoing annual costs. My office for example costs me a certain amount. One outright payment in 2015. It is now almost 2019 so I consider it bought, paid for and forgotten. Same for my 2015 Mac and my 2011 Mac computers. Not to mention my phone. Not fixed costs. Just depreciated but usable assets.

My work and my personal everyday life are so linked together that it is almost impossible to draw any kind of line between personal and business use for some items (phone, wi-fi, clothes, personal car diesel, printer ink?) so we prefer not to claim some expenses. It may not be 100% tax efficient but is prudent for other reasons. 

Does your accountant tell you for example that you can claim for the difference between trade and personal car insurance cost IF your trade insurance covers your personal car. I have chosen not to claim that. For some people this will be a four figure sum. 

[Tim H 16]

I think Nik's trying to lead you to get to grips with the difference between Fixed costs and Variable costs..?

[Nick M.K. 574]

1 minute ago, Tim H said:

I think Nik's trying to lead you to get to grips with the difference between Fixed costs and Variable costs..?

And the term ANNUAL COSTS was also important for the purposes of this discussion as it was all about annual fixed costs. 

[Dealer 54]

4 hours ago, EPV said:

The week? Surely you don’t measure your profits weekly? 

James, with 23k per month overheads i know what i need per week to make ends meet hence my post. If you run your enterprise a different way then good luck to you but I know what I need to cover the bases. 

[EPV 631]

56 minutes ago, Arfur Dealy said:

If you wear work clothes they are a work wear,, they are a fixed cost, if you run a vehicle for work that is a fixed cost, boots gloves, jackets, hats, socks, gimp masks, tea coffee sugar sweetener, these are all fixed costs.

If you buy a car for 5k without any prep and sell it for 7k you don’t make 2k minus VAT & tax, you have to know your actual running average fixed costs. 

You don’t have public liability? You don’t have an office at home, you don’t travel to auction you don’t have a computer, you don’t have a printer, you don’t have ink, you don’t have pens, you don’t service your allocated car, you don’t have break down cover.....

Let’s just call them overheads. 

A fixed cost is something that doesn’t change, month in month one. Petrol and mileage clothing vary. 

Overheads will do! 

 Month in month out*

[AutoJacob 34]

57 minutes ago, Dealer said:

James, with 23k per month overheads i know what i need per week to make ends meet hence my post. If you run your enterprise a different way then good luck to you but I know what I need to cover the bases. 

How do you sleep at night? £23K.. Per month.

[Arfur Dealy 823]

7 hours ago, Tim H said:

I think Nik's trying to lead you to get to grips with the difference between Fixed costs and Variable costs..?

The point I am making is clear, we all have costs to outlay prior to buying or selling and making a bean. You have to know your running fixed / variable annual costs to appreciate your break even point, whether it’s 2k 5k or 23k like James. 

All of the above costs are prior to paying out for prep. 

[EPV 631]

8 hours ago, Dealer said:

James, with 23k per month overheads i know what i need per week to make ends meet hence my post. If you run your enterprise a different way then good luck to you but I know what I need to cover the bases. 

I’m not saying you don’t know mate, I also know what I need to make to cover my bases. What I was wondering is WHY you look at it as a weekly “loss” as presumably you have weeks where you sell a dozen cars and make a huge “profit” but I’m sure you don’t get all excited thinking every week will be like it?

I just thought it was an odd way to look at it that’s all, we all probably have more losing weeks than winning ones but the winning weeks make up for the losing ones at the end of the year. 

[Rory RSC 596]

8 hours ago, AutoJacob said:

How do you sleep at night? £23K.. Per month.

Easy - Make sure you are bringing in a lot more than that 

With big risks, comes big rewards right 

[mike101 8]

I think the info you track will depend on your business and your size. All successful traders will have a ‘feel’ for it - I’m just a bit OCD on numbers. 

For me:

Long term (Financial YTD vs previous year)

Income, Cost of Goods Sold, Expenses, Operating Income.

Medium (monthly)

Unit Sales, Lead Conversion ratios.

Short term (daily/weekly)

Sales pipeline, enquires 

This week we were quiet but still ended up with 4 on the board. That makes me as happy as doing 10 when we are busy. I see it a bit like football ie if you grind out the win in a poor match that’s what makes the difference over the course of a season!

[Nick M.K. 574]

Just now, twerp said:

Nick - don't you have an Auto Trader package ?

Of course I do. And Ebay and Motors. All part of my huge variable costs. If I have less cars I will pay less and if I stop working for a month or a year I will pay nothing. 

Also something no one mentioned: Not every car we sell needs to be advertised. 14 cars at £1400 a month works out at roughly £100 per unit advertised but if I source for existing customer the advertising cost for that one unit is zero. I guess some can view advertising as fixed cost, some can view it as variable. Surely. 

In fact Simon himself stopped his AT for a couple of weeks when he went on holiday. I doubt anyone could stop paying his unit rent or his mobile phone bill in the same way. 

[mike101 8]

From an accounting perspective - advertising is an expense not a cost of sales. Doesn’t matter if the cost is variable - plenty of expense costs are variable. 

Edited November 24, 2018 by mike101

[Nick M.K. 574]

58 minutes ago, mike101 said:

For me:

Long term (Financial YTD vs previous year)

Income, Cost of Goods Sold, Expenses, Operating Income.

Medium (monthly)

Unit Sales, Lead Conversion ratios.

Short term (daily/weekly)

Sales pipeline, enquires 

My management style is massively different.

If someone employed me they will probably kick me out in month. I am pretty sure after (almost) 14 years on my own I am completely unemployable. 

[Arfur Dealy 823]

21 minutes ago, Nick M.K. said:

My management style is massively different.

If someone employed me they will probably kick me out in month. I am pretty sure after (almost) 14 years on my own I am completely unemployable. 

I’m with you there..... I wouldn’t even last a day  

i always cancel my AT package when I’m on holiday because I want a complete break, no business at all...... apart from this bloody forum of course. 

[Rory RSC 596]

51 minutes ago, Nick M.K. said:

My management style is massively different.

If someone employed me they will probably kick me out in month. I am pretty sure after (almost) 14 years on my own I am completely unemployable. 

I would be fine working anywhere so long as they never told me what to do and let me do what I wanted. 

[EPV 631]

7 minutes ago, Rory RSC said:

I would be fine working anywhere so long as they never told me what to do and let me do what I wanted. 

Amen. 

[L-P 15]

Haha - I doubt any of us would last that long in a corporate main dealer environment. My last job was basically doing everything BUT selling cars... 

[stockedup! 63]

2 hours ago, tradex said:

AD, interesting you mention site (unit?) public liability as part of your trade insurance, that's something we have never had, wondering here if that would be any cheaper inclusive.

I was chatting to a doorstepper friend the other day regarding public liability, he doesn't have any. He thought trading from home he wouldn't need any, to say I was shocked would be an understatement

Not as shocked as he would be if he does ever suffer an "incident" involving a client, for what it costs it isn't even worth considering not having.

 

 

[Arfur Dealy 823]

4 hours ago, tradex said:

AD, interesting you mention site (unit?) public liability as part of your trade insurance, that's something we have never had, wondering here if that would be any cheaper inclusive.

I was chatting to a doorstepper friend the other day regarding public liability, he doesn't have any. He thought trading from home he wouldn't need any, to say I was shocked would be an understatement

 

1 hour ago, stockedup! said:

Not as shocked as he would be if he does ever suffer an "incident" involving a client, for what it costs it isn't even worth considering not having.

 

 

Guys, it was Nik who said his PL was included in his trade insurance. 

I actually have a separate policy. 

[Nick M.K. 574]

Yes that is correct. 5 million limit for PL,  my insurance is with Arista / Ageas. Annual premium £1521. 

[SC Derby 259]

4 today, 12 for the month.

It's not gonna break any records or make me rich but the bills are paid in November and we have 6 days to add some cream on top (and a few appointments tbf).

[stockedup! 63]

1 hour ago, Nick M.K. said:

Yes that is correct. 5 million limit for PL,  my insurance is with Arista / Ageas. Annual premium £1521. 

Mine is due up soon Nick, how much stock does it cover for if you don't mind me asking.