Calculate the cost of goods when setting up a business
When setting up your company, you also have to prepare a financial plan that shows you what capital you will need in the first few months. An important factor here is the cost of goods, as it is a main cost bearer, especially for retail companies. To calculate, you have to respond to your company individually.
How high is your cost of goods
Every company calculates differently. Some work with a cost of goods of 50%, others manage 60%, and some production companies only calculate 15%. So you have to calculate your own individual rate.
You have certainly already drawn up a plan for your company. This is usually part of the business plan or also called the concept. If you have not yet created the plan, it is essential. You will find your fixed and variable costs on it, which you have to cover with your hand span.
When you came up with the plan, you must have thought about the sales you want to achieve and how you want to achieve them. This is why this plan also states which cost of goods is based on it.
Calculate the individual calculation rate with the formula: planned cost of goods: sales x 100 = cost of goods%
Some of the figures are of course pure budget figures that may not actually occur in practice. But try to plan as realistically as possible. Exaggerated wishful thinking is of no use to you - reality catches up with you faster than you think.
Would you like to know how much sales you have achieved in a certain period of time? …
Calculate financial requirements for the goods
Especially when setting up a business, it is important that you precisely calculate your financial requirements for the cost of goods. From your planning, you can see what sales you will achieve and what material costs you will with you, but you cannot assume that your entire warehouse will be empty at the end of the month to have. So in the first few months you have to buy more than you sell or sell. have a certain fixed minimum stock.
So think about how many items you want to offer and how many of them you have in stock. Calculate closely! Many suppliers offer deliveries within a few days, so you only need to have the number in stock for a relatively short period of time.
As a financial requirement, you need your constant inventory, which must not be undercut. So these are the minimum quantities that you need to have in stock for each item. For example, if your business partner delivers within 5 days, you should always have enough in stock so that you can use your inventory for this period plus a few days as a buffer.
You should definitely finance this minimum amount in the medium term and under no circumstances cover it with a short-term loan or even with an overdraft.
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