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Easy Methods for Making Your Business Worst

Conditions	A	B	C	D

Sales	100,000	150,000	150,000	150,000
Buying Cost	- 70,000	- 125,000	- 125,000	- 155,000
Closing Stock	0	20,000	20,000	50,000
Gross Profit	30,000	45,000	45,000	45,000
Expenses	- 20,000	- 20,000	- 20,000	- 50,000
Net Profit	10,000	25,000	25,000	- 5,000

Cash In from Sales	100,000	30,000	120,000	30,000
Cash Out for Buy	- 70,000	- 87,500	- 37,500	- 108,500
Cash Out for Expenses	- 20,000	- 20,000	- 20,000	- 50,000
Balance in Cash / Overdraft	10,000	- 77,500	62,500	- 128,500

Cash / Bank	10,000	- 77,500	62,500	- 128,500
Debtors	0	120,000	30,000	120,000
Stock	0	20,000	20,000	50,000
Creditors	0	- 37,500	-87,500	- 46,500
Net Assets	10,000	25,000	25,000
Net Liabilities				- 5,000

Condition A : Sales – Cash Term.
Buying – Cash Term. 30% Gross Profit Margin.

Condition B       : Sales increase to RM150,000 with 80% term, and 20% cash. Gross Profit Margin 30%.
                           Buying – 30% term, 70% cash
                           Stock RM20,000
                           Debtor a Lot, Creditor very few.
                           Careful with Debtors which achieve 80% of the sales. Because
                              - 20% of the floating cash to cover 100% expenses, 70% of the purchase.
                       : Confusion:     Net Profit Nice.
                                               Financial is tight. Overdraft is used. Beware of Bad Debts.

Condition C       : Sales increase to RM150,000 with 20% term, and 80% cash. Gross Profit Margin 30%.
                           Buying – 70% term, 30% cash
                           Stock RM20,000
                           Debtor very less, Creditor A lot.
                         : Confusion:     Net Profit Nice.
                                               Cash in hand too much, could spend it elsewhere such as
                                                              - Fixed Assets and Expenses.

Condition D       : Sales increase to RM150,000 with 80% term, and 20% cash. Gross Profit Margin 30%.
                          Buying – 30% term, 70% cash
                          Stock RM50,000
                          Debtor A lot, Creditor Less, Expenses A lot, Stock A lot
                         : Confusion:     Bank has facilities used to settle creditors.

Therefore Amount owing to bank more than creditors.

Easy Methods for making the company getting worse when

a) Condition A going into Condition B

b) Condition B going into Condition D

c) Condition C going into purchase Fixed Assets, and more stocks.

d) Condition D going to cut down sales 20% of sales with 80% term,
and increase only 5% sales of Cash.

Company getting more worse when

a) All the debtors, half of it is bad debts

b) Expenses is much more than Gross Profit

c) Stock mostly obsolete.

d) Loan from other company.

Business Trends to get worst:
01. Profit Margin for a product getting less yearly. Therefore, you would buy bulk.
02. When buying bulk, your customers tends to have longer period of terms.
03. When terms getting big, you tends to loan due to bigger customer bigger appetite.
04. Once you have established these customer, there is a competitor arrived.
05. Once there is a competitor, your strategy on pricing getting worst.
06. The type of stock would get larger yearly, damage, missing or obsolete.
07. Cost of Products, and Expenses increases yearly due to inflation.
08. When the economy is good, you miss, be ready for the worst.
09. When the economy is bad, you might focus the wrong direction.
10. Follow people doing without knowing what really meant by business.
11. Doing family business without the initial true meaning of business.
12. Using Emotion to do business.