Many brands, one stockist

The idea

Most stockists carry several companies — a biscuit company, a soap company, a tea company. Each brand must be judged on what it leaves in your hand after its own costs, not on how much it sells. The brand with the biggest turnover is often not the one that makes the most money.

Brand-wise or common salesmen

Many stockists mix the two: a dedicated salesman for the biggest brand, who may be partly paid by the company, and common salesmen for the rest. Whatever you choose, record each salesman's cost against the brand or brands he sells, split by their share of his sales.

Keep each brand separate

The company sees only its own brand. You must see each brand the same way:

• Stock — its own racks in the godown, its own stock count.
• The company's account — purchases, payments, credit notes and claims for that company only.
• Claims — open claims listed company by company.
• Sales and costs — every bill line and every shared cost tagged with the brand as a cost centre (chapter 1.6), not booked to a separate sales account for each brand.

A brand-wise profit and loss

October, for three brands. Gross margin is the difference between what we sold for and what we paid. "Money locked" is the stock in the godown, plus what retailers owe us for that brand, plus open claims on that company. We charge interest on it at our own cost of money, here 12% a year — 1% a month.

The biscuit company sells more than the other two together and makes the least money. The reasons are in the table: a thin margin, two dedicated salesmen, rejected claims and a lot of money tied up in stock and credit.

This does not mean drop the biscuit company. It brings shop visits that help the other brands, and its turnover may get you better terms. But now you know what to fix: tighter claims, less loaded stock (chapter 3.11), faster collection (chapter 3.15). And when the company asks for a third dedicated salesman, you know what he must sell to pay for himself.

Common mistake

Judging a brand by turnover. A stockist adds a fourth brand because it promises ₹10 lakh a month. Six months later the godown is full, two salesmen share their time, claims go unfiled, and every brand's numbers have slipped. Nobody can say which brand is the problem, because nothing was tagged by brand. Tag first; then decide.

Where you'll use this

In Part 4, the brand is a field on every bill line, purchase, claim and cost, so the brand-wise profit is a report, not a weekend with spreadsheets (chapter 4.8). The products, brands and salesmen must be set up cleanly first (chapter 4.3).

Check yourself

1. Why charge interest on stock and outstanding when no bank loan is involved?
2. In the table, which brand earns the most profit for each rupee of sales?
3. Should "Sales — Soap company" be a separate account?

Answers

1. That money could have paid off a loan or earned interest elsewhere. Money locked in one brand has a cost, even if it is your own money.
2. The tea company: ₹29,000 on ₹6,00,000, almost 5%. The biscuit company earns about 0.6%.
3. No. Keep one Sales account and tag the postings with the brand as a cost centre.