Before starting apparel retail franchise business, you must know that how much investment you need for this business and how much it will require with the passage of time because in this business like many others you will not be started earning profits at least during first six months so you must have sufficient capital in hand in order to bear all running expenses easily at least for one and half year. Below chart will really help you to understand what are the areas where investment will be served initially and what will be the later expense as well as how much you can earn through this business but proper planning and knowledge of any business is mandatory before taking any risk!
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Investment Type
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Amt Rs
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Remarks
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Fixed cost
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Security Deposit to brand
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X1
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It varies from brand to brand based on its fame and policies.
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Furniture and Fixtures cost
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X2
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It depends on you that how attractive visual merchandising you want to keep for your outlet as well as the demands of your chosen brand.
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Shop security deposit
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X3
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It depends on the location you selected.
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Dealer cost (if applicable)
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X4
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If this is not your own shop and you get it through dealer.
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Heat or cool plant / AC or heater etc
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X5
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If your plaza or mall is not centrally air-conditioned or heated
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Total
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sum(X1-X5)
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Variable cost
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Utilities + Maintenance charges
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X6
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Mainly electricity bill + if you have shop in Mall then you will receive the maintenance bill on monthly basis based on your shop size.
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Shop monthly rent
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X7
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Based on the location and Mall foot flow
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Salesmen salaries + monthly commission + off days working
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X8
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Normal salary is Rs 15k + 1% commission
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Fone / Internet Bills
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X9
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To entertain customer complaints or promotions of new collections
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Marketing materials
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X10
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If it is not being provided by your brand regularly so you must choose an appropriate medium to market your brand / outlet
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others/Misc
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X11
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(e.g. Stationary, cargo, alterations, salesman food etc)
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Total monthly expense
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sum(X6-X11)
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Total monthly sale
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XXXX
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Depend on the customer foot flow
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Total monthly commission to Franchiser
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X65%
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As per the contract ( 65-70% is normal)
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Total monthly commission to Franchisee
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X35%
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As per the contract ( 30-35% is normal)
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Total monthly Profit/Loss
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sum(X6-X11) – X35%
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Balance to breakeven
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Sum of total profit/loss from start till current month (-)sum(X1-X5)
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Please write us in case if you require any further assistance. We will be happy to help you.
Authored By HMS Khalid
Sohaib Khalid is the founder of “ThinkLikeGiant”. He is an Apparel Merchandiser and have been working for Denim companies and brands since 2008. He loves blogging that’s why started this blog with the aim to share his knowledge and experiences for the people associated with his field as well as for general public.Follow Him: Facebook » Twitter » Google+ » Linkedin
