Hayward Shows Retail Yard Costs and How to Figure Profits

How to estimate 'costs of retail yard operation and how to figtre the precise rate of net profit on- the monthly turnover-are subjects errlbraced in a comprehensive report just made by Sair f. Hayward of the Hayward Lumber & Investment Company of Lo. Angeles, who has given much thought and study to these essential details of his business'

Mr*. Havward iecentlv submitted his report to members of the Loi Angeles Diitrict Lumbermen's Club and offers it to the readeis of the California Lumber Merchant in the hope that the facts that it discloses may be of some practical value to them.

By SAM T. HAYWARD

I wish to take the actual cost data of seven retail yards of Southern California sh'orving wha't the average cost of doing business is for these seven yalgs,- and.showing particulirly what percentage must be added to the actual cost price to make proper return upon the investment. .' Our firm has kipt these coit data for the past three years, but the particular figures which I wish to show are ior the period January lst to July lst',1922. Starting three years ago we started to educate the managers as to what iheir ac"tual cost of doing business is, and it has proven to be of considerable success from a money making standpoint. We consider that the cost of cbmpiling these. figures is negligible as compared with the profits *" !.?Y9 made thro*ugi not allowing our local managers to "kid themselves" into thinking they were m'aking rnioney when they were not.

The cost data we have compiled and the educational work we have done ttsing these cost data as a basis has been of inestimable value. However, as you of course know, the retail pri'ce is in a large measuie set by competition. One retiil concern can not raise its retail price above the prices of its competitors without losing business' It is my betief that whatever cost data we have compile-d is of value to other concerns. If these cost data will arouse our competitors' iriterest in their own cost of doing trusiness. we will have accomplished more Ior ourselves than u,e can possi'bly 'do througl hork amgn:g our, own men. It is the competition of the yard which does not' realize their cost of doing business that hurts us worst'

Mr. P. J. McDonald is, I believe, the first man to give actual cost data, and we are all indebted to him for his startling figures as to what it costs us to manufacture O' P. FiniJh, lrinted in the CALIFORNIA LU'MBER MERCHANT of December 15.

As stated before, the data taken are for the six-month period Jahuary 1, to July 7, 1922, for. seve'n yards' A11 ihese.yirds hive enjoyed business which has been above ,rorirr"i. There is a mill connected with only one of these

The most

yards, and the milling operation expense has been separat!d etriirely from the iosl figures shown' Yards making a poor showirng due to bad competitive-.'conditions or locally poor businesi conditions have been eliminated. The seven 1'ards taken are healthy, prosperous yards enjoying Southern California prosperity. They vary in size -from- a yard requiring the slrviie of two men to one- y11{ 9j forty to frfty men'. These yards sold an average of $15,900 a month' The actual arretug" gross profit per yard was determined bv inventorv on Iuty tst to be $4170.00 per month, leaving a'difference-ot $ft,ZSO which is the actual cost price of the merchandise sold:

This mea,ns that merchandise costing an average of $11.730 was sold each month for $15,900.00 at a gross Profit of $4,170.00; these are actual average figures.

Here is the rvay our costs were distributed: l-Yard Operating ExPenses

.a. Management, Selling, Collect ing Bo6kkeeping, eslimating, Per Cent etc.