Term
Gross margin/sales revenue = Gross Margin Ratio
Net Income/Sales Revenue = Profit Ratio
Current assets/Current liabilities = Current ratio
Gross profit - Profit on goods & services, less the cost of good & services, before operating expenses |
|
Definition
|
|
Term
Net sales - cost of goods sold = gross profit
Gross profit - expenses = operating profit
Operating profit - taxes = net income (PROFIT) |
|
Definition
|
|
Term
| What do you use to determine if a part-time installer is a subcontractor or an employee? |
|
Definition
"20 Common Law Factor" test
BM 217 |
|
|
Term
| Define Circumstances (one of the Six Cs of Credit) |
|
Definition
The current financial situations of your business and the economy as a whole
BM 83 |
|
|
Term
| What is the most important element of your insurance program? |
|
Definition
Your liability insurance
BM 187 |
|
|
Term
| When should you initiate a punch list? |
|
Definition
At the beginning and throughout the project
BM 391 |
|
|
Term
| What type of business has limited personal liability, no Federal taxes, no limit on the number of stockholders, and business losses may be deducted from your personal taxes? |
|
Definition
Limited Liability Corporation
(LLC)
BM 69 |
|
|
Term
| What type of assets is your warehouse and showroom? |
|
Definition
|
|
Term
| What is an account receivable? |
|
Definition
Money owed to you by customers
BM 102 |
|
|
Term
| When you subtract liabilities from assets, what do you have? |
|
Definition
|
|
Term
| How long will it take an inexperienced designer to generate a reasonable sales volume? |
|
Definition
|
|
Term
| What are accounts payable? |
|
Definition
Money that you owe to others
BM 103 |
|
|
Term
| When should you have a discussion with your client about your fees? |
|
Definition
Very early in the process before you have scheduled the home appointment.
BM page xxxi |
|
|
Term
| Industry experience suggest salespeople should generate how much in sales per year? |
|
Definition
$500,000 to $750,000 per year
BM 112 |
|
|
Term
| If your customer tells you they have been shopping other dealers, what three questions should you ask? |
|
Definition
- What have you seen?
- What have you seen that you really like?
- Why didn't you buy?
BM 164 |
|
|
Term
| What are the sections in a business plan? |
|
Definition
- Title page
- Table of contents
- Executive summary
- Business description & mission
- Market and industry analysis
- Competitive analysis
- Marketing strategy
- Operations and management
- The leadership team
- The financial plan
- Summary and conclusion
- Appendix
BM 53 |
|
|
Term
| What are four keys to a successful business? |
|
Definition
- A qualified entrepreneur
- A researched business opportunity
- A detailed written plan
- A sufficient capital fund
BM 3 |
|
|
Term
| Owners and managers must be equally strong in what three major managment areas? |
|
Definition
- Financial management
- Marketing management
- Human Resource management
BM 201 |
|
|
Term
| Which taxes are deductible to reduce your taxable income? |
|
Definition
- Sales taxes on items you buy for the business
- Fuel and excise taxes
- Property taxes and local assessments
- Employment taxes you pay (but not federal income tax or the self-employment tax paid by individuals)
BM 194 |
|
|
Term
| What is the general ledger? |
|
Definition
It summarizes data from other journals, including cash disbursements, expenses, and sales and cash receipts journals.
BM 103 |
|
|
Term
| What is the marketing "wheel of fortune"? |
|
Definition
It is a continuous cycle of these steps:
- Understand target customer
- Tailor price/product/packaging/distribution
- Communicate marketing messages
- Make the sale
- Do the installation/ensure customer satisfaction through customer service
- After-sale, follow-up communications
BM 308-309 |
|
|
Term
| What are the seven easy steps for selling? |
|
Definition
- Prospect for clients
- Initial contact
- Qualify the client
- Present products & services
- Meet objections & concerns
- Close the sale
- Get referrals
BM 369 |
|
|
Term
| Human resource managers are responsible for what four areas? |
|
Definition
- Staffing
- Basic work place policies
- Compensation and benefits
- Regulatory issues
BM 205 |
|
|
Term
| What regulates methods of wage payments and hours of work for employees? |
|
Definition
The Fair Labor Standards Act (FLSA) of 1938
BM 219 |
|
|
Term
| What are the Six Cs of Credit? |
|
Definition
- Capital (money invested)
- Collateral (assets owned to secure loan)
- Character (experience, reputation, credit)
- Capability (ability to repay a loan)
- Coverage (insurance or precautions to protect investment)
- Circumstances (current financial situation & ecomony)
BM 83 |
|
|
Term
| What are the three elements of success in business? |
|
Definition
Finances, Marketing, and Human Resources
BM page xxviii |
|
|
Term
| What is the operating income statement? |
|
Definition
This statement shows your net income or loss. Main items are: sales, cost of goods sold, gross profit, expenses and net income or loss. This report gives you the "bottom line".
BM 104 |
|
|
Term
| What five questions you should ask yourself before hiring a new employee ? |
|
Definition
- Is the business profitable?
- Are projections for continued growth positive?
- Can the business support another person?
- How will an additional person affect current staff?
- Does good customer service require this?
BM 220 |
|
|
Term
| How do you calculate the multiplier for achieving a gross margin? |
|
Definition
100% - 40% = 60%
$6,000 cost
.60
= $4,000 Gross Margin or
40.0% Gross Profit Margin
BM 153 |
|
|
Term
| NKBA recommends goals for gross profit margin and operating expenses to achieve profitability. What are these goals? |
|
Definition
Gross profit margin should be 40% or higher.
Expenses should be 30% or lower.
BM 153 |
|
|
Term
| How do you calculate the markup on a product on which you want to make a 40% margin? |
|
Definition
Selling price = cost of goods
(100 - gross margin)
BM 153 |
|
|
Term
| What gross profit margin do industry experts suggest as a goal for all kitchen and bath businesses ? |
|
Definition
|
|
Term
| What should the second page of a Business Plan always be ? |
|
Definition
|
|
Term
| What are typical business liabilities? |
|
Definition
- Accounts payable
- Loans
- Credit cards
- Taxes
- Liabilities may be short or long term
BM 135 |
|
|
Term
| What is the balance sheet? |
|
Definition
Assets = Liabilities + Capital
Financial statement that lists your assets and liabilities.
BM 103 |
|
|
Term
| How are marketing and sales different? |
|
Definition
Marketing is about finding customers and getting them interested.
Sales is when the purchasing decision occurs.
BM 306-307 |
|
|
Term
| What is the typical marketing budget range for kitchen and bath dealerships? |
|
Definition
3% to 5% of annual sales volume.
BM 319 |
|
|
Term
| What does a non-exempt classification provide to the employee? |
|
Definition
Overtime pay, and other rights enumerated in the Industrial Welfare Commission (IWC) orders.
Non-exempt can be hourly or salaried.
BM 218 |
|
|
Term
What is the recommended breakdown
(in %) for spending the marketing budget? |
|
Definition
- 10% on the universe
- 40% on target customer
- 50% on repeat & referral clients
BM 319 |
|
|
Term
| What is the most popular legal structure for a small business? |
|
Definition
Sole Proprietorship
Almost 75% of the 23 million small businesses in the U.S. are this
BM 63 |
|
|
