Financial Fluency FOH (002)

1. FINANCIAL FLUENCY

2. MODULE OVERVIEW This course is designed to get all associates to understand the financial aspect of the business and be able to interpret business performance financially

3. OBJECTIVES • At the end of this module you will be able to; • Understand the financial aspect of the business • Understand what revenue means • Have an understanding on how to reduce gp loss • Have an understanding of company controls • Have an understanding of gross profit

4. WIIFM(WHAT’S IN IT FOR ME) • Have a better understanding of the business financials by knowing revenue and how to calculate average spent • Have knowledge of the company controls and how they help prevent loss • Learn how to calculate gp and how to prevent gp loses • Know how to upsell and suggest effectively to customers • Have an appreciation of how financials help to keep business afloat

5. INTERNAL CONTROLS These are sets of rules, polices processes, and procedures implemented to provide reasonable assurance that company operations are effective and efficient, reliable, and comply with country law. There are many internal control systems within the business but at this level, we will talk about a few.

6. INTERNAL CONTROLS • DECLARATION • The declaration is part of the company controls which entail that as soon as an associate enters the company premises, you declare your belongings and submit cash and cell phones to the manager on duty while you lock your bags in the lockers provided.

7. INTERNAL CONTROLS • WORKING HOURS • Associates work for 8 hours and get a break of 30 minutes daily working for 6 days a week and getting 1 day off. Research shows that a human body can work effectively for 8 hours, after that it will be strained and performance will not be the same.

8. INTERNAL CONTROLS • FLASHING • Cash should be banked after every hour or as soon as it gets to 300 USD whichever comes first. It is the responsibility of a cashier to flash the money from her cash drawer and give it to the manager on duty for verification and banking. All sections of the flashing slips should be filled, Hourly banking book should be completed before money is dropped into the drop safe.

9. INTERNAL CONTROLS • VARIANCE • Any variance after reconciliations and cash-ups are done should be paid within 24 hours. Stock variances are supposed to be paid within 24 hours mostly drinks for cashiers and when you do wrong dispatch the stocks should be paid within 24 hours.

10. T/O, ASP, GP Cashiers are the face of the business, they represent the organization and they need to be presentable. Cashiers also shape the turnover (T/O) base of the business, as well as the average spent ASP), and gross profit (GP) of the business.

11. UNDERSTANDING REVENUE REVENUE Turnover is the total amount a business realizes after making a sale. A car dealer had 30 Honda Fit hybrids selling at $4 000 each, 5 Mother Quantum’s selling at $10 000 each, 2 Mercedes Benz selling at $80 000 each. For the whole month he only sold 8 Honda Fits and 2 Quantum’s. What is the total sales he made for that month? 8*$4000 + 2*$10 000 $32 000 + $20 000 Total sales =$52 000 That means his Turnover for that month is $52 000

12. UNDERSTANDING REVENUE AVERAGE SPENT (ASP) Average Spent is the average amount that the total number of customers spent. You get ASP by dividing revenue with the number of customers. Given that the car dealer sold all the cars to different customers each purchasing a single car what was the ASP when we have a total of 10 customers. Formulae; ASP=T/O ÷ Customers $52 000 ÷ 10 = $5 200 Therefore the average spent is $5 200 Upselling increases the ASP of the store meaning even with the same customer count you can make more revenue than the previous month.

13. UNDERSTANDING REVENUE HOW ARE WE LOSING CUSTOMERS • Chasing customers away because of change, • Bad attitude, rude attitude will reduce our sales and that will result in more expenses for the business. • Product unavailability • Poor product quality • Poor customer service,

14. HOW DO WE KEEP THE CUSTOMERS FROM LEAVING US? DISCUSS

15. HOW DO WE GET NEW CUSTOMERS? • We keep our customers by doing the opposite of the factors making us lose customers. • By giving exceptional customer service to your existing customers who will spread positive feedback to potential customers. • Happy customers will tell a friend to tell a friend about us. • Go out in the markets and get corporates, visit schools, and offices.

16. GROSS PROFIT WHAT IS GROSS PROFIT? This is the money realized after the company subtracts the cost incurred in producing a certain product or in making a sale. These costs include the cost of drinks, food, and packaging.

17. HOW DO YOU SHAPE GP? KNOWLEDGE IS KEY Knowing and suggesting products with higher GP value such as extra toppings. The company should make more profit from very low costs. Everything being sold in the store contributes to a certain % percentage of the store GP. Everything that is purchased by the store comes with a cost and how you sell it determines its contribution.

18. HOW DO YOU SHAPE GP? EXAMPLE Carrier bag costs $0.05, and the selling price is $0.10. On everything being sold in the store, as a business we pay tax and VAT to the government which is 17% of the gross sale. GP is calculated after removing tax. The revenue will be called Net Turnover. Formulae; Gross Turnover – tax = Net Turnover (NT) To calculate the Gross Profit Dollar Value; Formulae; Net Turnover – Cost Of Sales = GP$ To calculate Gross Profit as a percentage

19. HOW DO YOU SHAPE GP? EXAMPLE Formulae; GP$ ÷ NT * 100 = GP% 0.085 - 0.05 = $0.03547 [GP dollar value] 0.03547 ÷ 0.08547 * 100 = 41.5% This concludes that whenever you sell a carrier bag the company gets a profit of $0.035, but when you give the plastic for free the company makes a loss of $0.05. So individually how many plastics did you take from the shops without paying? How much money did the store lose because of plastic only? What about the whole company?

20. FACTORS AFFECTING TURNOVER • Lack of Efficient Teamwork • Encourage the cashiers to push more spending Closing stations for personal reasons Have the business at heart and understand that we are here to serve customers. Without the customer we have no money Shouting Irrelevantly Always remember we are in a professional environment and everything we say can be heard by customers. Lack of passion Love your job and it will love you right back, love what you do and you will give the best in everything that you do

21. FACTORS AFFECTING GP RELATED TO THE STORE • There are little things we take for granted that have negative and positive impact on the shop’s GP. Pilferage Theft is the biggest of them all. When you steal from the shop it has a negative impact on the profit and a positive impact on the shop costs. Over Portioning Giving the customers more than what they have paid for because of personal gains increases the cost to the store. When customers ask for extra sauce a cashier will just take a handful of sauces and give them to the customer.

22. FACTORS AFFECTING GP RELATED TO THE STORE WRONG DISPATCH Giving customers what they did not buy. Some will return mostly if it is not worth the amount spent but if it is more than what they had spent they will just go. When the real owner of the order comes, who will pay for the order? When there is a miss-punch of a 2 Piecer instead of the munchy promotion, who is paying for the extra piece given to the customer? WASTAGE Carelessly handling food that will result in waste, increases the cost of the store.

23. FACTORS AFFECTING GP RELATED TO THE STORE The little things we take for granted like extra sauces, salt, serviettes, and plastic bags we just take, carry a cost with them and when they are given for free the costs remain in the store. Tomato sauce $0.02 Salt $0.004 Serviettes $0.01 Carrier bags $0.05 The total cost will be 0.084 for giving out the extras to a single customer What if you served 500 customers? That’s $42 lost for the store. How much more will the store lose for the whole month?

24. GP CALCULATIONS Extra expenses reduce the initial cost of a product and reduce the overall GP the store is supposed to get from the same product Say the cost of a 2 piecer =$1.85, selling price is $4.50 what is the GP, Formulae; Gross Turnover – Tax = Net Turnover $4.50 ÷ 1.17 = $3.85 (NT) $3.85 - $1.85 = $2 (GP$) $2 ÷ $3.85 * 100 = 51.95% (GP%)

25. GP CALCULATIONS Add extra sauce for $0.02 and a carrier bag for $0.05 to it, what will be the new cost of the product? $0.07 + $1.85 = $1.92 What GP will it give us? (NT) $3.85 - $1.92 (cost with extras) = $1.93 (GP$) $1.93 ÷ $3.85 * 100 = 50.13% When you add extra costs on the product it will reduce the GP the store is supposed to get and that will affect the overall profit the shop and the business will get

26. REMEMBER • Have an understanding of the shop budgets, know what you are chasing, have targets, and trace and assess performance. We want every customer who walks into our stores to spend money, spend more money, and continue to spend more money. Create strong relations with the customers and gain their trust. Promote repeat business, upsell, and suggest more. Work together as a team and get the best out of each other.

27. THANK YOU