by Tina Grazier
We have been discussing the effects of excessive taxes and regulation on small and local businesses. It seems to me that one of the barriers to understanding the plight of business is lack of first hand experience. The average person seems to be under the impression that anyone who owns a business is rolling in doe and just too cheap to share the wealth. I’ve wondered how to give the business owner experience to these inexperienced people who often support policies that result in fewer opportunities, higher prices for the goods they buy, and growing resentment in employees and employers.
Today I ran across an article in the Daily Mail about a small “chocolatier” in Briton who is closing his popular shop with deep regret. The owner, Simon Dunn, left a message in the form of a letter to his customers on his storefront windows. See the letter, which itemizes Dunn’s expenses and income here:
Mr Dunn, 52, listed the outgoings for his ‘busy and popular’ shop, which showed that his £208,000-a-year taking were being swallowed up by £52,000 in yearly rent and business rates, £41,600 in VAT and taxes, £41,600 in supplies and £67,600 on wages. …
… On a good week I made just £100 after taking £4,000. …
… ‘People were so shocked when they read the letter. They don’t realise how costly things can be.’
He’s right; they don’t have a clue, and why should they since they have never walked in those business shoes?
But is it too much to ask that they educate themselves as to the consequences of excessive taxation and regulation when in fact it will ultimately impact their own lives?
The problem with government intrusion into our freedom is that it eventually robs the human spirit of its sense of adventure and creative urge. The many who ride in the wagon don’t understand what it takes to create wealth and opportunity for the ride they demand. They don’t understand what happens when too much burden is placed on wealth and opportunity producers…or what it does to the smaller shops and restaurants that make our everyday lives more pleasant and enjoyable.
England is a few steps ahead of America. The VAT, for instance, is a real business killer, but this chocolatier’s story rings all to familiar for many American business owners. Will Mr. Dunn’s real life story create even mild curiosity in some of the inexperienced folks with equal votes in America? Or will their continuing demands for more and more government services and regulatory control shutter the doors of small businesses in America…perhaps forever? Will America reaffirm its place in the world as the land of the free…or will we continue down this dank and dreary “road to serfdom” under centralized government?
Only the American people can decide…we are on our own but as a united front we can restore our great republic.
“The problem with government intrusion into our freedom is that it eventually robs the human spirit of its sense of adventure and creative urge.”
Hear, hear. It’s about fre-dom, not free-stuff.
You got it…makes you wonder how people got to be so helpless and dependent in just a few short decades!
Great idea Tina. Owning ones own business can be a dream come true, but it’s not for those who aren’t willing to work 24/7 to keep the doors open.
Here are two terms those interested may find informative.
Cost Of Goods Sold:
COGS. An income statement figure which reflects the cost of obtaining raw materials and producing finished goods that are sold to consumers. Cost of Goods Sold = Beginning Merchandise Inventory + Net Purchases of Merchandise – Ending Merchandise Inventory.
For example:
Beginning Merchandise Inventory = $150,000
Net Purchases of Merchandise = $400,000
Ending Merchandise Inventory = $125,000
COGS = 150,000 + 400,000 – 125,000 = $425,000.
In standard accounting practices, gross margin can be calculated by subtracting the cost of goods sold from total sales.
Read more: http://www.investorwords.com/1158/Cost_Of_Goods_Sold.html#ixzz2alDaP000
Net Profit Ratio (NP Ratio):
Definition of net profit ratio:
Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as percentage.
Components of net profit ratio:
The two basic components of the net profit ratio are the net profit and sales. The net profits are obtained after deducting income-tax and, generally, non-operating expenses and incomes are excluded from the net profits for calculating this ratio. Thus, incomes such as interest on investments outside the business, profit on sales of fixed assets and losses on sales of fixed assets, etc are excluded.
Check out the formula and example here:
http://www.accounting4management.com/net_profit_ratio.htm