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Page 63
How To Investigate Any Business Opportunity
tween these changes and changes in sales volume.
8. How do the advertising and promotion costs of this business compare with typical or average
figures for this kind of business? Higher? Lower? A bout the same?
Figures are available from trade sources and other reporting agencies that will give a standard of com-
parison.
9. Are other forms of promotion being used effectively? Window display? Interior layout and dis-
play?
For many kinds of businesses, other promotion methods may be as important as media advertising, or
even more so. All possibilities should be studied as to their importance in the business under considera-
tion.
10. Is the company capitalizing on all special promotion events suitable to the business?
This point covers a wide range of activity. Examples might be maximizing sales effort at the seasonal
peak or peaks of the business, using premiums, participating with sources of supply in special promo-
tions, and so on.
11. What percent of sales has gone into selling-payroll costs for the past 10 years? What has
been the trend? Are selling costs increasing, decreasing, remaining about the same?
Changes in selling costs should be studied singly, in comparison to changes in sales volume, and in
comparison to standards or averages for businesses of the same kind.
12. What is the quality of the selling effort of this company as shown by such factors as training,
sales attitude, methods of compensation, and the like?
Selling-payroll costs as a measure of sales effort do not reveal the forces at work behind this effort and
affecting its quality. Motivation of sales personnel through training, method and amount of compensa-
tion, and sales management should also be considered.
Past Sales
The history of sales growth within the company and in relation to similar businesses is considered the
principal measure of company progress. The buyer or seller should note three types of variations that
influence sales and how each may affect the buy-sell transaction.
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