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BrewDogRadio
10-29-2008, 11:15 AM
Hey guys,

I just recently joined probrewer. I am an MBA student at DePaul University focusing in Entrepreneurship and was putting together a business plan for a Craft Distribution Company and was hoping I could get a few questions answer here. I have hundreds of questions but I would like to focus on the financials for now. Also I know that some of this information is sensitive to companies, so even if i could get a ballpark range that would be great.

1. Anticipated Sales Return Rate (estimate of sales that will be returned or refunded i.e. damaged, defective, etc)

2. What is your % Cost of Sales. This is the estimated mark up not including labor or overhead. This is the strait purchase price vs. sale price %.

3. What commissions do you pay your sales staff?

4. How many employees are needed to run a distribution company with a revenue of roughly $500,000.

As you can imagine, I have lots more and would love to talk with anyone in the industry. Please feel free to email me directly at ckoszewski@gmail.com. Thanks for your help.

Craig Koszewski

frigatebay
10-29-2008, 06:22 PM
1. Anticipated Sales Return Rate (estimate of sales that will be returned or refunded i.e. damaged, defective, etc)

less than 5%

2. What is your % Cost of Sales. This is the estimated mark up not including labor or overhead. This is the strait purchase price vs. sale price %.

25-35%


3. What commissions do you pay your sales staff?

hourly +per case bonus

4. How many employees are needed to run a distribution company with a revenue of roughly $500,000.

3-4

Jim Schembre
10-30-2008, 09:54 AM
In response to your questions about distribution. There are lots of issues that need to be addressed but here are some answers to your questions.
1) Sales rate of return including breakers and out of date runs less than 1% on average. There is a difference in returns as it relates to mispicks, misorders and that will depend of your selling system and operational system. But if it is over 1% you need to hire new salespeople and new warehouse pickers.
2) The average wholesaler in the nation works on a margin of around 27% and that is figured on laid in price to your warehouse which would include state and federal taxes and all freights.
3) sales compensation can either be a pay for perfomance which is basically a salary with performace levels to hit. or Commision which is simply based on gross sales times a percentage for commision. One takes management the other is self controlled.
4) with sales of around $500,000 and a margin of around 27% that leaves you a gross profit of $135,000 the average wholesaler that makes money has a total labor cost vs gross profit number of around 45% so that means that you could spend $60,750 on employees to be successful. The average wholesaler employee with benefits runs around $40,000 so you could possibly have one and 1/2 employees.
hope that helps contact me if you want more information.

BrewDogRadio
10-30-2008, 12:03 PM
Thanks for the great replys guys.

mckenna
01-03-2009, 12:49 PM
I too am working on a feasibility plan for a craft beer distributorship. I am having a difficult time estimating sales/demand in my region. Could anybody lead me in the right direction? Thanks.