Music Trade Review

Issue: 1941 Vol. 100 N. 6

Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
18
THE MUSIC TRADE REVIEW, JUNE, 1H1
ness and the office. Salaries are self-explanatory, however, the services
of the sole proprietor in executive capacity should be charged to Salaries
in Administrative expense, therefore, the salary of a sole proprietor or
corporate owner whose activities are divided between selling and ad-
ministration should be charged proportionately.
For minimizing clerical effort, taxes would be said to be all inclusive,
and would include those taxes that are to be borne by the business that
represent taxes on salaries paid, even though such salaries have been
charged to other types of departmental operations.
All taxes, such as capital stock tax, franchise tax, license, etc. should
be charged to administrative expense taxes. The only item of taxes
which might be charged to another category would be taxes on real
estate, which should be charged to occupancy expense.
Other items indicated as administrative expenses are self-explanatory.
SERVICE
SERVICE. The items comprising the elements of expense under Ser-
vice department are self-explanatory. Inasmuch as the service department
creates income from services rendered, and inasmuch as the services
rendered by the Service department are two-fold, that is, that it renders
service to customers as well as service to the store operation by the con-
stant conditioning and maintenance of salable merchandise, the Ser-
vice department should be placed in such position as to consider that
the gross profit arising from services rendered to customers for which a
charge is made to customers will be sufficient to offset the expenses in-
curred in the maintenance of salable merchandise within the store in
a salable condition.
above, are indicated as account 13. The amount so charged to these de-
partments will be credited to occupancy expense under account 15,
representing income from rent.
If a portion of the building is sub-let, or, if owned and a portion of
the building is rented to other tenants, the rent so received should like-
wise be credited to income from rent, account 15. In either event, it
must be recognized that the expenses incident to the occupancy of a prop-
ery for the purpose of operating a business that was organized for profit,
should be self-sufficient and not represent a loss. Therefore occupancy ex-
pense, like service, should at least break even, and the rent so charged to
the selling and administrative expense should be sufficient to offset all
occupancy expenses. If there is an income from sub-let space, the occu-
pancy account should, n all probability, reflect a small net income to the
business.
The suggestion above, with respect to allocating a rental charge to
the sales and administrative departments with due credit to occupancy
expense, is optional. It might be that some operators would prefer not to
effect a distribution of rent as an item of expense of the selling and ad-
ministrative departments of the business, therefore occupancy expense
as such would be an item of expense in a greater amount than shown on
the statement of profit and loss in subsequent paragraphs hereof. Corre-
spondingly, selling and administrative expense would be slightly lower.
SUMMARIZATION OF ACCOUNTS
At the close of the period after all transactions have been recorded
in the three books of original entry, and these entries posted to the
ledger, a trial balance of the ledger should be taken. If all entries have
WOKK SHEET
TP/AL BALANCE
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Work Sheet Applying to Paragraph on Summarization of Accounts
Therefore, it is proposed that the Service department be expected to
operate at an even break or a very minor loss. In order to recognize this
condition, income from services rendered to customers for which charges
have been made to customers, is proposed to be credited to the items of
expense that comprise the Service department and the net result of the
operations of the Service department thus shown.
This is one department that management of stores definitely watch and
over which control should be exercised, so that the gross profit from
services rendered, premised on a 50 r /c gross profit margin would cause
the department to be self-sufficient or self-sustaining.
OCCUPANCY
OCCUPANCY. The individual items of expense comprising this classi-
fication are self explanatory. This classification of expense is established
premised upon either the rental of the building occupied by the store,
or by the ownership of the location which houses the store. In event
of rental of the building, all expenses incident thereto, including rents
paid, should be charged to occupancy expense.
If the building is owned by the business, all expenses incident to
the ownership should be charged to the various classifications of expense
listed under occupancy. Premised upon either rental or ownership, it
is proposed that the proportion of rent that would ordinarily apply to the
sales rooms, as well as the office, should be charged to selling expense
or administratvie expense, which, according to the chart of accounts
been properly made and the total of the debits is in balance with the
total of the credits, the various accounts and their balances are then
listed, after which they are divided into two groups, or balance sheet
items and profit and loss items.
The analysis of any business is always made from two major state-
ments, the balance sheet and the profit and loss statement, or state-
ment of income and expenses. These statements are merely the various
accounts indicated above, arranged in such a manner as will clearly
indicate the results of the operation for the period and the statement of
condition after such operations.
As Exhibit C attached hereto, a work sheet is submitted covering the
summarization of accounts of a business whose volume of business was
$72,000.00 for the period. The figures contained in this work sheet are
hypothetical, however. Exhibit C is presented as a mere indication of
the procedure in the development of a work sheet for purposes of sum-
marizing the accounts disclosing the result of operation for the period
and the condition of the business at the close of the period.
To be continued in the July Issue at which time hypothetical profit
and loss statement will be published based upon work sheet.
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
THE MUSIC TRADE REVIEW, JUNE, 1941
Direct Mail
Advertising
As Outlined by C. D. Dietrich - a
Continuation from the May Issue
Now that you have decided who should
be on your mailing list, the next problem
is to get those names and addresses, and
to classify them according to whether as
prospects they are hot, warm, or just a few-
degrees above cold shoulder, -whether
they are in the above $1,000 class, the
$500 group, the $150 division, or perhaps
even smaller.
YOUR OWN CUSTOMERS
The logical way to start this mailing list,
and the easiest way, is to lae names and
addresses off your sales record and add
them to your mailing lit. Go back as fai
as your records will go. Start with to-
day's sales. Puday's sales. Put that latest
customer on your list . . . complete and
exact name (don't guess as to initials
and spelling . . . get il right), correct ad-
dress, phone number, daie of piano sale,
complete information on make, type, and
year of piano and its price, salesman who
made sale, information on family as to
members and age of children and who
uses the piano, etc. Don't stint on infor-
mation . . . the detail becomes very val-
uable when it's time to again contact the
customer by a salesman's call—and that,
by the -way, is something that should be
done periodically, as will be evident
shortly.
PROSPECTS PROVE YOUR CUSTOMERS
Suppose you have on your records the
sale of 500 pianos, that means you have
a 500-name start. Now, start calling on
you sold several years ago. Remember,
of all the people in your trading area,
these customers, especially those whom
these customers of yours will be most
likely to invite you into their homes, as
a friend who has done something val-
uable for them. If you have given them
a square deal, and I'm sure there is no
piano dealer in this room who would do
otherwise, you will find these past cus-
tomers of yours not only willing, but
usually anxious to help you sell pianos to
their neighbors, friends, and relatives. I
do not subscribe to the theory, so rampant
in the world of today, that people are sel-
fish, that they think only of themselves
and not of others. You'll find that where
there is a family whose life has been en-
riched by a piano, they will be only too
glad to share their spiritual wealth with
others, and will gladly give your sales-
men the names of others who they ieel
should have a piano for the good of their
souls. I've never bought an insurance
policy without experiencing the follow-
up contact for the names of others who
should have a policy. The National Geo-
graphic builds up almost its entire sub-
scription list through its subscribers; at
least twice yearly I receive in the mail a
form I'm asked to fill out with the names
and addresses of others who would en-
joy reading the National Geographic. In-
cidentally, why not use direct-mail in the
same way . . . mail each of your past
customers such a blank on which they
can list names of piano prospects, with
columns in which to inform you whether
they now have an old piano, how many
children there are in the family, etc.
By all means, use your customers to
build up a prospect list. Suppose each
customer gives you only two names . . .
that means that your list of 500 customers
grows to 1500 customers and prospects.
Your customer knows who your best
prospects are, for didn't the neighbor re-
mark just a week ago that she wished
her daughter would learn to play the
piano like his daughter? and hasn't he
watched nephew John adoring the piano
and showing all signs of wishing that
he, too, had a piano at his home? In my
home, I learn from conversation and ob-
servation who is interested in a piano.
And I can also tell you the type of piano
and the price that would interest these
prospects. Thousands of other piano own-
ers can do likewise.
If you have been in business many
years and have a large list of past cus-
tomers, you have as large a gold mine as
you need to bring you all the goid you
want. Your mailing list -will be as large as
your sales force can follow up. But this
business of digging up prospects by dir-
ect-mail is more than a matter of circular-
izing your salesman's calling list. You can
well go far beyond that . . . but be sure
that you do not over-reach yourself, for
if your direct-mail work should interest
more people in pianos than your sales
force can handle, your efforts may result
in piano sales by your less-occupied
competitors, at your expense. There are
two schools of thought in this regard:
some advertisers argue direct-mail should
contact those whom the salesmen cannot
call on or cover adequately; others argue
that direct-mail should cover only those
whom salesmen are calling on. My ex-
19
perience has proved that direct-mail
should do both, with heavier emphasis
on the latter because it paves the way
for a salesman's call and keeps the pros-
pect "warm" bet-ween calls.
Once you go beyond your own cus-
tomer list and your customer-built pros-
pect list, your work begins . . . and some-
body -will expect payment for the work.
Your second group, those with children,
is an easy one to compile -where school
boards will permit you to obtain the
names of children enrolled, or where
teachers or students will give you the
information at so much per name, or
where Parents-Teachers Association mem-
bership lists are readily obtainable
through their secretaries. It is not enough
to have just the names and addresses, if
the direct-mail effort is to bring maximum
returns; each name should be classified
as to whether or not there is a piano, what
type and age, -who plays, who is a pros-
pective player and -what age, etc. In the
third part of this talk it will be evident
that an unanalyzed mailing list cannot
bring the quick and certain returns that
carefully analyzed mailing list -will bring.
CANVASSING AND VITAL RECORDS
House-to-house canvassing is another
good -way to determine where there are
children. It can be done by phone.
Churches can and will help, for where is
there a pastor or a priest who does not
know that music is food for the soul? . . .
that is, if it's the right kind of music! In
smaller communities, newspapers gen-
erally cooperate, by furnishing the names
of families with children of any desired
age bracket. In the back issues of news-
papers and at city halls and county
courthouses are the records of all births,
and to determine who has 6-year-old
children, one need but go back six years
and take off those birth records—after
which comes the job of determining
where the parents now live, and whether
the children are still living. Do not over-
look that last point . . . save your neigh-
bor the heartache of being asked in your
direct-mail to buy a piano for a child that
died a year ago. Always be sure you
have up-to-date information. If you pur-
chase your list thru a newspaper, or
any other source, be sure the list has
been thoroly checked before you accept it.
You will find it profitable to spend a few
cents extra to make sure that each name
is accurately checked, not alone from the
standpoint of spelling and address, but
also as to the other factors I have men-
tioned before.
MAILING-LIST BUILDING BY TRADE
And let me give you a thought at this
point. To many pianists, the problem is
not alone the price of the piano, but also
the cost of the sheet music. That's my
problem, too. If your store happens to
handle sheet music, why not pay for
direct-mail building assistance IN TRADE?
(To be continued in July)

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