Grex Store Issues

Nov 27 19:40 UTC 1997

We need to make some decisions about funding the "Grex Store".

The concept behind the store is to sell Grex insignia items as a way to raise
money for Cyberspace Communications.  They'd be offered through a web page
and whatever other way we can think of.

Rob Argy has come up with a nice design that we are using in our first run
of items (it'd probably be cool to introduce new designs from time to time).

Currently we have:

   - sweatshirts (screen printed)
   - t-shirts (screen printed)
   - mugs (photographically printed)
   - mousepads (photographically printed)

My understanding is that with the T-shirts and sweatshirts, we save money by
making larger orders, while the mugs and mousepads don't have quantity
discounts.  Even without quantity discounts, it's useful to order them in
slightly larger batches since it saves handling time.

Because of these factors, we should probably try to maintain an inventory of
various merchandise.

However, we obviously don't want all our money tied up in merchandise
inventory.  We certainly want to maintain some money in our back account for
emergencies and such like.

How should we determine the amount of money to invest this way?

Do people have other ideas on how to more effectively manage the store?

Are there volunteers to help manage the store?

response 2 of 78:

Nov 28 00:46 UTC 1997

It seems to me that about 20% of our current unclaimed savings (that is, money
that won't be needed to pay a bill or finish an upgrade in the near future
might be a place to start.

response 4 of 78:

Nov 28 03:46 UTC 1997

I'd like to see the store be financially self-sustaining.  The general
fund could (has) gotten it started with a $750 initial "loan".  Did that
include the mousepads and mugs? 

What if that initial stocking fee was repaid to the general fund but the
profits kept in a store account.  This profit money would then be used for
future re-stocking purchases and only when the profit balance was
significantly healthy would any money be shifted into the general fund, if
at all.  I'd think we could simply view the store money as our advertising
money and be happy if it was self-sustaining. 

Until profits were sufficient to make another large purchase the Board may
wish to float another "loan" to the store.  Or the store could simply not
make another big "spec" order but rather conduct a special order event,
pre-paid.  But I'd really like to see the general fund kept out of this as
much as possible.  Too, when I speak of a special store account I don't
mean yet another bank account but a bookkeeping strategy, something that
would most likely be done anyhow.

response 6 of 78:

Nov 28 13:52 UTC 1997

Generally speaking, I agree with Mary.

response 8 of 78:

Nov 28 16:33 UTC 1997

Ingeneral, I think that's a good idea.  The only reason I see for the store
being given a head start is that T-shirts have generally sold well.  And it
*is* a form of advertising that can bring in more members over the long haul.

I think one more order of t's in a different design would be a good idea --
because people like choice.  But I think we might consider doing three or four
designs as custom orders for a trial period and then make a bigger order of
whichever sells really well.  After the second design is chosen, I agree that
if the store isn't self sustaining, it's probably a mistake to try to sustain
it.  (I can't see that happening, though.)

response 10 of 78:

Nov 29 06:38 UTC 1997

I'm afraid I don't understand what having a separate store account would
accomplish.  I suppose that it would lighten the treasurer's work load,
but it would increase someone else's more. 

Certainly I agree that the store ought to be "self-sustaining" in that it
should make money.  But since its only costs are the costs of stock, all
it has to do to make money is sell *something*. 

Are you worried, Mary, that somehow money will slip under the rug here? 
That if we keep the money in the general fund that somehow it won't be
clear how much money we have in stock, and how much we're making from the
store?  Because there are other ways we could make that clear.  (By adding
it to the treasurer's report, for instance, or having the storemaster
enter a monthly report.)

response 12 of 78:

Nov 29 13:07 UTC 1997

Mark, were the mousepads and mugs included in the bill for $736.00?

response 14 of 78:

Nov 29 20:27 UTC 1997

No - we haven't paid for any mousepads and mugs.

I guess I don't understand what you mean by making the store
"self-sustaining".  There is no way the store can lose money, because it
doesn't have any overhead.  The worst it can do is end up with stock that
no one wants to buy.  But that's a problem we have faced with T-shirts
before; I don't see how separating the store's finances from the general
fund will make any difference. 

The difference in the treasurer's job, if we had two accounts, is that
there would be fewer credits to record and less communication required
with the storemaster.  The storemaster (if I'm understanding the proposal
correctly)  would be responsible for receiving money for purchases,
recording the credits, depositing the money, and reporting regularly how
much business the store did.  That means we need a separate P.O. Box and a
separate bank account for the store, with the storemaster the signator on
both. 

Well, ok, but that seems like a lot of responsibility for the storemaster,
and a lot of duplication of what the treasurer is already doing.  Not to
mention introducing the overhead of the cost of another box ($40/year) and
another account (service charges). 

Am I completely lost here?  Is that not what you're imagining, Mary?  If
the important thing is to make sure the store operates "within a budget
supported by its sales", then we could accomplish that by having the board
review the sales figures before allocating money for new stock.

If we were Disney corporation, launching a huge gamble like EuroDisney, I
would see your point about isolating the risky endeavor from the whole.
But the store doesn't seem like that big a deal to me.

response 16 of 78:

Nov 30 01:03 UTC 1997

Exactly.  Mark, I don't think were talking to each other at all. ;-)
Somewhere, in my first response, I said this would not require
separate bank accounts and that the treasurer's job would be
unchanged.  Even the reporting would be the same.  What would
be different is that the Grex Store wouldn't end up needing
micro-management by the Board.  They would have the profits available
to use for restocks without needing Board approval.  The store's cash
needs wouldn't be dependent on whatever priorities were facing
the general fund.  If they sold stock, the money would be there.
If they didn't, they wouldn't need more money.  Meanwhile,
the Board can look at the general fund as money available to
keep Grex going and meet the demands of our mission.

Every few weeks you'd exchange mail with the Storemaster and he or she
would be told how much money *you* had deposited for t-shirts.  You'd
reimburse the Storemaster for postage on maybe a monthly or bimonthly
basis.  And every month *your* report would detail how much money the
store brought in, how much it spend, and the store's bottom line.  The
money would all stay in the same account.  It would be kept separate on
paper.  The Board will decide how much discretion the Storemaster had in
terms of purchasing power but I'd hope he or she would be allowed to spend
up to about $50 of what was in the Store's balance.  You would write
the checks to pay the store's bills.

If there is a way the Storemaster could deposit checks to the Grex
account without needing to be a co-signer, great.  The Storemaster
could do that for you.  But we don't need new bank accounts or
new signers.

One of the reasons I'd like to see this happen, besides making it easier
for the store to operate, is to not have a lot of general fund money
hanging out as store inventory.  Once the initial loan for startup is paid
back that won't be an issue.  The general fund will be available for
system needs.  Also, there will be a strong incentive for orders to match
demand and the Board won't be having to count stock while agreeing to new
orders.

Under this setup I expect the store to do well and the Board won't have to
micro-manage the effort. They can focus on more important issues.  If the
store doesn't bring in enough profit to be self-sustaining (possible if
too much of the wrong thing is ordered) then that will become obvious
quite quickly and the problem addressed. 

This really isn't all that complicated.  If it sounds like it is then I'm
not doing a very good job of laying it out. 

response 18 of 78:

Nov 30 13:19 UTC 1997

Well, OK, that's simpler than what I thought you meant.  And if, as you
suggest, Mary, we call the store's balance the "promotional fund" and use it
to pay for any advertisements, it solves the problem of deciding how much
money to allocate for advertising, which is something we also needed to
address.  I'm not sure that's a *good* solution, but I don't have a clue,
otherwise, how to decide how much to spend on advertising.  So it's a
welcome idea.

So you're imagining that if the promptional fund contains $700, and the
storemaster wants to order $700 worth of shirts, he need only ask the
treasurer for a check, and the board doesn't have to approve the expense at
all?  But if the storemaster wants to "borrow" money from the general
fund, then he needs to ask the board for approval?

I guess I have no objection to adding another category to the treasurer's
report, to subtract from it all purchases of stock and advertisements we
buy, and to add to it all sales from the store.  Right now the total will
be significantly negative, since we have paid out more than we have taken
in.  Perhaps the treasurer's report ought to include a summary of all
store stock as well?

response 20 of 78:

Dec 1 00:44 UTC 1997

Mark:  When Rob dropped of the Mugs and mouse-pads, he said he thought he had
been reimbursed for this.  This would have been quite a long time ago.  Way
back when Rob originally got them made.  I know I bought a mousepad and
Valerie bought a mug back then.  I thought we paid Grex, so I hope Grex paid
Rob.


Hmmm...  I think I'd handle this by making a rule:
       _____
       \
        >     (purchase price of item)    <   $900
       /____
     inventory

That is, we should never have more than some amount, say $900, invested in
inventory.  

This rule means the storemaster does not have to ask the board for approval
every time a purchase is made.  If the storemaster wanted the cap raised, 
then board approval would be needed.

The cap should be relatively high, so that purchases can be made in large
lots (thus keeping costs down).  We would expect the actual inventories to
average significantly lower than the cap.

For internal accounting, I'd probably ask the store keeper to report on
the total purchase value of Grex's inventory at the end of each month.  On
Grex's account books, we'd record that value, the purchase price of the
inventory, as part of Grex's total worth.  This way we won't see Grex's
finances take an apparant nose dive every time we buy a batch of T-shirts.
Instead, purchasing inventory will just show numbers moving from the cash
column to the inventory column.  We will see Grex's bank account rise
whenever the shop sells anything, since the sales price is higher than
the inventory price.

This is a bit of a pain.  Different shirt styles and colors have different
purchase prices.  I don't know what they are, though I guess I can get them.
But I don't see any sensible way of avoiding that without making complete
nonsense out of our account books.  I think it's pretty much a matter of
setting up a spreadsheet, recording purchase and sales price of each type
of item, and carefully updating the inventory counts of each item.  Not
really too bad.

I don't like the idea of farming all the profits from the store back into
the store.  I don't see why the store should necessarily grow significantly.
If there are reasons why it should get bigger, then the board should be asked
to grow its inventory cap.

response 22 of 78:

Dec 1 08:45 UTC 1997

I would add that the storemaster ought to keep track of requests ("backorders")
that get made but can;'t be fulfilled because the item requested is out of
stock.  That, and records of what has sold well in the past, will provide a
sound basis for deciding what to stock up on next time a purchase is made.

If bruin is still interested in the job after reading Jan's definitions, I
think he'd do it well.

response 24 of 78:

Dec 1 13:07 UTC 1997

If you are going to let the store manager place orders by
simply requesting the money from the general fund then I think
you need a few other safeguards other than a $900 max of stock
and money available.  If the general fund is flush with $6000
of cash assets then $900 is reasonable.  If the fund has just
had a big hit for hardware or donations are down and maybe
we only have $2000 available then $900 is way to high.

Maybe a dollar figure or a percentage of cash assets, whichever
is the *lower* figure.

I still would very much like to see store business kept quite
out of the general fund.  But that's just me.  

Too, whatever system ends up being used the treasurer's report will
clearly show, on a monthly basis, how much money went to the store and
what the bottom line cash assets are, right?  I'd hate see folks
following an "assets" line, thinking that cash is available
to keep grex running in the event of an emergency only to find out
it's being held in t-shirts.