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In general the cost of doing business was considerably higher for the 

 stores doing a small business than for those doing a large amount. 



Salaries were found, of course, to be the chief item in the cost of doing 

 business. They ranged from 1.21% (in a store whose cost amounted 

 to 7.24%), to 22.41% (in a store whose cost totaled 35.9%), and averaged 

 10.15%. Rents ranged from .47% (total cost 8.44%) to 6.15% (total cost 

 32.61%), and averaged 2.25%. Advertising ranged from nothing to 1.81%, 

 total cost 7.24%), the average being .2%. It does not appear from this 

 survey that advertising added materially to the cost of doing business; 

 in fact, by the creation of sales which would bring about a more rapid 

 turn-over, with no increase in fixed charges, it would seem, in some 

 cases at least, that it actually decreased the cost. 



Bad debts ranged from nothing to 4.11%, the average for the 30 stores 

 being .65%. In every case where a store was doing business at a cost 

 of less than 10% this item of "bad debts" was at a minimum — in fact 

 in no instance was it higher than a half of one per cent; certainly 

 this would appear to be a strong argument for those who wish to 

 economize to do business on a cash basis. 



The investigation brought out with startling clearness one fact, which 

 every banker probably knows: — there are entirely too many men 

 operating small stores in the state (particularly grocery stores), where 

 bad business methods are being used. As an example, in conducting 

 the investigation, many of these men did not know what it was costing 

 them to do business, nor even what per cent of their receipts were 

 being absorbed by the various items which make up that total. Some 

 of those who were actually losing money were not aware of the fact 

 until the investigation pointed it out; by failing to charge a salary for 

 their own labor their accounts were showing an apparent profit, which 

 disappeared rapidly when a fair sum for their own labor was charged 

 against the books. It appears to me that here is an opportunity for a 

 big work to be done by the Retail Grocers' Association, in the establishing 

 of a usable system of accounting for the small grocer. Inefficient 

 business methods are costly not only to the merchant himself but to 

 the consuming public as well. 



In commencing this report I stated that turn-over would be considered 

 as a factor separate from the cost of doing business. I made the state- 

 ment chiefly in order to dispel the popular illusion that a merchant who 

 advertised extensively or did a large volume of business must necessarily 

 charge more for his products than a merchant who did not advertise or 

 who did business on a small scale. As a matter of fact, no set rule can 

 be established. Even in our modern business, the personal equation 

 plays too important a part to do so. Many small* merchants, with or 

 without advertising, possess business ability which enable them to sell 

 cheaply but profitably. On the other hand, of course, it is only logical 

 to expect a merchant doing a large business to be able to sell cheaper 

 than the one doing a small volume of business. - It would be more exact 

 to say that his cost per unit should be less and that he should, therefore, 

 be able to exact a smaller percentage of profit per unit. In using the 

 term "larger volume of business," I refer not particularly to the size of 



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