Question

From the key terms listed below. Select a business that you either are working for, have worked for, have observed, been a customer of, or have researched. Write a 2-page paper defining, illustrating, describing, and discussing these terms individually, as they relate to the business you selected.

KEY TERMS: ADMINISTRATIVE EXPENSES, COST OF MERCHANDISE PURCHASED, COST OF MERCHANDISE SOLD, INVOICE, NET SALES

As you write, explore and examine all key related concepts. Use subheadings and number sequentially each of the terms you have chosen. Include a title page and a reference page. Seek other reference sources in addition to your text, and include in-text citations. Compare and contrast other authors and scholarly sources with your text author and cite those in-text. Add context and application from your own work experience and observation.

Answer 1

I am selecting "TEXTILE BUSINESS" since I have been Observed in detail and been a customer in this field.

Let me give you the basic Idea Related to Textile Business:

"TEXTILE BUSINESS"

Introduction:

Starting a textile business for ethnic wear means you need to have enough knowledge about the material of cloth and even its designing. Textile business is segregated into two types, one which includes every single fabric for sale and another one when a shop has very less amount of fabrics available within it for selling. So first you need to decide which type of business you are planning to start.

A textile business is included with the business of designing, producing and distributing yarn, cloth etc. It can be one of the most active business these days, but some time is required to grow to the height.

As well as you should be aware of the fabric types which will be sold by you.

Understand the market

Before initiating any business the most important thing is to know about the market and market strategies. It is a good idea to take opinion from someone who is experienced in this business. You Must Acquire Basic Knowledge of the following concepts:

a) Product demand

First, most important thing is to know about the products and what all products you are going to sell to the customers. For this, you need to know the product demand, which means what all products are in demand in the surrounding, try to keep those things which are in demand. Try to focus on the most required products. Demand may not be same everywhere so you should carry out an area-wise survey to determine it.

b) Competition

Learn from the competition as well, what they are good at. And if there is any availability of Good Competitor shop try to overcome with the things which you are good in.

c) Pricing

Pricing will be different for every product, it may also differ as per the product quality and quantity.The Proper Care must be taken before Determining Price of its Product and the Value of such Product derived by the customer

Research

During the inception of any business, you need to know every single thing about it. Start doing research for the market and the customers. What do they desire for? Are you capable to provide the necessary things?

You can also search for required things like the amount of capital you would need to start the textile business, your funding options, steps you need to take to promote your business, the type of licensing your business needs and much more.

Connect with vendors for textile, printing & production

In this business, you should connect yourself with the vendors who can provide your raw materials in bulk at an affordable price. Contact your friends and colleagues for such vendors. As well as there are many online ways to find vendors for your business.

Find the appropriate fabric

There are a variety of fabrics such as Cotton, Silk, Satin, Wool, Rayon etc. You need to decide which fabric you are going to sell in your store. According to that, you need to search for the vendors and inform them about it. You should be aware of the high quality of fabrics which will be sold to the customers. There are many handmade materials which are appreciated a lot so you can keep them in the shop.

Location

The most important thing in every business is to start up the business for ethnic wear in the appropriate place for starting the business. The location should have a huge supply of water and electricity. Find a location which will be having a various target audience in the surround

Transportation

If you are starting a textile business you need to be sure that you have already added the charges for transporting in your budget. You can export the business from one place to another as per the requirement.

Advertise for your business

Now you are all set, the last and the most important thing is the promote your business. Explore about your business everywhere, to your friends, your colleagues, your neighbors. You can utilize social media platform for promoting your business. Such as you can create your own website, post blogs, distribute pamphlets, share your product knowledge to the customers.

You can eventually reach out to a large number of target buyers by using these tools.

Before starting any business make sure that you have enough knowledge about that business. Because lack of knowledge cannot lead the business, make sure that you know every single thing about it. It will also help to make innovation in the business.

Sourcing Material: Exploring various textile hubs and markets like Surat, Kolkata, Jaipur and fashion hubs like Delhi, Mumbai, Bangalore, etc will surely help you to keep balance between the sourcing in line with the latest fashion. For more information, you can collect information on various trends through local market as well as research well online on fashion sites.

Designers: You can collaborate with various fashion designing institutes and ask them to create designs for your brand on regular basis (on mutually agreed terms). You can also take interns as required. For freelancers, there you can surely explore your local facebook community pages, blogs and seek references for designers.

Tailoring : Taking help from Fashion Designers will surely help you explore this aspects of trade. I am not too sure about your location, but you need to explore tier 2 and tier 3 cities to find talent as well as keep your cost to the lowest. Exploring places like Surat will surely help as that is the textile hub when it comes to women’s wear and there are lots of trade houses that manufacture as per orders.

E-commerce and branding: Setting up an e-commerce store is too easy for these days. You can create your own website through professionals web-designers at anything for Rs. 15000 or so. Take help of digital marketing experts to increase your sales and get your sales through social media. The other aspects of online sales is to register with various portals like Flipkart, Amazon and so on. However, all this requires high dedication from your end to get long term results. Creating brand in ethnic wear is very tough given the fact that this is very unorganized sectors. Hence, focus on creating customer loyalty and maintain high retention rate among the existing customers. This is help you over the time. Remember, creating brand is long term activity.

Order Management and Payment System: For offline and payment modes, there are vast options in software readily available in market and are customized as per your requirements. You need not shell out huge amount for such software. All you need is proper understanding of your requirement and option to add features in software as required at later stage so that you need not buy a new software again.

The capital investment will depend on various factors like the customer base you are targeting, the scale of operation, the range of options you wish to option to customers, the online presence and so on. So I would rather want you to first decide on your investment amount and then figure out the best possible use of resources.

Further, as per the requirements of the questions, the following are the Key terms explained related to textile Business:

1. ADMINISTRATIVE EXPENSES:

An expense incurred in controlling and directing an organization, but not directly identifiable with financing, marketing, or production operations.
The salaries of senior executives and costs of general services (such as accounting, contracting, and industrial relations) fall under this heading. Administrative costs are related to the organization as a whole as opposed to expenses related to individual departments. Also called administrative expenses.

2. COST OF MERCHANDISE PURCHASED:

Manufacturing companies are companies that make a product. Because these companies have inventory in various stages of production, there are three inventory accounts that we must deal with in order to calculate cost of goods sold. The three inventory accounts are:

Raw materials inventory
Work-in-progress inventory
Finished goods inventory
Each of these accounts must be calculated to see how much inventory from that account moves to the next account and eventually to cost of goods sold. The basic calculation for each of the accounts is the same.

Beginning Inventory
Plus: Something added to the account
Less: Ending Inventory
Equals: materials or goods transferred out of the account

Raw Materials Inventory

Raw materials inventory is the inventory of materials waiting to go into production. These are components of our product that have been purchased to make our product. In this case, we start with beginning inventory for the raw materials inventory account. What do you think we add to this account? We would add purchases of raw materials. Next, we subtract the ending inventory in the raw materials inventory account which is obtained by counting what is still on hand at the end of the period.

What happened to the stuff that is no longer there? Those materials were requisitioned by employees to use in the production process. They are being used to make our product. We call the materials that were taken from the room materials used in production.

Those materials were transferred into work-in-progress inventory.

Work-In-Progress Inventory

Now that we have put materials into production, what else goes into the cost of our product? The three product costs are direct materials (which we have already placed in the room), direct labor, and manufacturing overhead. These three accounts are also called manufacturing costs. Add the cost of materials used in production to direct labor and manufacturing overhead costs. These costs are our “something added to the account.”

Finished Goods Inventory and Cost of Goods Sold

We have transferred cost of goods manufactured into finished goods inventory. For this room, this is our “something”. Add beginning inventory and subtract ending inventory balances for finished goods inventory and we are done.

COST OF MERCHANDISE SOLD

The cost of merchandise sold is the cost of goods that have been sold by a wholesaler or retailer. These entities do not manufacture their own goods, instead buying the goods from third parties and selling them to their customers. If wholesalers and retailers were to instead manufacture their own goods, this term would change to the cost of goods sold.

The calculation of the cost of merchandise sold is to add the beginning inventory balance to merchandise purchases during the period, and subtract out the ending inventory balance. Thus, the calculation is:

Beginning merchandise inventory + Merchandise purchases - Ending merchandise inventory
= Cost of merchandise sold

There are several factors that can influence this cost. If there are purchase discounts, allowances, or freight costs, these items are added to the merchandise purchases amount.

INVOICE

An invoice is a legally-binding document (assuming both sides have agreed to the payment and other terms) that a supplier sends to the buyer after the goods or services have been provided.

NET SALES

Net sales are the portion of a firm’s revenues that remain after deducting the allowances for any missing or damaged goods, returns, and the sales discounts. In other words, it’s the remaining sales after all returns, discounts, and allowances are removed from the gross number.