I founded a surf shop back in the day called Fiveforty Surf Co. along Katipunan Avenue. It was the first custom surfboard shop in the Philippines and later became a retail store selling all the major surf brands. That was my first lesson in how to fail at business. I failed terribly at the surf shop and retail and since then have helped launch Tomato Kick in the same building. In addition to manufacturing, F&B and retail, I’ve also done water sports in Boracay, Subic and am currently building the Quiksilver Surf School in Zambales.
This series will contain all the things I wish I had known from the very beginning. I encourage all of you to interact with these blogs because I’ll answer any of your questions and try to clarify all the information I put out and since most of this is my own experience in business and I’ve never taken any courses other than basic accounting, I would appreciate any of your input and advice if I need correction. Let’s make this an interactive thing. There are many types of businesses and business models but I’m being cautious as to not overwhelm you with a bunch of business jargon. For the purpose of this series, I’ll flip around between four different types to give examples: Service, Manufacturing, Retail, and F&B.
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So you need to buy a container for the juice to go in so you get one of those big plastic jugs with the nozzle for you to just serve the juice from the jug once it is mixed. This is your first purchase of an "asset" which, loosely defined for our purposes is something you purchase and use for business that has a resale value. Let's say this costs P50. So now you have P450 in your "bank" (again the little box) and a P50 container for your juice that you will use for business. Say you decide you bought the wrong container but you used it a bit so you can't return it so you sell it to your mom for P40. Essentially you have "spent" P10 of the value of the container by using it. This is called "depreciation expense".
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This is also true for restaurants because you have to account for broken dishes and your equipment is not going to last forever so you need to make sure that the P100,000 that you spent on that chiller for your meats is back in the bank by the time it depreciates and can no longer be used or you're going to have a big problem down the line. So back to our juice stand. You have P490 in your box-bank and you haven't started yet. Luckily the right container that you need is P40 so although you lost P10, you still have a container and P450 in your bank.
Next time were going to buy our raw ingredients and begin production of our first batch of juice ready for the market.