BFF Part 5 - Profit

Bestway Rental, Inc.
Best Foot Forward

“Profit”
Version 1.15.14
Best Foot Forward
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2012, 2013, by Bestway Rental, Inc. All rights reserved. No parts of this material – written, audio or video – may be
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recording means or otherwise, without permission from Bestway Rental, Inc.
Contents
Section One ..................................................................................................................................................... 4
Profitability.................................................................................................................................................. 4
Profit Enhancers .............................................................................................................................................. 4
Bestway Standards .......................................................................................................................................... 5
APB .............................................................................................................................................................. 5
Potential Rental Revenue ........................................................................................................................... 6
Rental Revenue Performance % ................................................................................................................. 6
Revenue Growth ......................................................................................................................................... 7
Section Two ..................................................................................................................................................... 7
Credit Standards ......................................................................................................................................... 7
COD vs. Free Time Dollars ....................................................................................................................... 8
BestCare Percentage ............................................................................................................................... 8
Training Percentage .............................................................................................................................. 10
Turnover ................................................................................................................................................ 10
Model Store Operating Budget ................................................................................................................. 12
Section Three ................................................................................................................................................ 14
Understanding & Controlling Expenses .................................................................................................... 14
Product Costs ............................................................................................................................................ 14
Depreciation of Rental Inventory.......................................................................................................... 14
Cost of Sales .......................................................................................................................................... 14
Gross Profit ........................................................................................................................................... 15
Labor Expense ........................................................................................................................................... 15
Salaries and Wages ............................................................................................................................... 15
Payroll Taxes ......................................................................................................................................... 15
Employee Benefits ................................................................................................................................ 15
Losses ........................................................................................................................................................ 15
Skips & Stolen ....................................................................................................................................... 15
Missing Merchandise ............................................................................................................................ 16
Over/Short ............................................................................................................................................ 16
Broken TV Screens ................................................................................................................................ 16
Other ......................................................................................................................................................... 16
Junk Inventory ....................................................................................................................................... 16
Delivery Expense ....................................................................................................................................... 16
Gas & Oil................................................................................................................................................ 16
Bestway Rental, Inc. © 2013 Version Jan 15, 2014 Page 1 of 24
Maintenance & Repair .......................................................................................................................... 16
Vehicle Lease......................................................................................................................................... 17
Vehicle Depreciation ............................................................................................................................. 17
Vehicle Insurance .................................................................................................................................. 17
Other ..................................................................................................................................................... 17
Service Expense......................................................................................................................................... 17
Parts & Supplies .................................................................................................................................... 17
Contractor ............................................................................................................................................. 18
Communication Expense .......................................................................................................................... 18
Utility Expense .......................................................................................................................................... 18
Advertising Expense .................................................................................................................................. 18
Flyer Cost............................................................................................................................................... 18
Flyer Distribution .................................................................................................................................. 18
In Store Promo and Print Local ............................................................................................................. 18
Agency Fee ............................................................................................................................................ 18
Other ..................................................................................................................................................... 19
Outside Services ........................................................................................................................................ 19
Security ................................................................................................................................................. 19
Pest Control........................................................................................................................................... 19
Other ..................................................................................................................................................... 19
Other Operating Expenses ........................................................................................................................ 19
Postage & Shipping ............................................................................................................................... 19
Repairs / Maintenance .......................................................................................................................... 19
Property Tax .......................................................................................................................................... 20
Store Forms ........................................................................................................................................... 20
BestCare Expense .................................................................................................................................. 20
Misc. ...................................................................................................................................................... 20
Occupancy Expenses ............................................................................................................................. 20
Profit from Operations .............................................................................................................................. 20
General & Administrative (G&A)............................................................................................................... 21
Recruitment .......................................................................................................................................... 21
Legal/Accounting/Consulting ................................................................................................................ 21
Bank & Credit Card Charges .................................................................................................................. 21
Computer Support ................................................................................................................................ 21
Office Supplies ...................................................................................................................................... 21

Store Supplies ....................................................................................................................................... 22
Licenses & Fees ......................................................................................................................................... 22
Depreciation.............................................................................................................................................. 22
“Checkpoints for Success” ........................................................................................................................ 23

Section One
Profitability
“Leadership in business is ultimately expressed in financial results. Continually seek

ways to increase revenues or reduce costs.”
Objective: 20+% profit.
Purpose:
1. Create opportunities for our associates
2. Fuel growth for the company
Golden Rules:
1. Understand how every decision affects profit
2. Treat all products with respect
3. Treat all customers with respect
4. Sell packages / add-ons
5. Watch your pennies and the dollars will take care of themselves
6. Keep charge-offs below 3%
7. Keep depreciation of rental merchandise below 25% of rental revenue
8. Strive for $110 APB
9. Keep free time and extensions at a minimum to ensure minimum performance percentage
of 92%
10. BestCare Plus Program
Tactics:
1. Work with a sense of purpose
2. Know your programs, products and packages
3. Inspect what you expect
4. Strive to get one extra delivery per day
5. Grow your customer base and APB
6. Understand the P&L
Profit Enhancers
How to increase PROFIT dramatically:
 Grow your BOR
 Grow your APB
 Potential revenue
 Percent collected…we must average over 92% performance collected on a three
month average
 Reduce depreciation
 Revenue growth
 Hit collection standards
 Increase COD, reduce free time
 Increase BestCare and Waiver fees
 Train and develop your people
 Reduce turnover
 Control overtime
 Collect all fees and keep lost fees below 2%

Bestway Standards
The following steps offer information to assist you in understanding key measurements and
defines the Bestway standards for each:
APB
This term is used to define the Average Price of each BOR on rent. This reflects what the
average payment per BOR is on a monthly basis. The Bestway standard for this key
measurement is $110.00. The Stretch Goal for this key measurement is $115.00
Although increasing the number of BOR is critical to the success of your store, you must also
consider the revenue generated from each BOR; thinking in terms of “quality as well as quantity.”
APB is calculated as follows: Potential Revenue Divided by Number of BOR Equals APB
Remember, as your BOR increases or decreases, so does your potential revenue. These
changes will also result in a change to your APB. For example:
Day 1 Day 2 Day 3
Same BOR as Day 2

LRG @ $89.99 Month Same BOR as Day 1 PLUS
EXCEPT
Rented BRG @ $119.99 LPT @ $139.99 Month

LPT @ $139.99 Month
Month Returned
Rented Washer @ $52.99 REF @ 99.99 Month

REF @ 99.99 Month
Month Returned
Potential
Potential $139.99 Potential $329.97 Revenue $502.95
Revenue +$89.99 Revenue + $119.99 Monthly - $139.99
Monthly + $99.99 Monthly + $52.99 Rates Of 3 - $99.99
Rates Of All 3 = $329.97 Rates Of = $502.95 Remaining = $262.97
BOR All 5 BOR BOR
APB APB
APB Potential $329.97 Potential $502.95 Potential $262.97
Revenue ÷ Revenue ÷ Revenue ÷
divided by # 3 divided by # =$100.59 divided by # = $87.66
of BOR = $109.99 of BOR of BOR
Note that the ending number of BOR is the same for both Day 1 and Day 3, while both the
potential revenue and APB for these days show significant differences. Also, note that although
you have less BOR on Day 1 than on Day 2; your APB is higher on Day 1.

This key measurement is affected by:
 Keeping “high end”, “attention getting,” merchandise in stock. Display these in your
window areas, facing out (remember to “cover” product backs). You will entice the “high
end shopper” by proving that we have the merchandise they want.
 Properly displaying products to promote package rentals; such as ensuring that matching
lamps and tables are displayed with matching living room groups; and sound bar systems
are connected to TVs and “turned on” to display great HD.
 Using “Package” and “ADD On” price tags on the showroom to demonstrate the value of
package rentals. Promoting these deals by quoting these prices during customer
inquiries.
 Creating package agreements when a customer chooses to rent more than one unit.
Although you will have a lower number of BOR, you will have a higher APB; and you will
provide additional value to the customer. This increases the possibility that they will
continue the agreement to ownership. Ideally, at least 40% of your BOR should be part of
a package agreement.
 Attempting to “sell up” to a unit with a higher monthly rate when the Customer qualifies.
 Selling “add-ons” to existing agreements.
Remember, if you process an agreement with a weekly rate of at least $26.00, or a monthly
rate of at least $110; you have achieved your APB goal for that delivery.
Potential Rental Revenue

This term defines the total monthly rental income available if every account currently on rent is
paid as scheduled. The Bestway standard for this key measurement is
$83,000.
The Stretch Goal for this key measurement is $100,000.

Achieving this goal will establish yours as a MILLION DOLLAR STORE!
Information to identify your total potential revenue is provided each day on the Daily Report.
You can affect this key measurement by:
 Gaining BOR
 Increasing APB
Rental Revenue Performance %

This term is used to define the percentage of all potential rental revenue that you have
collected. The Bestway standard for this key measurement is to collect 90% of all potential
revenue each month.
The Stretch Goal for this key measurement is 92%.
Revenue Performance is calculated as a percentage as follows:
Actual Revenue Collected Divided by Potential Revenue
For example:
Potential Revenue Revenue Collected Revenue Performance

$72,385 $66,847 92.35%

 Controlling your credit; collecting all rental payments due from your existing accounts, and
performing any necessary merchandise returns as soon as possible.
 Controlling free time and extensions on new accounts. For example, if a customer opens a
new account on Friday and we set a Saturday due date, we should collect an initial
payment of 8 days rent; not collect a week’s rent and issue free time for the extra day.
 Controlling free time and extensions on existing accounts. There is no way you will collect
the total projected revenue for an existing account if you give away or postpone payments.
 Collecting any past due rent at the time a product is returned. Posting this to the system
prior to processing the return, keeping in mind that we do not wish to jeopardize a future
relationship with the customer.
Revenue Growth
This term is used to define the increase in the revenue collected for one period compared to
another. The Bestway standard for this key measurement is to increase revenue by a
minimum of 10% per year, compared to the same period last year.
The formula for calculating your goal is simple:
Last Year’s Revenue Plus 10% (or 20%) Equals This Year’s Goal.
For example:
Last Year’s Revenue Calculator Goal

$792,000 10% $871, 200
Note: Stores with less than 600 BOR generally have an increased opportunity for
growth; these teams should strive for a minimum 15% increase.
You can achieve your goal for revenue growth by:

 Gaining BOR
 Increasing APB
 % Collected
“Failing to plan means planning to fail…What are your goals?”
Section Two
Credit Standards
Daily opening and closing standards are in place to assist you in achieving credit, growth, and
revenue goals. Achieving the following standards each week is critical to your success.
Total Past Due 7+ Past Due

Standard STRETCH Standard STRETCH
Monday Open 18.9% 17.9% 4.9% 3.9%
Thursday Close 10.9% 6.9% 2.9% 1.9%
Saturday Close 5.9% 4.9% 3.9% 2.9%

Challenge your team to reach stretch goals by achieving tomorrow’s credit standards
today.
COD vs. Free Time Dollars

This term compares the revenue collected at the time of delivery to the amount of revenue
“given away.” The Bestway standard for this key measurement is a ratio of
3:1.
The Stretch Goal for this key measurement is 4:1
The calculation is simple:

Collect $3 or $4 for Every $1 Given Away
 Asking for monthly payments; “Selling” monthly accounts.

 Collecting all revenue due to advance the customers payment to the next desired due date.
For instance; if they open a new agreement on Friday and we set a Saturday due date,
collect the rent due for a week and a day; do not collect a week and use free time to
advance them to Saturday.
 Restricting the usage of free time for any reason.
BestCare Percentage
This term defines the percentage of our Customers that are enrolled in the BestCare Plus
program. The Bestway standard for this key measurement is 80%.
BestCare percentage is calculated as follows:
Total Number of Customers Divided by Number of Customers Enrolled In BestCare Plus
In addition to providing our customers with the many benefits, the BestCare program
significantly affects the store’s profitability in several ways.

For example:
Merchandise on rent is destroyed by fire…
Effect To Customer Effect To Store
No Coverage
 Not protected from loss.  No additional revenue collected.

 We will likely lose this account,
 Loses merchandise as well as all money
as well as future business and/or
paid towards ownership.
referrals from this customer.
 Store absorbs total cost for loss of
 Is responsible for continuing to pay for
all merchandise on rent to this
merchandise they can no longer use.
customer if they refuse to pay.
Waiver Program
 Released from responsibility of paying for
merchandise lost, provided rental  Losses are posted to the P&L at the
payments and the waiver fee are current time of charge off. No “credit” is
at the time of loss. received for waiver payments made
 Receives no “credit” for payments made by the customer.
to lost merchandise if they choose to
rent “replacement.”
 Customer will likely feel “cheated”  Because previous payments cannot
because they made rental payments as be applied towards “replacement”
well as waiver payments and have merchandise, it will be difficult to
nothing to show for it. keep this customer.
BestCare Plus
 Receives full credit towards “replacement”

merchandise; allowing them to continue  Stores receive credit at the time of
towards ownership as though no loss charge off for the remaining cost of
occurred, provided rental payments and all units lost.
BestCare fees are current.
Discuss the various benefits of this program with your supervisor to ensure you understand the
effects of each as they relate to your store and your customers.
 Offering the BestCare Plus program to all new customers.

 Offering the BestCare Plus program to all active customers not currently enrolled.
 Ensuring that all current BestCare customers pay the registration fee to include all their
active agreements under the program.

Training Percentage
This term defines the percentage of coworkers that have completed the requirements of the
Bestway Training Program. The Bestway standard for this key measurement is 100%.
The Stretch Goal for this key measurement is 120%
To achieve the stretch goal, each coworker in the store must “train up” to the next level of
training beyond their current job title.
To calculate the training percentage:
Points Completed Divided By Potential Points Equals Training Percentage
Potential points are defined by the current job title of each coworker and the time period in
which the required training for that position must be completed.
If the coworker completes the next required level of training on or before the “due date,” the
points are awarded and the potential points increase; resulting in a score of 100% (No “bonus
points” are awarded for training completed prior to the required due date).
If the coworker does not complete the next required level of training by the “due date,” those
“expected” points are added to the store’s overall potential; resulting in a negative effect to the
score.
For example:
A new coworker hired as an assistant manager that completed both the New Hire & Sales Rep
training within 6 weeks of their hire date would earn a total of 2 points; resulting in a score of
100%, (they earned 2 of the 2 potential points).
However, if they failed to complete their assistant manager training within 12 weeks of their hire
date (or within 6 weeks of their promotion date) their score would fall to 67%. (They only earned
2 of the 3 potential points)
Note: Coworkers rehired beyond 30 days after termination must repeat the training program for
all modules required for their current position.
 Ensuring that all coworkers are trained through their current position within the time period
required.
 Encouraging coworkers to “train up” from their current position to earn points not required.
(Coworkers training above their current position will score over 100%)
“Remember; when you see someone on top of a mountain; they didn’t fall there.”
Turnover
This occurs when the coworkers we hire do not remain employed with the company. The
Bestway standard for this key measurement is less than 50% annually.

Turnover is calculated for any given period as follows:
Total # of Terminations Divided By Total # of Coworkers Hired
Although it’s easy to understand the effects of turnover as it relates to people, (customers
having to get used to new faces, remaining coworkers having to “take up the slack”, etc.) we
must also recognize the effects of turnover as it relates to other aspects of the stores operations
and its profitability.
For example:
Placing ads; other recruitment efforts

Reviewing Applications or Resumes / Scheduling Interviews Interviewing /
Time
Testing / Background, Drug, & MVR Screening Processing a new coworker
(New Hire Packet / Training)
Current coworkers must train new coworker; affecting their own productivity
Productivity Amount of work completed by new coworker as compared to one
already trained
Possible overtime expense to ensure all required tasks are completed

Other Costs New coworker mistakes (damaged goods or second trips due to inexperience)
Unemployment compensation for terminated coworker
Once all these factors are considered, the true cost of replacing a coworker can be realized;
and it can be quite sobering. In fact, studies show that the actual “cost” to replace a
coworker is equal to the annual salary of the coworker replaced.
 Open, honest communication with each coworker; never making promises you cannot
keep.
 Providing a clean, safe, and well-organized environment for all coworkers.
 Providing the proper tools for each coworker to fulfill their job requirements.
 Maintaining the work schedule; ensuring each coworker’s workday ends as scheduled.
This keeps overtime expenses down.
 Being committed to the proper training of each coworker so they can achieve their
individual career goals. Ensure learning is taking place.
 Providing information and resources and to promote self-development.

Model Store Operating Budget
The following provides an overview of the revenue and expense controls required to
achieve the Company standard of producing 20% operating profit.
(Stores with less than 650 BOR)
Average Monthly Revenue $65,000

Total Revenue Collected 100.0%
Cost of Sales 22.5%
Gross Margin 77.5%
EXPENSES
Total Labor Expenses 27.5%

Total Rental Loss 2.5%
Total Delivery Expenses 4.5%
Total Service Expenses 2.0%
Total Telephone Expenses 0.5%
Total Utility Expenses 1.8%
Total Advertising Expenses 4.0%
Total Outside Expenses 0.2%
Total Other Operating Expenses 4.0%
Total Occupancy Expenses 5.0%
Total G&A Expenses 6.0%
Total Fees (District & Corporate) 9.0%
Total Expenses 67.0%
Net Store Income 10.5%
Bestway expects all stores to meet or exceed the monthly revenue standard of
$65,000 by increasing BOR, APB, Fees Collected, and Number of Customers.

Bestway teams not currently producing this standard must set goals, then develop and
execute plans to achieve those goals, with the emphasis on controlling costs.

(Stores with more than 651 BOR)
Average Monthly Revenue $83,333

Total Revenue Collected 100.0%
Cost of Sales 22.0%
Gross Margin 78.0%
EXPENSES
Total Labor Expenses 24.0%

Total Rental Loss 2.5%
Total Delivery Expenses 3.0%
Total Service Expenses 2.0%
Total Telephone Expenses 0.5%
Total Utility Expenses 1.5%
Total Advertising Expenses 3.0%
Total Outside Expenses 0.2%
Total Other Operating Expenses 3.5%
Total Occupancy Expenses 5.0%
Total G&A Expenses 4.0%
Total Fees (District & Corporate) 8.0%
Total Expenses 57.2%
Net Store Income 20.8%
Challenge your team to achieve a Stretch Goal of 25%!

Section Three
Understanding & Controlling Expenses
We have discussed various strategies for expanding our customer base, providing existing
customers with quality customer care, protecting inventory, and collecting the revenues due
from the units on rent. These are key elements to the success and profitability of a store;
controlling expenses is another.
It is the responsibility of the Bestway store manager to properly plan and control store
expenses. The goal is to “meet or beat” the amounts budgeted for all categories each month.
While some expenses have a “fixed rate” or may seem like they are outside the manager’s
control, there are things that can be done to help manage these costs.
Outlined below is an overview of the store’s P&L. Information is included to help understand
each area and offer suggestions to assist in controlling expenses.
Revenue:
This section includes the information for all income collected by a store; broken down by
category (Rental Income, Merchandise Sales, Fees, etc.).
 Revenue can be increased by expanding the store’s customer base, increasing APB,
and collecting all revenues due.
 Encouraging BestCare enrollment and collecting all fees due is an excellent way to
increase revenue.
Product Costs
Depreciation of Rental Inventory

The store is not expensed for inventory costs as new merchandise is received into the system.
This expense is incurred for each unit as it is rented. The expense is calculated by dividing the
remaining cost of the merchandise, by the payout term of the agreement. For example; a unit
with a remaining cost of $300 that was rented on an agreement that will payout in 18 months,
will result in an expense of $17 for each month that this agreement remains active. ($300
divided by 18 equals $16.67 - then round up) In contrast, that same unit rented on an
agreement that will payout in 12 months, will be expensed at $25 per month.
 The most effective way to control this expense is to ensure that every unit is rented at the
maximum term allowable by its condition (Perceived Value). Control the condition of the
merchandise by ensuring that all units are properly protected, refurbished, and maintained
to “like new” condition.
 Keep in mind that the condition of some units will require reduction of the “recommended”
term while the condition of others will allow an increase. Gear sales plan towards ensuring
that units rented at an increased term will offset those that must be rented at a reduced
term.
Cost of Sales
Expenses identified in this category are defined by the remaining cost of all cash sale units, as
well as those that were paid out by customers exercising the early purchase option.

 Control the cost of cash sales by ensuring that units are sold based upon their condition,
not their remaining value. Gear sales plan towards ensuring that units sold at a greater
profit will offset those that must be sold for less. The goal is to produce a 50% profit on all
cash sales.
 Help offset any loss incurred as the result of an early purchase option by ensuring we keep
these customers; find out what they want and get it to them.
Gross Profit
This information identifies the difference between the total revenue collected and total product
costs. The goal is 78% or better.
 Increase revenue and keep product costs low (depreciation and cost of sales) to affect
this area.
Labor Expense
The information in this section identifies all payroll related expenses.
Salaries and Wages

These expenses identify salaries, overtime, bonuses, and vacation paid to all coworkers working
in the store.
 Control these expenses by planning your weekly work schedule to ensure that coworkers
are only on duty at the times in which their particular areas of responsibility will most
likely be successfully executed.
Payroll Taxes
These expenses reflect the company’s matching of Social Security (FICA) taxes, Medicare
taxes, Federal Unemployment taxes, and State employment taxes. Combined, these will
typically be about 9.5%-10% of the amount of your total salary and wages.
 Unemployment taxes are based upon a cumulative wage base that is “reset” at the
beginning of each year, this expense is temporarily increased during the months of Jan,
Feb & March.
Employee Benefits
These expenses identify particulars for each coworker’s medical and dental group insurance
expense, worker’s compensation expense, and the company’s match for those coworkers
participating in the company’s 401(k) Plan.
 Control these expenses by ensuring the proper staffing levels are maintained for the
needs of the business.
Losses
This section lists expenses to the P&L as a result of the following:
Skips & Stolen
The remaining cost of all units lost due to accounts that were charged off as skip or stolen.
 Control these expenses by ensuring that all order forms are properly verified before
merchandise is delivered.
 Ensure all past due accounts receive the appropriate follow-up through proper execution
of the credit program.
Missing Merchandise
The remaining cost of all units unaccounted for.
 Control these expenses by completing proper inventories per Best Foot Forward.
Over/Short
The totals from all bank deposits processed as compared to the receipts posted at the store.
 Control these expenses by ensuring that all coworkers understand proper cash control
and credit card processing procedures.
 Investigate variables daily and work to resolve overages and shortages immediately as
identified.
Broken TV Screens
Expenses due to all televisions broken by coworkers in the store.
 Control this expense by using proper product care techniques.
Other – Expenses due to losses not identified in the categories above such as:
Junk Inventory
This is idle inventory that was charged off because it could not be rented or sold.
 Control this expense by ensuring the proper care and maintenance of inventory, and
properly qualifying all customers prior to delivery.
 It is important to remember that “one person’s trash is another person’s treasure.”
Unless it is irreparable, it has some value. If possible, cash sell it for anything at all; it
will help to offset losses.
“Act as though it were impossible to fail”
Delivery Expense
For detailed instructions on the GE Capital Service Website, refer to the Admin section titled
Vehicle Maintenance and Inspections.
Gas & Oil

This expense identifies the fuel purchases and oil changes for all store vehicles.
 Control this expense by ensuring that vehicle activity (deliveries, returns, service calls,
credit “runs,” etc.) is properly scheduled to ensure efficiency.
 Oil changes are required each month for all store vehicles.
Maintenance & Repair

This expense identifies the maintenance and repair costs for all store vehicles.

 The most effective way to control this expense is through routine inspection and
preventative maintenance. Store managers need to drive the vehicles periodically to get
a first-hand account of any problems.
 Schedule routine issues such as tire replacement to ensure that “everything is not done
all at once.” However, any problems identified that indicate that the vehicle may be
unsafe must be repaired immediately.
 Never drive, or allow another person to drive, an unsafe Bestway vehicle!
 Major repairs and expenses (outside your budget) must be pre-approved by the district
manager.
Vehicle Lease
This expense identifies the monthly cost of all leased store vehicles. The total cost of a leased
vehicle is expensed over five years, or 60 months.
 Control this expense by properly maintaining current vehicles; eliminating or postponing

the need to replace them. Remember, after its “paid for” in 60 months, the only expense
for that vehicle will be insurance, gas, and repairs; and that means big savings on your
P&L.
Vehicle Depreciation
This identifies the monthly expense required to pay the balance due for any vehicle costs that
were “capitalized”; meaning that the total cost was not expensed entirely within the month it
occurred. This includes large expenditures such as vehicle decals, or engine and transmission
replacements.
Vehicle Insurance
This identifies the insurance expense for all vehicles.
 Help control this expense by ensuring that all coworkers practice safe driving
techniques; reducing claims and keeping costs down.
Other
This lists any other vehicle expense, such as renting a truck or van for store use.
 Such expenses must be pre-approved by the district manager.
Service Expense
Parts & Supplies

This information identifies the expense for any part, accessory, or supply that was purchased to
repair or refurbish inventory.
 Control this expense by using approved parts and supply vendors; special rates have
been negotiated.
 Ensure all accessories are retrieved during all product returns.
 Always speak with the product vendor representative before ordering replacement parts
(drawer handles, sofa legs, power cords, etc.). Often these will be provided by the
vendor at no charge.

Contractor
This information identifies the amount paid to service vendors for the repair of rental inventory.
“To achieve something you’ve never achieved before, you must become someone you’ve
never been before.”
Communication Expense
This identifies the expense for phone service and equipment.
 Control this expense by properly maintaining equipment, and reducing the number of
long distance calls; use 800 numbers when available.
 Do not pay for directory assistance. Use 1-800-535-3639 for information; not 411.
Utility Expense
This identifies the expense for all utility costs (gas, electric, water, sewer, trash).
 Control store utility costs in the same way these costs are controlled in a home. Adjust
the thermostat a bit when everyone leaves for the day and repair any leaks or plumbing
problems promptly.
 Trash cost is negotiated be the home office; questions regarding extra pick-ups, missed
pick-ups and all other trash related issues; call Waste Harmonics (800) 451-5765.
Advertising Expense
Flyer Cost
This identifies the cost for printing promotional fliers. It is negotiated by the advertising
department.
 Stores cannot control these costs but the store manager can communicate with the
advertising department concerning their effectiveness. Provide them with important
information to assist in making the decisions that best affect the store’s advertising
dollars.
Flyer Distribution
This identifies the cost of mass mailing promotional fliers.
 Complete the Add/Drop form to plan costs and ensure flyers are distributed to targeted
customers. Refer to the Gain training guide for information concerning the usage of the
Add/Drop form.
In Store Promo and Print Local

This identifies any expenses associated with any advertising specific to the store.
 These expenses require DM and VP approval.
Agency Fee
This is the fee paid to an outside agency for assistance in the development of our corporate
advertising campaigns; it is negotiated by the advertising department.

Other
This will include any expenses for promotional campaign items such as postcard printing, and
door hangers or other customer “giveaways.”
 Get your customers “signed up’ for that special giveaway and mail the postcards. A
return on these investments will not be seen if the campaign is not properly supported
and promoted by the store.
Distribute door hangers to homes and apartments five doors to the left and five doors to the
right (“5 up and 5 down”).
Outside Services
Security
This is the fee paid to the company that provides store security system monitoring. This fee is
negotiated by the home office.
Pest Control
This is the fee paid to the company that provides store pest control service. This fee is also
negotiated by the home office. Questions regarding extra service, bed bug inspections; call
Orkin (800) 241-1666.
Other
This identifies any additional outside service expense, such as the fee paid to the company that
provides store HVAC services and air freshners.
Other Operating Expenses
Postage & Shipping

This category includes store postage and shipping expenses.
 Help to control this expense by ensuring that the system records are correct for all
customers. This will eliminate wasted postage due to incorrect address information.
 Use correct postage. For example, do not use standard postage when mailing
postcards.
 Treat postage stamps as cash. Keep secured and monitor their usage.
 Contact the purchasing department prior to shipping damaged or warranty merchandise
back to the vendor. They will help to ensure that return shipping expenses are
negotiated or waived.
Repairs / Maintenance
This includes all maintenance and repairs to the store facility.
 Check with the home office prior to performing any maintenance or repair to ensure the
expense is not included as part of your lease.
 Always get three estimates to ensure you are getting the best deal available in your
market area.
Property Tax
This is the annual property tax expense charged to the P&L in monthly installments. As well as
monthly Use Tax on items that are for several stores’ use, such as tax on RES items for store
use.
Store Forms
This identifies the costs of all forms ordered from the forms supplier. This includes the expense
for forms that are sent “automatically” each quarter.
 Properly budget the costs of these forms. If there is a month when no forms are actually
needed, it might be a good time to order those which are low; avoiding the need to order
a larger number of forms at one time.
 Ensure the forms are used only for the purpose for which they are intended. Do not
allow them to be used to “doodle” or jot down notes.
BestCare Expense
This identifies the costs associated with the BestCare program.
 This is 26.6% of BestCare revenues collected the previous month.

 One loss not covered by the BestCare program can exceed the program expense for
several months. It is in the best interest of the company, and our customers, to
encourage and increase participation in this program.
Misc.
This includes the cost of services to the company that conducts Bestway’s “mystery shops,” as
well as any petty cash expenditures posted by the store in this category. This category can also
include any customer “damages” paid directly by the company on behalf of the store.
 The “mystery shops” results should be used to improve Bestway services and provide
training to coworkers.
 Use this petty cash code only when others are not applicable.
 Reduce the risk of customer “damages”; properly protect customers by ensuring all
coworkers practice proper product transport and delivery procedures (not driving in the
yard, “routing” the delivery through the home before unloading the product, protecting
floors and doorways, etc.).
Occupancy Expenses
Expenses identified in this category include those for store rent, real estate tax, property
insurance, common area maintenance (CAM), and store warehouse expenses. The CAM
charge covers repairs to the outside of the building (structural issues, parking lot, lawn care,
drainage problems, etc.).
 Always contact the home office to discuss CAM issues prior to contacting the landlord.
 Explore all other inventory management possibilities, (alternative showroom displays
and/or stockroom organization, transfers to another store, etc) prior to considering a
warehouse expense.
 Any warehouse expense must be pre-approved by the district manager.
Profit from Operations

This identifies revenue collected minus all operating expenses.

“Failure to hit the bull’s-eye is never the fault of the target. To improve your aim, improve
yourself.”
General & Administrative (G&A)
Recruitment
This category lists all expenses related to the recruitment and hiring of coworkers, such as the
cost of “help wanted” ads, and/or fees to companies that conduct recruiting and interviewing for
the company; as well as those that conduct drug screening, MVR & background checks and
pre- employment testing.
 Control this expense by reducing turnover through the proper training and development
of your current coworkers.
 Conduct tests and screenings only for those candidates you intend to hire. These tools
are meant to reinforce the hiring decision; not make the decision. Always follow the
hiring process outlined in the Crew training guide.
 Contact the district manager prior to placing print ads; these must be pre-approved.
Legal/Accounting/Consulting
Expenses in this category include the fees paid for any legal consultation or representation, any
court costs or filing fees, and the costs for processing any “Attorney Letters” requested by the
store.
 With the exception of “Attorney Letters,” any legal action must be pre-approved (District
Manager must approve Civil).
 Control these costs by properly verifying all rental orders, periodically polling customers
for changes in information, and consistently executing the credit program.
Bank & Credit Card Charges

These charges include bank service charges, and the cost of credit card processing services.
 Debit cards are much less expensive to process than credit cards. Ensure that only
credit cards are processed as “credit”; if a debit card is used, require that the customer
enter their PIN so that it will be processed as “debit.”
Computer Support
These expenses include the licensing fees paid to High Touch, as well as any charges incurred
due to calls from the store to the “Help Line.”
 To avoid “tech support” charges, seek to resolve any computer system issues by
contacting a more experienced store manager, your district manager, or the home office
at Ext. #7238.
 Always contact the home office prior to calling the help line for assistance.
“The greater danger for most of us is not that our aim is too high and we miss it, but that
it is too low and we reach it”
Office Supplies
This category includes the costs of supplies such as blank paper, pens, ink cartridges, tools,
and store decorations; as well as other essential items such as cleaning & bathroom supplies.
 Bestway has an account with Staples however, compare the costs of ordering these
supplies to obtaining them locally at a dollar store; it may be cheaper.
 Regardless of whether an order is placed for supplies or picked up locally, properly plan
to ensure these kinds of purchases are made only once per month. This will save time
and money.
Store Supplies
This category includes the costs of supplies such as touch-up kits, stretch wrap, furniture pads,
work gloves, tool kits; as well as store printer parts.
Licenses & Fees

This category includes annual business licensing and vehicle tag renewals.
Training – This identifies the cost for internal training software.
Contents & Liability Insurance – This identifies the costs for insurance for the store location,
as well as general liability insurance.
Insurance Reserve – This identifies the cost for additional insurance reserves and is a fixed
amount per month.
Depreciation
Depreciation Furniture & Fixtures - This identifies the capitalized costs for all store fixtures
and office furniture, as expensed in monthly installments over the useful life of these assets.
Depreciation Leasehold -- This identifies the capitalized costs for all store leasehold
improvements, build-out costs, relocations and remodeling; as expensed in monthly
installments over the life of the store lease.
Depreciation Signage -- This identifies the capitalized costs for all exterior store signage, as
expensed in monthly installments over the life of the store lease.
Depreciation Computers -- This identifies the capitalized costs of all computer and office
equipment, as billed in monthly installments over the useful life of these assets.
 To best control the depreciation expenses above, ensure the proper care and
maintenance of these store assets; eliminating or postponing the need to replace them.
(Gain) Loss on Fixed Assets – This identifies the net book value of any store asset that was
“written off,” less any cash value received due to the sale of the asset.
Total Expense Before Allocation – This identifies the total of all store expenses with the
exception of district & corporate allocations.
Income Before Allocation – This identifies total store income prior to district & corporate
allocations.
District Allocation – This identifies the total monthly expense paid for district manager
overhead. The total is expensed equally among each store in the respective district.
Corporate Allocation – This is a fixed 6% of the store’s monthly revenue.
Total Expenses – This is the total of all expenses.

Net Store Income – This is the store’s profit. The total income remaining after all expenses are
paid.
“Checkpoints for Success”
Achieving 20% Profit:
All coworkers must work as a team to:
 Increase revenue through BOR & APB growth.

 Increase fees collected to 15% of total revenue. This can be achieved by increasing
BestCare to 90% and collecting all waiver fees, late fees, and processing fees due.
 Maintain credit standards consistently to keep losses under 2.5%.
 Protect vehicles and eliminate repairs through proper inspection and preventative
maintenance.
 Maintain service costs under 2% by properly protecting all merchandise and ensuring
that all accessories delivered are recovered upon return.
 Collect 92% of income by eliminating free time and extensions and properly controlling
credit.
 Decrease depreciation to 22.5% through proper product respect. Increase terms
whenever possible.
 Set a goal of 50% profit on all cash sales.
In addition, it is the responsibility of the store manager to:
 Maintain proper staffing levels and training percentages to reduce turnover and overtime
expenses.
 Manage petty cash expenditures to less than $400 monthly. Review the petty cash
report each week to ensure you are in line with budget.
 Review P&L statements with the entire team each month. Develop a plan for any areas
that need improvement.
“Goals are dreams with deadlines.”

BFF Part 5 - Profit

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Bestway Rental, Inc.

Best Foot Forward

Best Foot Forward

Bestway Rental, Inc. © 2013 Version Jan 15, 2014 Page 2 of 24

Bestway Rental, Inc. © 2013 Version Jan 15, 2014 Page 3 of 24

“Leadership in business is ultimately expressed in financial results. Continually seek

Objective: 20+% profit.

Bestway Rental, Inc. © 2013 Version Jan 15, 2014 Page 4 of 24

Day 1 Day 2 Day 3

Same BOR as Day 2

Rented BRG @ $119.99 LPT @ $139.99 Month

Rented Washer @ $52.99 REF @ 99.99 Month

Bestway Rental, Inc. © 2013 Version Jan 15, 2014 Page 5 of 24

Potential Rental Revenue

The Stretch Goal for this key measurement is $100,000.

Rental Revenue Performance %

The Stretch Goal for this key measurement is 92%.

Revenue Performance is calculated as a percentage as follows:

Actual Revenue Collected Divided by Potential Revenue

Potential Revenue Revenue Collected Revenue Performance

Bestway Rental, Inc. © 2013 Version Jan 15, 2014 Page 6 of 24

The Stretch Goal for this key measurement is 15%.

The formula for calculating your goal is simple:

Last Year’s Revenue Calculator Goal

You can achieve your goal for revenue growth by:

“Failing to plan means planning to fail…What are your goals?”

Total Past Due 7+ Past Due

Bestway Rental, Inc. © 2013 Version Jan 15, 2014 Page 7 of 24

COD vs. Free Time Dollars

The calculation is simple:

You can affect this key measurement by:

 Asking for monthly payments; “Selling” monthly accounts.

The Stretch Goal for this key measurement is 90%.

BestCare percentage is calculated as follows:

Total Number of Customers Divided by Number of Customers Enrolled In BestCare Plus

Bestway Rental, Inc. © 2013 Version Jan 15, 2014 Page 8 of 24

Merchandise on rent is destroyed by fire…

Effect To Customer Effect To Store

 Not protected from loss.  No additional revenue collected.

 Receives full credit towards “replacement”

You can affect this key measurement by:

 Offering the BestCare Plus program to all new customers.

Bestway Rental, Inc. © 2013 Version Jan 15, 2014 Page 9 of 24

The Stretch Goal for this key measurement is 120%

To calculate the training percentage:

Points Completed Divided By Potential Points Equals Training Percentage

You can affect this key measurement by:

Bestway Rental, Inc. © 2013 Version Jan 15, 2014 Page 10 of 24

Total # of Terminations Divided By Total # of Coworkers Hired

Placing ads; other recruitment efforts

Possible overtime expense to ensure all required tasks are completed

You can affect this key measurement by:

Bestway Rental, Inc. © 2013 Version Jan 15, 2014 Page 11 of 24

Average Monthly Revenue $65,000

Cost of Sales 22.5%

Gross Margin 77.5%

Total Labor Expenses 27.5%

Total Expenses 67.0%

Net Store Income 10.5%

$65,000 by increasing BOR, APB, Fees Collected, and Number of Customers.

Bestway Rental, Inc. © 2013 Version Jan 15, 2014 Page 12 of 24

Bestway Rental, Inc.

Average Monthly Revenue $83,333