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Increasing Profits

The University of San Diego conducted a study to determine the economic value of on-premise signage.  Table 2 shows the average increase in sales revenue that resulted from signage improvements. [1] 
 
TABLE 2
Signage ChangeFast FoodPier One Imports
Add one monument sign9.3% 
Add large pole sign (144 sq. ft.)15.6%8.6%
Add chain identity to plaza identity sign 7.7%
Addition of two new directional signs 8.9%
Replaced storefront wall sign with larger sign 7.7%
 
Let’s assume you own a typical family clothing store and add a new, better-designed sign to the business.  Here’s how it could impact your bottom line:
 
Your annual sales$1,757,486.00
Cost of goods sold61.8%
Gross Profit Margin38.2%
Operating expenses (includes other expenses of 1.5%) 36.0%
Income taxes (estimated at 35%) 0.8%
Income after taxes 1.4%
After tax profit  ($1,757,486.00 x 1.4% or) $24,604.00
 
 A 7% increase in sales created by the addition of a needed sign, without increasing operating expenses, would cause the following change in profit:
 
New sales at 7% ($1,757,486.00 x .07) $123,024.00
Gross Profit from new sales ($123,024.00 x 38.2% Margin Contribution) $46,995.00
Net Profit (Assumes 35% taxes) $30,547.00
Total Profit (Original Profit $24,604.00 plus New Profit $30,547.00) $55,151.00
 
With a small, 7% bump in sales your profit could jump from $24,604 to $55,151. 
 
That’s an increase of over 124%!
 
Increasing profits is one way that signs improve your bottom line.  Another way is by decreasing expenses.
 
 
[1] Figures from The Economic Value of On-Premise Signage, a study conducted by the University of San Diego School of Business Administration

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