To
the HWFC membership...
A report from the Finance department
In an effort to keep the
membership
informed of the status of the finances of the Coop, the Finance
department is
providing you with a narrative of the 2005 fiscal year.
Sales
2005 was a tremendous
year in terms
of record sales growth for the Coop. The finance manager and Collective
Management Team wrote a conservative budget for 2005 by forecasting a
7%
increase in sales, based on the limitations of our present location and
the
uncertainty of the economy. Our 2005 sales growth rate ended up being
17%
higher than 2004, a full 10% above budget! We finished 2005 with sales
exceeding $7.5 million.
Personnel Expense
These are all the
expenses
associated with staff and member workers at the Coop. At the close of
2005 the
Coop’s payroll was right on budget, even with the soaring sales growth
rate.
The payroll budget was written with only a 7% sales increase in mind.
Adding only
a few new employees, our staff and member workers helped to manage the
tremendous increase in sales with great ease.
Not enough can be said
about how
productive our staff and member workers have been helping us maintain
such
growth. HWFC also implemented a living wage that started employees at
$9/hour
in 2005. Our member labor remains strong, with 34% of the Coops labor
being
provided by members. This was up from last year’s 30% for the same time
frame.
Our level of staff discounts was over budget for 2005, an encouraging
sign that
our staff are doing more of their shopping here at the Coop. Our
expenses for
health and dental insurance were slightly over budget for the year due
more
employees going from full-time to part-time status. Since HWFC met and
exceeded
its net Income goals for 2005, $50,000 was given in staff bonuses and
member
worker coupons. This was distributed equitably based on hours worked in
2005.
Occupancy Expense
These are the expenses
that are
directly related to renting and maintaining the store. The primary area
where
we exceeded our budget in 2005 was repairs and maintenance of the
store. We
also put down a $2,000 deposit with our landlord to hold the back area
of our
building until we are ready to expand into it. On a positive note, even
with
the tremendous increase in utility costs, we were able to come in 8%
under budget
in 2005. This was due to periodic maintenance of our heating and air
conditioning systems. Our building was also reassessed, saving us a
significant
amount of money on our property taxes. Our total occupancy expense was
5% under
budget for the year.
Repairs & Maintenance
Store. This area was over budget
primarily
due to the repairs of the overhead garage door, the hydraulic lift for
receiving, a few plumbing issues that arose because of the age of our
building,
the addition of some much needed lighting on the sales floor and
various small
repairs.
Utilities. Our consumption of
electricity ran 7%
below budget for 2005. Maintenance of the system has helped in this
area, even with
one of the hottest summers on record and increasing electrical costs.
Gas
consumption was 3% less than budgeted, even with sky rocketing gas
costs, again
proving maintenance to be well worthwhile. We did take into
consideration the
extreme increase in energy costs when writing the budget for 2005.
Operating Expense
These are the expenses
related to
operating the store on a day-to-day basis. We were 6% over budget for
the first
half of 2005 for a few reasons.
Armored Car Service. Our armored car service
raised their
prices by adding a fuel surcharge to each delivery. This resulted in us
being
slightly over budget.
Non-Capital Equipment
Purchases. This is an account we
created this
year, and is a place for purchases under $1,000 that we do not
capitalize. This
was the first year that we budgeted these expenses separately from
store
supplies. Among the items we have purchased are: new coffee pots for
the deli,
stocking carts for the HaBA department, tables for the Community Room,
clear
new signage for the parking lot, chafing dishes for the Membership
Dinner and to
use for outreach events, new credit card imprinters and various
computer
related purchases.
Store Supplies. This was the first year
that we
tracked the different store supplies by department. This will allow us
to
budget much more efficiently for the 2006 sales year. Store supplies
increases
are a reflection of sales. The more people who shop, the more people
who use
plastic and paper bags supplied by the Coop.
Bank Service Fees. This account is basically
credit and
debit card fees. They were over budget by 11%, which was right in line
with
their respective sales increases.
Administrative Expense
Administrative expenses
are related
to the back office expenses needed to run the Coop. At the close of
2005, we
were 18% under budget in this area. Last year the Finance committee and
the Board
of Directors recommended that an audit take place of HWFC’s 2005 books.
The audit
was performed in January by our CPA, Ken Claflin of Cusack &
Company. The
results of the audit were very positive, assuring us that our financial
procedures meet the Generally Accepted Accounting Principles, and that
our
financial statements are fairly presented.
The cost of the audit
ended up being
less than we budgeted.
Marketing Expense
These are our
advertising,
marketing, outreach and donation/contribution expenses. Also included
in this
category are the various promotional discounts the Coop provides to
senior
citizens, vendors, visiting Coop members, etc.
Advertising. At the end of 2005,
advertising was
slightly over budget. Our primary advertising media for 2005 were WAMC
and WMHT,
as well as Metroland and many small local spots.
Marketing & Outreach.
Even
with participating in well over
100 events, this account finished under budget for 2005.
Donations/Contributions. We were committed to
donating 5% of
our profits before taxes to the local community. Since we had a record
year, we
ended up donating over $19,000 in 2005. Our two main donations were
made to the
Community Foundation and the Community Loan Fund.
Governance Expense
These are the expenses
associated
with the governance of the Coop and are primarily Board expenses. Total
governance expenses were 23% under budget for 2005. One of the large
expenses
for the Board has been that we have finally, at the request of the
membership,
acquired directors and officers insurance for them. We budgeted for
this in 2005
and our insurance policy was significantly under budget. The only area
that was
over budget was for our Membership Dinner.
Capital Expenditures
Hot Food Case. We have replaced the old
hot food
case with a new one, which has resulted in more than doubling of our
sales of
hot food this year.
Produce Case. We replaced our old cold
produce
case with a new, larger model that has certainly brightened up the
Produce
department.
Awning and Plant Corral. We have extended the
awning out
front of the store, and have incorporated a large plant corral to
extend our
plant season and make it less labor intensive for the Produce
department to
handle the plants. The new plant area has resulted in an increase in
plant
sales of 22.6% from last year.
Water Machine. As already reported, we
have
replaced the water machine with a new unit that has reduced the amount
of “waste
water” created by the filtration system, and will greatly reduce the
amount we have
had to spend on repairs and maintenance to the old system.
Community Room. We have replaced the rug,
purchased
new tables and are in the process of further sprucing up the Community
Room,
while spending far less than the $10,000 budgeted.
Computer Upgrades. Computer upgrades are
under way,
with new workstations being installed and new monitors.
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