How much is your house worth? Or perhaps your car? While you may not have an exact number, you probably have a pretty good ballpark figure that you could rattle off. But now think about how much that dog you are adopting out is worth. Do you know? How much money has been put into him/her?
Cost of goods sold is a term that is used in businesses of all shapes and sizes. From the small town bakery on the corner, to Fortune 100 companies, the term helps calculate how much profit you made on a particular sale of inventory and it’s required to adequately report your earnings and pay your taxes. Wait, did we just refer to your animals the same as having inventory on a shelf? We know that just the mere thought of animals as inventory will evoke a negative reaction from many people and the fact that we would refer to animals as ‘inventory’ will likely bring about some strong reactions. But for a moment think in pure business concepts and consider that rescues and shelters are businesses with mission focused goals instead of profit focused goals and hear us out on the whole inventory reference.
At their core, animal shelters and rescue organizations are businesses. They buy and sell things like other businesses do, both types of organizations register with the state and federal government, and both file tax returns even though they may not be taxed on the revenue they bring in (assuming they are 501c3 charities). So if they are businesses that sell a product, they have inventory of that product and that inventory has a value. Yet many of these organizations could not tell you the value of their inventory in order to calculate their cost of goods sold at the time of adoption. Did they put $100 or $500 into the animal? Maybe they sourced the animal for free, but had to pay surgeries to get them healthy. Most organizations end up vaccinating and micro-chipping so they’re adding more value to the animals to make them more adoptable and contribute to the overall cause. Wouldn’t it make sense to keep track of the cost of acquisition, any additional costs put in, and the revenue from the sale to determine if you’re operating at a profit or loss?