1) Research costs
You need to research the costs so that you are not caught off guard by unexpected expenses. Not only the unexpected cost sets you off track, they make it hard for you to accomplish your goals. If your budget was set for a certain cost and you later determined that more money would be needed, you now have reduced the profit being made on your sales. This puts your business in a bad position because you know have to determine how you will increase both revenue and profit to offset your high expenses.
When operating a business, your budget will need to be created to account for fixed and variable costs. Fixed costs include your rent, utilities, phone/ Internet, accountant, legal fees, technology, salaries, advertising & marketing. Variable costs include the costs of goods sold and labor costs/ commissions.
Here are a few tips you should know when it comes to researching your business costs:
- Overstate costs in order to avoid underestimating expenditure
- Marketing costs are very easy to underestimate
- If a new business, include startup costs
- Variable costs are usually associated with sales
By doing the proper research, you are better able to plan for the costs of operating your business. This process helps you make informed decisions that allow your business to operate without any unexpected financial surprises.