What are the most important costs essential to your business model? Creating and delivering high, proven value costs time and money. It costs your business something to create a customer experience that produces raving fans. Acquiring and maintaining assets and resources can be very expensive. There are two extreme approaches to cost: a no-frills, low cost model and a high-end luxury model. Your business will likely fall somewhere between these two extremes. Wherever your business is when it comes to expenses, it is important to recognize and track the various types of expenses you face on a weekly, quarterly and annual basis.
Fixed costs are fairly easy to track, as they remain the same regardless of the volume of product or service you sell. Fixed costs include things like rent, salaries, and insurance. Variable costs are dependent on the volume of goods or services produced (not sold). Participation in events, conferences, marketing campaigns, and new product launches would involve variable costs.
Pricing your products and services in a way that creates profitability requires that you know and track your expenses. Timing your work flow may depend on availability of resources and having a clear picture of your expenses. Having an updated tracking system for income and expenses will also serve you at tax time.
Finally, tracking expenses will allow you to see how well you are practicing stewardship over your company assets. Are you giving back? Are you profitable enough to pay your bills and support your lifestyle? Do you have a Proven Profitable Business Model?
Do you need help in developing a tracking system for your income and expenses? Do you need to consult with someone about what type of system would serve you best? Contact me for a complimentary strategy session and free template at [email protected].