What Pandemics and Recessions Can Teach Us…
If there is one thing a recession, reduction in economy, global credit crunch or natural disaster will not teach many of us, is that we need to have our reserves ready to be called upon.
I mean this with the greatest of respect to business owners, it’s tough always, but in any country I have consulted in, the same issues crop up when it comes to be able to take ‘bumps’ along the way.
This starts from inception and start up of a business. Making a business robust from the outset is extremely important to ensure it lasts, and can take all manner of ‘things’ that could be thrown at it. make sure your business is starting out right by knowing and planning for elements related to costs.
Always calculate your costs for set up, running and be prepared for tricky times, spend you didn’t plan for, and customers not rushing to you all at once!
Costs can include, but certainly are not limited to:
Development costs – marketing analysis, developmental engineering and customer surveying. Often seen as part of the product lifecycle, this is a cost the business incurs from researching, growing and introducing a new product or service. Commonly known as R&D, research and development.
Variable costs – materials, packaging, distribution, transportation, advertising and digital costs. It’s a corporate expense which changes in proportion with how much a company produces or sells. Variable costs can increase or decrease depending on a company’s production or sales volume—they rise as production increases and fall as production decreases.
Capex – fixed costs such as rent, business rates, salaries and tech resources. These are funds used by a company to acquire, upgrade, and maintain physical assets.