Small businesses have lower costs than larger businesses.
However their unit costs are usually higher and their cost base (as a percentage of sales) is also usually higher.
Cost control is therefore not just important - but vital.
If you take your eye off your costs, you can get into trouble very quickly. So, of course you need a good costing system - so that you understand where costs are incurred and at what level - and why.
However, only you can judge whether a particular cost offers good value to the business.
So take a good look at your costs -all of them - and assess the value they provide to the business. Then think how you might reduce them - without impacting on that value.,
This is not an annual review - it should be a continuous process. Value/Cost is your productivity - its what generates your profit. Maximize it!
However their unit costs are usually higher and their cost base (as a percentage of sales) is also usually higher.
Cost control is therefore not just important - but vital.
If you take your eye off your costs, you can get into trouble very quickly. So, of course you need a good costing system - so that you understand where costs are incurred and at what level - and why.
However, only you can judge whether a particular cost offers good value to the business.
So take a good look at your costs -all of them - and assess the value they provide to the business. Then think how you might reduce them - without impacting on that value.,
This is not an annual review - it should be a continuous process. Value/Cost is your productivity - its what generates your profit. Maximize it!
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