Saturday, 26 January 2013

Small does not mean insignificant

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!

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