Stabilize Your Operating Costs: Balance The Demands Of Increased Client Service Expectations
Surprisingly many business owners have an unclear view of their operating costs, which is key to achieving sales goals. What are the ongoing costs for operating your business?
Operating costs are the expenses that you have related to the day-to-day operations at your firm. Your operating costs will be in one of two categories:
- Fixed
- Variable
A fixed cost is, as the name suggests, costs that you will incur regardless of how much business you do.
Some examples of fixed costs are:
- Salaries
- Office rent
- Utility bills
- Loan payments for any start up costs
- Banking Services
Variable costs are those which will change according to how much business you do. Variable costs play a role in projecting your profit and break-even points for your business. Some examples of variable costs are:
- Sales
- Sales Commissions
- Marketing
You will be facing choices that begin to increase your operating costs. For example, you add a team member to assist in keeping up with the service expectations of your clients, thus, for each salary added, the more clients you must add to cover your costs.
The time you spend with your clients is a service that you don’t want to compromise. There are other ways that you can re-evaluate your operating costs. Consider outsourcing items such as;
- Web-site maintenance
- Mailings
- Compliance
- Marketing Initiatives
- Printing Services
- Kill your power
- Rent instead of buy
- Stay out of the airport
- Get rid of your printers
Sure, some of these ideas cannot be cut completely. Compliance issues will prevent you from ridding of hard copy documents. Streamlining business operations, while containing overhead costs, is the real secret to profitable growth.
Ironstone can assist you in estimating the costs associated with owning and operating your firm and will guide you through re-evaluating projections if appropriate. We have templates available for your use.
We want to hear from you! What steps are you taking to reduce your operating costs? Share your ideas!
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- Strategic Planning
- Business Development
- Operational Effectiveness
- The Human Element
You won’t want to miss our next in the series: Business Development- Capabilities Presentation, How Do You Share Your Firm’s Story? Learn How!
