Which Business Costs Require Constant Checking
Running a business is tough and there are so many things to keep on top of. But one area that you need to be in constant checking on is your costs. There are certain costs that can either change or become out of control and this can, over time, cause you huge problems, each thing may not seem that big a deal but if they are allowed to increase over time then it can suddenly be a big problem.
Cost Of Raw Materials Or Stock
If you manufacture goods then the cost of raw materials needs to be checked to make sure you are not running your profit margins too thin. Many things can affect material costs, there could be an increase in demand, manufacturing or producing issues and all of these can push the cost up. If this happens you need to be on top of it as quickly as possible as you should asses if you can absorb the cost increase or if not how much will you need to raise your sale prices and if your customers are willing to pay the increased cost.
This may not seem like a major issue but if gone unchecked it can mount up to a loss over time. What is your office supplies system? Do you order it in and the staff get what they are given, is there a budget limit on this and do certain departments get a set budget per year or per quarter for this? There should be a budget allocated to this in your business plan and is this checked? If you are above your expected spend then it’s important to assess whether you are overspending or if the budget is set too low.
Many businesses rely on vehicles and fuel costs can change and also fuel usage can fluctuate over time meaning that fuel is difficult budget category to estimate, this is why it’s important to keep on top of this. If you have a regular fuel supplier it is important to make sure they keep you updated on any changes in the cost, they really should have a method of informing you of any cost changes like our supplier can give you the latest red diesel prices.
Do you allow your staff to claim back expenses or even give them an expenses card? If so do you have a good and accurate system to keep track of this? You should set spending limits on both certain items and overall to make sure best practice is observed, make sure that you or another management personnel checks the expenses claims to be sure that excessive spending is not taking place.
Hours If You Employ Casual Staff
If you employ casual staff then it is essential to know how many hours they are doing each week and to monitor this to be sure you are not over-spending on hours. Have their manager know there is an hours budget and that the work needs to be done within this budget.