Know What All Your Expenses Are

It is essential to know what your business expenses are and separating business expenses from personal. Most small business owners often times fail to make this separation. As much as you might be your business and your business might be you, distinguishing between personal and business expenses is essential for your business success.

There are different types of expenses;

i.Fixed expenses – those expenses which do not charge regardless of your sales. Example, rent and fixed salaries.

ii.Variable expenses – those expenses which change with your sales volume. Example, hourly wages and printing and stationery.

• There is also inventory expenses – those expenses which are a direct result of the goods your purchase for resale. For example, shipping, duty etc. These will make up the full cost of your product.
• Include a salary or wage for yourself as part of your expenses. Unless your business is solely about making a quick buck and not about business growth and development.
• Listing your expenses will help you determine the selling price of your product.

Moment of Truth: What pricing strategy do you use to determine your selling price? Do you include both fixed and variable expenses when pricing your products?