SLC | S21W1 | Costs for entrepreneurs - Introduction to cost.

in #costs-s21w1yesterday (edited)

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What is the cost and how important is it for entrepreneurs?

The cost of goods or services are the working capital we spend in buying the raw material required to manufacture, the labour, electricity and variable expenditures and depreciation of capital goods. So it is very important to know the cost of goods or service in order to decide the price so that one can make profit margin instead of losses. It is very important for the bottom line of the profit and lose account of an entrepreneur.

Establish the difference between costs and expenses, giving examples of this through a real case.

In case of a printing press one has to take care of the purchase items like paper, printing ink, blocks and dice, operator and electricity.

1000005683.pngWikipedia

Expenses are investments in building, printing machines, marketing, salary of office staff and expenses of fixed nature. Income tax and other taxes.

What are the benefits of performing a good cost determination?

In order to run a business profitably cost determination is one of most important financial activities. Cost determination helps in deciding profitable pricing of goods or services. It can help control and analyse the cost of product. Without exact knowledge of cost of goods the fate of business become dicy. Cash flow is unmanageable if cost of goods are not specified. Business forecast and financial planning is not possible without cost determination.

How do you determine the costs of your business? If you are not an entrepreneur, how would you do it?

If I'm not a entrepreneur, my business is managing home finance and my financial strategies will be as follows:

1000005685.jpgPicpedia

Financial StrategyDescription
Create a Family BudgetTrack income and expenses to manage spending and savings.
Emergency FundSave 3-6 months of expenses for emergencies.
Automate SavingsAutomatically transfer money to savings.
Pay Down DebtFocus on reducing high-interest debt.
Diversify InvestmentsInvest in different assets to reduce risk.
Life InsuranceEnsure you have adequate life insurance.
Retirement SavingsMaximize contributions to retirement accounts.
Teach Fina LiteracyEducate family on budgeting and saving.
Tax PlanningUse strategies to minimize tax liability.
Plan for Maj ExpensesSave for big expenses like education and home buying.
Track Net WorthRegularly assess your net worth.
Cut Unnecessary ExpensesEliminate non-essential spending.
Review Financial GoalsRegularly assess financial goals

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