Managing a business, small, medium or large is not easy. A lot of processes and expenses should be taken into consideration. There are legalities to consider and the things that you’ll need to run the business itself. Basics business research will cost you and you are doing all of this within a specified budget. Even before you start your business you will start to spend. The most common business expenses for small and medium enterprises include equipment, rent or mortgage, office utilities, marketing and advertising, repair and maintenance, and employee wages and benefits.
Whatever your business might be it will always require certain types of equipment. The most basic equipment such as telephones, copiers, and computers to heavy-duty equipment will require purchasing. You will also need to maintain this office equipment to keep systems up and running all the time. Renting or having your own office space is also pricey. Like your equipment, it will be needing cleaning and daily maintenance. Therefore you hire maintenance or you do it by yourself. Advertising products are not so hard these days. However, to get people’s attention you will still need to pay a certain amount of money to boost your posts or advertised material. Regular platforms, like traditional media, will cost you more due to ads space and airtime. Most of the company’s annual budget goes into marketing and campaign strategies just to ensure sales.
Without a team of employees, your business won’t last long. If you’re just starting, you’ll need to first decide who’s going to be on your team and what responsibilities they’re going to handle. Then delegate their specified tasks. A greater part of the profit goes into their salary and other benefits. According to studies, labor costs can account for as much as 50-70% of the total business cost. This includes employee wages, benefits, payroll or other related taxes. The cost of employee benefits can reach up to 30% of the overall labor cost. However, HR professionals take time to hire top talents and convincing new employees and develop them over time.
One business trend that has helped business cut cost is outsourcing. According to a study by Brain & Co. of over 2000 companies of 10 years tenure, only one of 10 achieved sustained profitable growth. They used the capability to source innovative ways to be more competitive. Outsourcing and offshoring began as cost-cutting measures, but companies that create real sustained value routinely use them for far more strategic ends. It is to gain capabilities that they don’t have in-house, or to strengthen capabilities they do have. The research also found out that leading companies use their sourcing capability to build five strategic capabilities. These are to tap into global talent, build partnership and reduce risk, seize new local market opportunities, getting into the market faster and boost innovation, and to disrupt traditional business models.
Companies also have developed repeatable formulas. These apply what they’ve learned from their increasingly complex outsourcing and offshoring activities. Sometimes done by building an internal organization to manage partner relationships and transfer experience from one project to the next.