So you start looking at what will be the fixed costs for your business and these could be some of them to consider
1.Wages-If you employ people on a regular basis some of them may be employed with a salary that is consistent all year round and not dependent on the volume of sales. These may cover yourself and maybe your managers but could in fact cover all the staff as many companies, unlike many years ago, now do not pay overtime or bonuses. If you do, then these staff will be variable costs to the business.
However you must remember you are liable for national insurance contributions and also to administer staff PAYE.
2.Rent & Rates – on the basis of the property you have acquired you will need to take into consideration the annual rent, business and water rates. Once upon a time you would have to pay these annually but now there are normally quarterly and monthly options.
3.Fuel – on the basis of the property you will occupy and the actual use you make of it you will need to estimate the amount of gas, electricity, heating oil and so forth that you will consume in the business. Fuel for business vehicles should not be included in this as it will come under variable costs. Once you have the calculated estimations for the cost incurred for the profit and loss, however a note must be paid when this expenditure is made. It could be monthly or quarterly.
Do you have machinery or equipment that has a high rate of fuel consumption at various times of the year? Again work out the cost likely to be incurred and when the expenditure will be made.
4.Other Areas – to consider are as follows, however although much of these will be Fixed costst there will be certain elements that are variable depending on business activity:-
- Telephone & Postage
- Printing & Stationery
- Advertising & Promotions
- Repairs & Maintenance
- Professional Fees
- Interest Payments
- Bank Charges
- Vehicles & Travel
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