Home topics finance finance-cash-flow Accounting Advice Banking Accounting Better control needed in SMB rising costs, here’s how John Corias March 13, 2014 One of the most common issues faced by small businesses is keeping control of the businesses finances and ensuring that the business continues to be profitable. A key area that the majority of small business owners focus on is their costs of operating the business. Rising costs can often escalate quite quickly and catch business owners by surprise when they do their accounts. Keeping a lid on rising costs is not a matter that small business owners should attend to on an ad hoc basis. Having a regular ongoing management plan that monitors your regular and one off expenses can stop these expenses from creeping up. As in all aspects of life, balance is the key. The key for you in understanding how costs can rise is to break down your costs into three key categories cost of goods sold, fixed costs and variable (or operating) costs. Cost of goods sold Broadly speaking these are the costs that directly relate to producing what you sell. As an example these costs for a restaurant include all of the food and drinks/liquor that go into creating a prepared meal for your customers. For service-based entities, where the actual product that you take to market is based on time, then your costs of labour are really your own cost in this area. Ways that you can take control of your expenses