Small Business Management Edition 2006

Posted on January 08, 2012 by Admin
Small Business Management Edition 2006

Small Business Management Edition 2006

There are two basic ingredients to running a profitable business, income and expense. The entrepreneur has much less control over income, yet there’s generally more emphasis geared towards increasing income. Controlling expenses is equally important as increasing income, as far as profitability’s concerned. After all the basic equation for profit (or loss) is income minus expenses.

Controlling Operating and Fixed Expense

There are two categories of expenses generally associated with a business, fixed and operating expense. Fixed expenses remain somewhat constant overtime. Since they don’t fluctuate, the focus of this article will be on operating expense (aka variable expense). Operating costs generally fluctuate with operating activities. In a sales environment, they increase as sales activities increase. In a production environment they change along with an increase or decrease in production.