The Cost of Doing Business: 3 Expenses You Should be Happy to Pay!
The formula is simple: increase revenue and decrease expenses. But should you decrease all expenses? Not the following three!
Paying for inventory is a no-brainer. If you don’t have inventory, you can’t drive sales and revenue. Inventory should be viewed as asset, not an expense. The cost of inventory can seem expensive but any money invested in inventory will be regain at least two-fold. If you feel that the cost of your inventory is too high, consider purchasing more units to get a lower per unit cost.
2. Merchant & lender fees
Credit card processors and lenders each charge merchant fees in exchange for their services. Without these fees, they would not be able to process credit cards or offer customer financing for small business. These payment options are vital to the success of your business, so it’s important that we view our merchant and lender fees as the cost of partnership. You want your business partners to be successful so that they can continue to offer us the products that allow our customers to make payments.
It’s important to note that merchant and lender fees are usually flat rates or a percentage of the income that you make. If you’re being charged merchant or lenders fees it’s a usually an indication that your customer financing for small business is generating income. It’s a win-win situation for you business and your merchant or lending partners because as you make money so do they.
The costs associated with marketing can seem to be endless. There’s always a new company guaranteeing that their marketing strategy will improve your customer base and increase your revenue. Some of the strategies have worked and resulted in increased traffic to your business and some of them have failed. Investing marketing is never a bad idea. You’ll know instantly if it’s working so even if the strategy you’ve tried was a failure, it’s always a learning experience.
Ask your customers how they found you, and document the types of marketing platforms that work well. Be consistent with your marketing approach. If you find that your ad in the local coupon publication brings in many new customers continue to utilize that method. Marketing is the only way for your clients to know that you exist. Don’t be afraid to spend money when it comes to marketing but also track traffic so you can pinpoint which strategies work and which strategies do not.