What are costs?
Costs can be translated into expenses. You often talk about costs in the form of money, which were necessary to start a business or achieve another goal. It can for example be wages, rent, goods, and so on.
You can split costs into two categories:
Capacity costs: This cost occurs in connection with the operations of a business. This cost has nothing to do with the business’s revenue, here it is costs solely aimed at keeping the operation going. This could be costs in the forms of wages and rent.
Variable costs: This cost is connected to the business’s production as well as sales. It can for example be costs for the shipment of goods. Therefore, the costs will vary depending on how big of a production you are running in the given period.
Keep track of your costs by creating budgets. Read how important it is to make budgets for your company here and get hold of our budget templates.