Profit is the main indicator of the company's performance. There are a number of costs or expenses that can reduce this figure. They are divided into several large groups.
Instructions
Step 1
You need to understand that the costs of each company are purely individual factors. For example, in a taxi, this is primarily the cost of gasoline and car repairs. The beauty salon has cosmetics and other products. Therefore, it is unacceptable to say that certain costs affect profit in one way or another.
Step 2
It is customary to single out several main categories that are necessarily present in every company: finance, personnel, production and organizational resources. All costs in one way or another fall into one or more categories. For example, low qualifications of employees are personnel costs, and shadow accounting is financial costs.
Step 3
There is also a typology according to which costs are divided into fixed and variable. All expenses that do not affect the final output of products are considered constant. For example, the salary of management personnel or the cost of renting a room. Variables, respectively, are those costs that directly affect the efficiency of the firm.
Step 4
To determine exactly which costs can affect the final profit, a black box model is drawn up. On the left, indicate the reason (in our case, this is a "decrease in profit"), in the center they make a list of all kinds of expenses, and then on the left indicate those that reduce profit the most.
Step 5
The largest costs are generally considered to be the wages and salaries of the providers. Work in these areas should be constantly, especially large corporations. Initially, you need to determine the optimal salary that would correspond to the cost of labor and the wishes of employees. Suppliers are usually determined on the basis of mutually beneficial cooperation. You should not conclude a contract with the first one that comes across, find the best solution.
Step 6
An innovative activity also does not always bring results and is often declared unprofitable, but is it really so? A big step in the development of technology allows the company to seriously overtake competitors and multiply its profits. However, innovation spending should not exceed a certain percentage, which is usually set by management based on the optimal financial strategy.
Step 7
To determine unprofitable expenses, a simple formula is used: expenses are divided by income. If the resulting number is less than one, then the costs are considered justified, if it is equal to or greater than one, then they need to be reduced to a minimum.
