A rap about the different costs that businesses face
Hook:
In any sort of business if you want to be the boss
You’re gonna have to know about the different kinda costs
Both up-front and part of the ongoing occupation
Costs can be start-up or costs can be operating
Whether they change or remain the same, there is a mix
Costs can be variable, and costs can be fixed
For any product or service you’re likely to get
Costs which are direct and indirect
1.
Costs may be start-up or may be operating
Start-up costs occur before you even started trading
Like the cost of premises, equipment or resources
Payments for adverts, lawyers and insurance
Operating costs are in the day to day running
The bills for rent and wages just keep on coming
Gas, electricity and water utilities
Interest, repairing and restocking your facilities
2.
Costs can be fixed or variable
Fixed costs stay the same, they don’t vary at all
Regardless of what I sell, the cost is the same then
For equipment, rent and loan repayments
Variable costs vary, so as I produce each piece
The cost of raw materials needs to increase
Wages and amount of electricity I use
Changes depending how much I produce
3.
Depending how closely to production they connect
Costs can be direct or indirect
Resources and labour used to construct
Are direct costs linked to a product
Indirect costs are not directly linked to what you make
But still important for the business to operate
Like furniture and cleaning – don’t forget:
Indirect costs are also known as overheads