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Introduction to costs in business
2
Operating costs
Exam Tips
This is another name for running costs. The costs are incurred through operating a business
1. you need to understand what a start-up cost is
2. you need to understand what a running (operating) costs is
3. you need to give examples of both types of cost in your exam
4. Start your revision notes now...
How often are they paid?
This depends on what the cost is for. They might be paid:
- daily
- weekly
- monthly
- annually (once per year)
Start-Up and Running costs
Introduction to costs in business
Start-up costs are paid before a business can begin to operate. Most are one-off purchases of equipment etc.
Start-Up costs
Running costs are the everyday expenses that have to be paid on a regular basis when running a business
These can be small or large depending on how big your business will be and what you are offering for sale
Examples
Finance
Examples
Sometimes a business will have trouble finding money to pay any start-up costs as a bank or other lender has no guarantee that the business will be successful and pay back its debts
The types of costs for start-ups include:
- vehicles
- equipment
- initial stock
- uniforms and safety clothing
- deposit for rent/purchase of a building
The following are all running costs...
- buying more stock
- advertising your business
- paying wages
- paying rent or mortgage
- paying insurance
- electricity bill
- vehicle repairs
- fuel costs