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In this video, Monika Papadopoulou, our Community Relations Manager, talks about two essential attributes for the cost structure of her business
The cost structure refers to all the costs it incurs to comply with its business model. Keeping your costs under control is essential to maintaining a healthy business:
Two elements of the Essential Cost Structure include:
1- Fixed costs: refers to all the costs that you must incur, whether you sell or not. These may include factory costs, general administration staff, rent, administrative staff, etc.
2- Variable costs – which refer to the costs that are associated with the sales of your products or services. The more you sell, the more these costs will go up. Variable costs include things like the raw material for your products, or the cost of the consultants that you, etc.
When starting a business, keeping fixed costs as low as possible is essential so you do not run out of cash too quickly before you start selling enough products and services to cover your costs.
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