Managing Costs

Managing Costs BYhttp://benchmarkbusiness.com.au/



Costs – We Cannot Operate Without Them, But WeCan Manage Them!This is the first of a series of blogs where we will look at some of the majorcosts associated in operating a business and how you might be better able tounderstand these costs and if there is anything you can do to reduce them.Rent – How much is too much?I am always asked how much should I be paying for rent or how much is toomuch?This can vary between businesses, but in retail, especiallysupermarkets/convenience stores, this can range between 3-7%. If your GrossProfit is 30% or more you could possibly afford 7% rent more so than someonewhose Gross Profit is at 24%.

The most important thing you can do is to ensure that you have a good leasewith some flexibility but also some security as well and always think ahead.When you are signing up a lease, do a business plan showing where youmight be in 3, 5 and 7 years time. This is a way for managing costs andseeing the benefits of each lease term. You can then decide if a 3, 5 or 7lease is for you.Increases are generally CPI or sometimes it is a fixed rate or both. Some willsay CPI or a maximum of 4% increase this can be better than straight CPIwhich is low at the moment but if it increases to 6-7% then you could be introuble. It is important that you have in your lease options and marketreviews at these points in time in the lease. This gives you the option toensure that you are paying a fair amount for rent.

The link below is the retail shop act and a very important managing coststool for signing a lease. You should before signing a lease ensure youunderstand your rights and obligations also including the landlordsresponsibilities.https://www.legislation.qld.gov.au/LEGISLTN/CURRENT/R/RetailShopLA94.pdfThere are numerous things that can be included in a lease and it is veryimportant that before you do commit yourself that you have someone withexperience in this type of business and/ or accountant/solicitor to look overthe document to ensure you understand if this is right for you.If you would like more information on managing costs or have any generalenquires. Feel free to contact me for more information.

David ZampechSupermarket SpecialistMobile: 0422 671 375E: [email protected] for sale quick links:Businesses for sale Gold Coast | Businesses for sale Brisbane | Businesses for saleMelbourne | Businesses for sale Adelaide | Business Brokers Brisbane | BusinessBrokers Gold Coast | Business Brokers Adelaide | Business Brokers Melbourne