Every business start with a product or service, which is available with their unique characteristics to customers locally, regionally, nationally or internationally.
The product or service would have a sales price for a unit supplied generally. To produce this unit of sales one would incur costs solely for the generation of this sale. Such costs are termed DIRECT COSTS. There are other costs that are incurred by a business which are incurred irrespective of whether you produce or sell. Examples of these costs are Rent are salaries which have to be paid what ever the circumstances are in the short medium. In the medium and long tern, you can do something but this would be at the detriment of being able to produce the right level of sales.
The objective of a business would be to Supply a good quality product or service, where you would maximise sales and minimise costs. In the minimistaion of costs one has to keep the direct cost perecnetage in terms of the sales price to a minimum. Overheads must be reviewed at least on a monthly basis, to ensure that each cost incurred has value, there is no wastage and that all unproductive elements are cut out as soon as possible.
Also it would be most important to make sure that all customers are happy with the services or products of the company on a periodic basis. If there are areas of deficiency it must be put right as soon as possible.
