Btec Business L2 Unit 3 P1

Topics: Costs, Commerce, Variable cost Pages: 2 (601 words) Published: May 12, 2013
P1 - To identify the differences between start up, operating costs, variable costs, and fixed costs. Managing Business Expenses
In this leaflet I will be elaborating on the terms start-up costs and operating costs. I will provide examples for both cases and show the comparison between the two .Having done that I will also provide, in detail, definitions for both variable costs and fixed costs. Both accompanied by examples.

Start-up Costs:
Start-up costs are incurred before a business operates to assure the person that they have everything covered to begin their business. Usually, when starting a business most of your money would have to be paid out in either buying a property or renting premises. I recommend that if you are a small business you make a start in just renting the premises. The second cost you would need to make is the monthly bill of gas and electricity; this would cover you for the month and could give you a rough idea of how much you would be paying each month. Lastly, and most importantly you would need to pay out on buying equipment for your business. For example if you are to open a shop providing services, desks chairs and stationary equipment would be essential. On the other hand if you were to open up a business in providing products you would need to have a full stock, places to store them, and items to go with them(i.e. cutlery to go with tables and chairs).

Operating Costs:
Operating costs better known as expenses. This refers to both the monthly or weekly consistent payments that you would need to pay out for while your company is up and running. Say for example you were running a shop such as a bakery you would need to make payments each week or month for your favourite product to be produced because it is popular among your customers. Each month it is essential that you continue to make payments for your rent otherwise terms could come to the worst and you would be out of business. As well as the rent heating, water,...
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