PRESCHEDULED GROWTH
There are often areas where a business has had a history of cost growth, such as annual increases in payroll and benefits, which have become accepted as the norm for the business and where cost growth can become “scheduled in” without realizing it. These operating cost expansions can represent a significant risk if they haven’t been identified during due diligence or included in future plans. Changing these norms can create significant employee problems. “But we always receive a 5 percent raise.” These are scheduled-in expansions that can impact the business’s expense burn rate, and they should be anticipated (but might not be pointed out during due diligence).
Such prescheduled cost expansions may not be optional if they ...
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