Starting a Business All-in-One For Dummies, 3rd Edition

Chapter 5

Controlling Costs and Budgeting

IN THIS CHAPTER

Getting the right perspective on controlling costs

Comparing your P&L numbers with your balance sheet

Focusing on profit centers

Becoming familiar with the budgeting process

Preparing your first budget and applying advanced techniques

Using the budget as a business management tool (and more)

What’s the first thing that comes to mind when you hear cost control? Cutting costs, right? Well, it may come as a surprise, but slashing costs is not the main theme of this chapter. Cost control is just one element in the larger playing field of profit management. The best, or optimal, cost is not always the lowest cost.

A knee-jerk reaction is that costs should be lower. Don’t rush to judgment. In some situations, increasing costs may be the best path to increasing profits. It’s like coaching sports: You have to play both defense and ...