Costs are always at the centre of every decision you make as a business owner. Every penny spent is considered carefully, sometimes agonised over, because everything that goes out takes away from your profit and how much you can afford to pay yourself.
What’s particularly important is the return on costs. Some costs are easy to account for and see a direct return on, for example, without spending money on ingredients, cake boxes and tools you would have nothing to sell. Specifically, all of the ingredients, packaging and decoration for a particular cake can be added up and compared with what the cake was sold for.
Other business costs, or expenses, are harder to quantify and return is harder to measure. Advertising can be something that can eat into your expenses but it’s not always easy to know exactly how many sales are being driven from it.