Managing Costs

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Managing Costs

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• http//benchmarkbusiness.com.au/

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Costs We Cannot Operate Without Them, But We
Can Manage Them! This is the first of a series of
blogs where we will look at some of the major
costs associated in operating a business and how
you might be better able to understand these
costs and if there is anything you can do to
reduce them. Rent How much is too much? I am
always asked how much should I be paying for rent
or how much is too much?This can vary between
businesses, but in retail, especially
supermarkets/convenience stores, this can range
between 3-7. If your Gross Profit is 30 or more
you could possibly afford 7 rent more so than
someone whose Gross Profit is at 24.
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The most important thing you can do is to ensure
that you have a good lease with some flexibility
but also some security as well and always think
ahead. When you are signing up a lease, do a
business plan showing where you might be in 3, 5
and 7 years time. This is a way for managing
costs and seeing the benefits of each lease
term. You can then decide if a 3, 5 or 7 lease is
for you. Increases are generally CPI or
sometimes it is a fixed rate or both. Some will
say CPI or a maximum of 4 increase this can be
better than straight CPI which is low at the
moment but if it increases to 6-7 then you could
be in trouble. It is important that you have in
your lease options and market reviews at these
points in time in the lease. This gives you the
option to ensure that you are paying a fair
amount for rent.
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The link below is the retail shop act and a very
important managing costs tool for signing a
lease. You should before signing a lease ensure
you understand your rights and obligations also
including the landlords responsibilities.https//
www.legislation.qld.gov.au/LEGISLTN/CURRENT/R/Reta
ilShopLA94.pdf There are numerous things that
can be included in a lease and it is very
important that before you do commit yourself that
you have someone with experience in this type of
business and/ or accountant/solicitor to look
over the document to ensure you understand if
this is right for you. If you would like more
information on managing costs or have any general
enquires. Feel free to contact me for more
information.
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David ZampechSupermarket SpecialistMobile
0422 671 375E Davidz_at_benchmarkbusiness.com.au B
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