The ability to differentiate operating and non-operating costs is also critical for small and medium-sized business owners. Understanding how operating expenses impact your business is crucial to remaining profitable. Smart business owners will also keep track of their spending with a balance sheet and practice good p&l management. Income statements track revenue, expenses, profit, and loss over time. Companies typically keep track of these expenses with their income statements. Still, you control your operating costs and how you manage them. Operating expenses are what keep your business running-they are usually unavoidable. If they didn't, they wouldn't be able to operate. We’ll get into these later.Īll businesses incur operating expenses. To help remediate this or avoid it entirely, you should take control of your operating expenses with corporate cards, good spending policies, automation, and more. It’s worth keeping in mind that unauthorized and out-of-policy spending are the primary culprits of struggling and failed businesses. Calculating and controlling operating expenses is crucial for small and medium-sized companies to remain operational. ![]() If you didn't have operating expenses, your business would not run. Operating expenses pay for your business's day-to-day operations. ![]() Operating expenses are costs that your business incurs to remain functional. ![]() In this article, we’ll dive into operating expenses and how to calculate, manage, and save on associated costs. But unauthorized and uncontrolled spending on operating expenses can sink your business. Your employees and customers depend on your ability to operate within your means. Living by the old adage "you've got to spend money to make money" can be a dangerous motto for business owners if they don't understand how to prioritize operating expenses. Too many small and medium-sized businesses fail because of poor operating expense management. Business owners need to understand operating expenses and how to manage them to run a successful company.
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