Determining your cost structure involves several steps:
Identify All Costs: List all possible expenses, including both fixed and variable costs. Be thorough to ensure no costs are overlooked. Categorize Costs: Divide the costs into fixed and variable categories. This helps in understanding which costs will remain constant and which will vary with production levels. Analyze Cost Behavior: Study how different costs behave with changes in production levels. This can help in making strategic decisions about scaling the business. Use Financial Tools: Utilize financial tools and software to track and analyze costs regularly. This can provide real-time insights and help in proactive financial management.