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Managing Costs .pdf

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Title: Get Network Administration and Business Networking Service in Long Island
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Managing Costs

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
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%.

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.

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
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.

David Zampech
Supermarket Specialist
Mobile: 0422 671 375
E: Davidz@benchmarkbusiness.com.au
Businesses for sale quick links:
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