STUDENTS' CORNER - 240
       Total cost of a business
Without the
information of the total cost of a business, it will be unwise and incompetent
to arrive at the Return On Investment. You must know how much you have invested
in the business of manufacturing a product or evolving a system of service.
This is important because it effectively guides you in pricing a product. Of
course arriving at a pricing decision is very critical since the very marketing
exercises and the consequent expenditure, the essentials of a business concern,
are involved in it. In fact, it is the
most important final decision in any business process. In a way, every
commercial decision is critical; right decision at lease guarantees that there
will be no loss if not expected profit. Business like jealous lady-love demands
complete attention to itself.
Now, how to arrive
at the total cost of the business: of course,Â
business is in a way a very sound common sense, not spoilt by greed for
more or by fear of facing challenges; the greatest challenge is neither market
fluctuations nor customer or employee betrayal but the uncertainty that
surrounds every little fact of life that includes business. Another name that comes
very close to common sense is what is called insights; in the popular
terminology, sometimes it is called by some successful entrepreneurs as ‘guts
feeling’. That is where experience
matters; it is also a big complex thing; let us leave it now and go to cost of
business.
Even the platform
shopwala knows there is fixed cost and the other thing non-fixed cost; this is
called in business terminology variable costs. The total sum of both the costs
is total cost of the business; in other words, this total cost earns the
investing man the name, the Owner of the business concern.
 You might have heard the most popular quote
from Shakespeare: “Uneasy lies the head that wears the crown.†Imitating him,
we can say uneasy lies the head that is in a business. Simply, it says crown
and business take away peace of mind from him;Â
and we know business people strive to retain the peace of mind through sustainable
business; that is, all the time thinking about business; it means the threats
of the merciless and unpredictable market ; the known and the unknown
formidable rivals to the business.
We will spend some
more time on both the fixed and variable costs in our next session.Â
