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About this assignment
What's involved in creating an operating model?
What should I remember when creating an operating model?
What do the experts have to say about creating an operating model?
What's involved in creating an operating model?
When considering the cost of operating your business, you should consider three types of expenses:
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Start-up expenses: These are expenses that must be incurred before the business starts operating. When determining start-up costs, consider:
- Real estate (leases, rent)
- Recruiting, hiring, and training employees
- Salaries and benefits
- Capital costs for equipment, raw materials, etc.
- Branding, advertising, and promotion costs
- Office supplies
- Fixed expenses: These are expenses that do not change, or vary, based on the amount of sales. Fixed costs might include:
- Rent
- Insurance
- Professional services
- Some administrative costs
- Debt repayment
- Utilities
- Telephone and Internet service
- Variable expenses: These are expenses that fluctuate directly with the volume of business. Variable costs might include:
- Labor
- Raw materials or supplies
- Fuel
- Maintenance and repairs
- Ongoing advertising and promotion costs
- Uniforms
- Equipment
What Next: Click What should I remember when creating an operating model?
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