You may be planning to start a business or are currently operating one. Your business is in one of the three crucial overlapping business phase delineated below as follows:
Three Crucial Business Phase
- Business Initiation and Planning
- Business Operations and Management
- Fiscal End-year Auditing and Reporting
Each business phase and its corresponding business phase constitute a myriad of data, often challenging business entrepreneurs and owners to know where to begin, what data to collect, or what significant findings are crucial to understanding the cost of doing business from a corporate and discrete perspective (material, product, and services).
The goal of this paper (Article Number 7) is not to overwhelm you with formulas for calculating the cost of doing business or sophisticated business language. Instead, the goal is to create awareness of the basis for understanding three unique business phase to delineate the cost of doing business, which is critical to business profitability, stability, and sustainability.
Essentially, what we do at DPBA is demystify critical business challenges. We are a full-service Management, Consulting, and Technology firm specializing in Collecting, Disseminating, and Analysing data on diverse populations globally, including Black, Indigenous, and People of Colour (BIPOC) in the diaspora and other racialized populations across Canada, the USA, the Caribbean, Latin America, and Africa.
Introduction
In addition, our firm is one of the global leaders in conducting Labour Market Needs Assessment surveys, statistical analysis, and cutting-edge technological solutions. With a core focus on digital transformation and IT-managed services, DPBA bridges the gap between traditional business practices and innovative tech solutions. Our commitment to excellence and forward-thinking approaches have positioned us as leaders in the industry, serving both B2B and B2C clients worldwide.
DPBA is positioning the organization to broaden its service offerings to help foster a better understanding of the integration between project and business management among project and business managers. This capacity will foster a broad base of digital educational forums, offering innovative articles and fueling the release of DPBA’s “knowledge base” of the end-to-end project and business management knowledge, from ideation to business start-up, execution, and closeout. [1]
There are many representations of the cost of doing business by statisticians, financial advisors, and business consultants.[2] However, this article presents the following twenty-one predictable cost items to doing business, which can vary from business to business as follows:
Twenty-one Predictable Costs to Doing Business (randomly ordered)
- Business Consultation Fees
- Building Purchase, Lease, or Rent
- Salaries and Wages
- General Office Expenses
- Professional Memberships
- Business Licenses
- Business Seminars and Training
- Bookkeeping, Accounting, and Income Tax Reporting
- Business Taxes
- Publicity, Marketing, and Sales
- Packaging and Shipping Expenses
- Equipment Warranties and Rehabilitation
- Utilities Expenses (building services)
- Contingency (insurance premiums and investments)
- Vehicle Expenses (purchase, lease, and maintenance)
- Interest Charges (banking and loans)
- Products, Materials, and Services
- Material Losses and Perishables
- Disposal Expenses
- Digital Systems Applications
- Business Safety and Security
Depending on the type, size, and nature of your business, as well as the capital cost to set up the business, some entrepreneurs and business owners may not achieve the success they anticipated. However, the reasons for the lack of business success are predictable and clearly delineated in the twenty-one items listed above. For this reason, statisticians, business advisors, and consultants promoting the concept of business entrepreneurship and ownership must focus on advising of the cost of doing business, recognizing three business phases cited previously in the opening statements.
BDC: The Small Business Statistics in Canada paints a picture of challenges. Nicole Blair: Canadian Statistics. Updated: November 4, 2024.
Recent years have been challenging for most companies, but most of all for small businesses. As more people are shopping online, a development speeded up by the global pandemic, small companies often lack the workforce or the know-how to create an online presence that could compete with larger companies. Neither can they compete in prices with large online retailers. As a result, many small Canadian companies are struggling, and many small company owners do not have a positive future outlook, nor are they expecting their sales to increase [Following is a sampling of small business statistics]:
Small Business Statistics for Canadians
- Almost 98% of Canadian businesses are small companies.
- More than a third of small businesses are not optimistic about the future.
- Small companies employ over 10 million Canadians.
- Small and medium-sized companies contribute over half of Canada’s GDP.
- The revenues of many small Canadian companies have decreased in recent years.
- Almost 20% of small businesses with less than 20 employees expect sales to decrease.
- Over 20% of small businesses are worried about cash flow.
- 5% of small businesses do not survive their first year.
- Over 70% of Canadian small businesses fail because of management issues.
- 58% of small business owners believe a work-life balance is crucial for long-term survival.
According to Guidant Financial, 33% of small business owners say their biggest challenge is generating enough cash flow. Marketing, time management, and administrative work are also factors that many new entrepreneurs find challenging. [3]
OTHER CHALLENGES TO DOING BUSINESS
In addition to the internal cost of doing business, looming on the business horizon are external business uncertainties and risks often excluded from the business initiation and planning processes. These external challenges to business operations are likewise predictable. However, the timing and the magnitude might not be as predictable, delineated by a series of seven conditions that statisticians, financial advisors, and business consultants must inculcate as critical to business success in our postmodern business ecosystem. We at DPBA view these challenges to business success as external stressors on businesses, suppressing long-term viability. They include the following:
Unpredictable Costs of Doing Business
- Online Shopping
- Seasonal Weather Patterns
- Cultural Market Segmentation
- Rising Market Competition
- Political and Social Instability
- Environmental Regulations
- Public Liability
The question posed by DPBA is how the entrepreneur and small business manager operate a successful business, overwhelmed by predictable and unpredictable costs of operating their businesses? DPBA puts forward the five perspectives depicted in Figure 1: Five Representative Project/Business Success Strategies. For a broader discussion on the five elements generically applied to project and business success, refer to Article Number 6 (November 30, 2024). These five parameters do not represent the actual functioning of the business but are critical in establishing the foundation for achieving business success.
Finally
When initiating and planning a project or business, the consensus is to begin with a feasibility study. Still, a business feasibility study is only one criterion of five foundational perspectives providing the most significant opportunity for business success. The five elements depicted in Figure 1 are central to business success. They are comprehensive and integrated for study and analysis to establish the parameters to ensure feasibility, viability, profitability, stability, and sustainability. Every business and project manager can agree with such a proposition(Reference: Article Number 6 for a brief but comprehensive understanding of the five crucial business success strategies).
From an operation and management perspective, many business entrepreneurs fail to conduct the seemingly tedious work of stringent monthly reporting or at least a cursory analysis of the business status every month. Notwithstanding, the predictable and unpredictable cost of doing business looming on the business horizon, the highest’ value proposition’ (subject for a future article) is the application of principles of review of variance (ROV) across all aspects of projects and businesses—monthly. The benefits of ROV are critical in understanding the impacts of predictable and unpredictable costs, enabling entrepreneurs and business owners to develop strategies to forecast and enhance business success.
CONTACT INFORMATION
Dunn, Pierre, Barnett & Company Canada Ltd
First Canadian Place
100 King Street West
Suite 5700, Toronto, ON
M5X 1C7, CANADA
Cell: 647-966-4783. Fax: 416.915.4260
Email: jpierre@dpbglobal.com Email: cjustinepierre@gmail.com
Website: http://www.dpbglobal.com
[1] Dunn, Pierre, Barnett & Company Canada Ltd (DPBA) (https://dpbglobal.com/associates/).
[2] DBC: https://www.bdc.ca/en/articles-tools/entrepreneur-toolkit/templates-business-guides/glossary
[3] Small Business Statistics Canada: Nicole Blair: Updated: November 4, 2024. Canadian Statistics: https://madeinca.ca/small-business-statistics-canada/.