You have a successful business. Congratulations. Now you want to grow further. And you find out that growing costs money. Not least for sales and marketing. It is important to pay close attention that both keep pace. Now what are the cost drivers to have well mapped out.
As a company grows and produces or sells more products or services, it may qualify for economies of scale. This means that unit costs decrease as production increases. For example, if a company produces more products, it can purchase larger quantities of raw materials at lower prices. However, with a growing business, overhead costs, such as marketing, administration and management, may rise, increasing the total cost of sales.
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Higher cost of quality and service:
As a company grows, the cost of quality and service may increase. For example, if a company serves more customers, it may need to allocate more resources to customer service and support. More may also be needed for the quality control process to ensure that increased demand is met and that products or services continue to meet appropriate standards.
Higher cost of inventory:
As a business grows, inventory may increase, increasing storage, transportation and management costs. A company may also need higher inventory levels to meet growing demand.
Higher costs for marketing and sales:
As a company grows, it may have to allocate more resources to marketing and sales activities to keep up with growing demand. This can lead to higher costs for advertising, promotion and sales support. As a specialist in this field, Klantenfabriek maps out exactly where your marketing dollars are rolling in and how to use them most effectively.
Higher costs for personnel:
As a company grows, it may need more staff to meet growing demand. This can lead to higher costs for salaries, benefits and training.
In short, although economies of scale can lower unit costs, other factors can lead to higher total cost of sales as a company grows. It is important to keep these costs on your mind to ensure that growth remains sustainable and profitable.