The current pandemic has caused a lot of businesses to rethink how they operate and look to generate income in different ways. I read an article today which shared how a Pizza restaurant switched to selling raw pizza kits online seeing a market in families making pizza’s together in lockdown. A great pivot.
When you change your business model you also change the make-up of the expenditures you are incurring. Being aware of this new cost base is important. For example; restaurant owners in UK who started using Uber Eats and Just Eat to deliver food during lockdown suddenly found the costs of delivery and online charges eating significantly into their profit margin. A cost they had not fully anticipated.
So if you change your business model take time to understand the costs you will incur as a result of that business model and what costs from your old business model fall away and which remain.
Taking this time to do this will help prevent any surprises to your profit and cash flow.
Understanding the steps of the process, from creation to customer delivery, will help identify any expenses. At each step ask yourself ‘what is the cost for this?’ and don’t forget about general costs such as specific taxes and insurances!
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