🖥️ Presentation: All About Operations - Bootcamp

📖 Reading : What Is Operations and Why Does My Business Need It?

▶️ Video : Basics of Operations Management pt.1

▶️ Video: Basics of Operations Management pt. 2

▶️ Video: Operations and Strategy - Overview of Operations and Processes Management

🧠 Exercise: How to Cope With Operations Challenges

🧠 Solution: How to Cope With Operations Challenges

▶️Video: Volume, Variety, Variation, Visibility - The 4 Dimensions of Operations

📖 Reading: I’m a Small Busines, How Should I Fulfill an Order? - Simple Steps to Order Fulfillment and Scenarios

📝 Product Labeling - Milk Example

📖 Reading: How to Create a Legal Label for Your Food & Drink Business Pt. 1

📖 Reading: How to Create a Legal Label for Your Food & Drink Business Pt. 2

📝 Template: Order Tracker

Operate Like a Franchise — Even If You’re Not One

Most small businesses aren’t franchises — they’re independent ventures built from the ground up. But there’s an important lesson entrepreneurs can learn from how franchises operate: successful franchises run on systems, not guesswork.

When someone buys a franchise like Subway, they’re not just buying a name — they’re buying a complete turnkey system. Every detail is defined and repeatable: how to open and close each day, how to clean the space, how to prepare every sandwich step-by-step, and even how much of each ingredient to use. Nothing is left to chance, which means customers get the same quality experience every time, no matter which location they visit.

You can apply this same mindset to any business, even if it’s not a franchise. Documenting your processes — from how you serve customers to how you restock inventory — creates consistency, reduces waste, and increases efficiency.

The benefits are powerful:

• Consistency: Every customer receives the same quality experience, reinforcing your brand.

• Efficiency: Clear steps reduce mistakes and save time.

• Scalability: With written systems in place, the business can grow or train new employees easily.

In short, think like a franchise owner — build systems so your business runs smoothly, even when you’re not there.

📖 Reading: Quality Control Best Practices for Small Businesses

✅ Checklist: Quality Control Checklist for Small Businesses

What Are Standard Operating Procedures (SOPs) and Why Your Business Needs Them

Every business, no matter how small, runs on routines — from how you open each morning to how you serve customers or manage inventory. Standard Operating Procedures (SOPs) are simply the written version of those routines. They are clear, step-by-step instructions that describe how to complete specific tasks the right way, every time.

Having SOPs helps you stay consistent, save time, and avoid mistakes, especially as your business grows or when new team members join. For example, if you own a café, you might have an SOP for how to prepare drinks, clean equipment, or close the shop at the end of the day. These procedures make sure everyone follows the same process and delivers the same level of quality your customers expect.

Even solo entrepreneurs benefit from SOPs: they help organize work, track what’s being done, and make it easier to delegate when the time comes. In short, SOPs keep your business running smoothly and professionally, just like a well-oiled machine.

Here is an example of SOPs in a business:

📝 Example: SOPs of a Catering and Events Business

📖 Reading: Invoicing for Small Businesses - Everything You Need to Know to Get Paid

📝 Template: Simple Invoice Template

📝 Template: Invoice Template - Services

📝Template: Invoice Template - Products

📖 Reading: Best Practices for Maintaining Equipment

📖 Reading: Chef Story

Think of your business like a theater production. There’s what the audience sees — the front stage — and everything that happens behind the scenes to make the show work — the back stage. Both are essential, but they serve different purposes and often need to be managed differently.

Front-stage operations are what customers directly experience. This includes how they are greeted, how services are delivered, and how problems are solved. For example, in a Collaboration Hub, the front-stage process might include greeting the client, completing an intake form, assigning them to a student consultant, working together on a solution, and following up after the project.

Back-stage operations, on the other hand, are all the things the customer never sees — but that make the front-stage possible. These include maintaining databases, training and scheduling staff, paying rent, cleaning the space, restocking supplies, and maintaining equipment like printers.

Both areas need structure and consistency. Creating a clear operating model for each helps you identify bottlenecks, maintain quality, and find opportunities for improvement. By regularly reviewing both your front-stage and back-stage systems, you can run your business more efficiently and deliver a smoother, more professional experience to every customer.

📝Template: Frontstage-Backstage Audit

▶️ Video: Frontstage vs. Backstage

▶️Video: Products vs. Services

📝 Example: Operations Diagnostic Analysis

Now it is time to sign the lease on a location you have selected. Do so cautiously, and pay attention to all the details.

A lease is a binding contract. It is easy to miss important items hidden within the lease. Here are some action items and considerations you might want to take into account before signing the lease:

a. Check zoning laws to ensure you are allowed to conduct the kind of business activity you are planning in this particular location. Are any special permits required?

b. Carefully inspect the property and note (write down, take pictures) any existing damage or potential problem areas (missing railings in stairwells, electrical outlets that don’t work, water pressure in sinks, locks that don’t lock properly, unacceptable smells).

c. Understand who the landlord is. Much like renting a house or an apartment, your landlord matters! Make sure the landlord has a history of being fair, reliable, and trustworthy. Also, determine if the landlord you are working with is also the building owner, or who the owner is.

d. Read the lease slowly and then read it again. Don’t accept what the landlord says verbally – it must be in the written lease.

e. What is the duration of the lease? Is it renewable? How much can rent be adjusted if you decide to renew? Can the lease be broken by either party? Is there a penalty to break the lease? How much warning must be given if the lease is to be cancelled?

f. Is the rent fixed for the length of the lease?

g. Know what is included in the rent. Understand your full financial commitment. Does the lease include all utilities, some, or none? This can include water, sewer, gas, electricity, internet access, and trash. Does the lease indicate who is responsible for maintenance and repairs, and what is included in terms of maintenance and repairs? Are there any maintenance fees? Some leases may include a charge for building insurance. Depending on the location, things like snow removal and lawn care could be important. How much parking is provided and are there any parking fees?

h. Understand not only how much the security deposit is, but the exact requirements for getting the security deposit back.

i. What happens if you are late or miss a payment?

j. What restrictions does the lease place, if any, on what kinds of business activities you can do in the space. Can you do what you want and need to do with the space? Can you install the equipment you will need? Maybe you want to have patio seating, is this allowed?

k. Are you allowed to make adjustments to the space, and does this first require approval by the landlord. For instance, can you paint the walls, add shelving, replace the flooring, or install a counter?

l. Also, are there restrictions on having similar businesses in the same property (e.g., if you are a hair salon in a shopping center, can the landlord rent space within the same property for another hair salon?)?

m. Do you have exclusive use of the property, or is it possible others could have access?

n. Are there any restrictions on the kind of signage you can put on the building or office space? Are you allowed to put sandwich board type signs (e.g., announcing a special sale) on the sidewalk in front of the property?

o. Are there any restrictions on things like smoking in the space, having pets in the space, hosting events in the space?

p. What sort of notice must the landlord give you if they are planning to enter or access the property?

q. Are you allowed to sublease any of the space to another party?

r. What are the terms of renewal? After the lease expires, if you want to keep the location of your business, can you renew the lease?

s. If the building goes up for sale, what are your rights in terms of retaining your space? Also, do you have the first right of refusal to buy the building if it comes up for sale?

Keep in mind that terms of a lease are negotiable. For instance, you might be able to negotiate a shorter (or longer) period for the lease, and based on this, negotiate a different amount of rent or inclusion of utilities, or more parking spaces.

Be certain that you fully understand the terms of the lease that you are signing. It is worth it to work with a good real estate broker or lawyer, and have them review the lease. They can see things you might miss, and tell you the terms or items where you should beware. They can also tell you what items you might want to attempt to negotiate.

It can be exciting to establish a physical space for your business. Do not let emotions rush the process and push you into a space that does not suit the needs of you and your business. Take your time before signed a lease and make sure that all of your boxes are checked.

No matter what your business is, it is likely that you will need equipment, tools, or furnishings. Make a list of everything you think you will need and try to get three price quotes. Go through the list, and make sure that everything you have written down is necessary. After you have a full list of the necessary equipment, tools, and furnishings, decide if there are ways you can borrow, share or barter to get each item.

If you cannot leverage the resource, then determine which items you can rent, and which items make sense to buy. Consider the price of both options, but also the investment you may be making. For example, when opening a coffee shop, it would make sense to buy a coffee maker rather than rent one. This is a staple in your business and if good quality, something that will make a profit quickly.

It may be possible to lease or rent some of the items you need rather than purchase them. Leasing can be a good option when you don’t have much money at start-up. It is also a good option when you need equipment that has be to upgraded every couple of years. While leasing costs you less in the short term, over time leases will almost always cost you more money than just buying the item in the first place. At the same time, lease expenses are deductible on your tax return. While leases offer flexibility, keep in mind that you must make payments for the entire lease period even if you stop using the item you are leasing. There is usually a penalty fee for trying to terminate a lease early.

If instead you decide to buy the equipment, it costs you more upfront, but can save you money over time, particularly if it is something that is durable and long-lasting. You will usually be able to depreciate the equipment as it wears out, giving you what can be a sizeable tax benefit. In addition to depreciation, the government offer tax incentives for purchases of certain kinds of equipment in the first year that you own the items. If you borrow money to finance the purchase of equipment, the bank will still require a down payment (20 percent or so of the purchase price), and you will then have interest and principal payments to make. Keep in mind that, if you buy the equipment, you are stuck with it if you find you no longer need it, or newer and superior models or versions become available. However, because you own it, you have the ability to sell the equipment.

When first opening a business, stay frugal! You will not want to break the bank buying equipment before you know how much profit your business will bring in. Set yourself up for initial success and get creative. Look for gently used equipment or furniture, contract certain tasks, take advantage of trade and barter sites, and consider buying government surplus. When a federal agency has surplus equipment, they look to get rid of it at much lower prices than they paid. These items are often auctioned off online or available for negotiation. The SBA provides a helpful list of government auction sites. Using this link https://www.sba.gov/business-guide/manage-your-business/buy-assets-equipment, scroll to the end of the page for a list of sites.

Having proper signage is super important when it comes to communicating your business (and conveying a professional image). Signage comes in many forms beyond a sign on your business premises. For example, a lawn care company may benefit from a sign on the vehicle they use. A storefront may also need signage on the windows or doors, or at the front of the store. You may want to invest in a table cloth or a banner sign which you can take to different events. A gas station may add signage to tell people they have a car wash. Selling items at a farmers market? Bring with you an eye catching, professional sign to keep at your table, or under your tent. Signage will look different for every business. Decide what makes the most sense for you.

In terms of some basic rules of thumb when creating the primary signage for your store or building, have an experienced professional design the sign. Make sure the sign reflects the target audience you are going after, and the location where the sign will appear. Keep it simple, easy to read, and vibrant. Make sure it is legible, and all spelling and grammar are correct. Don’t use fancy fonts and don’t use more than two different fonts. Avoid clutter (have enough white space so that the letters and logo stand out). Logos and attractive graphics that complement your message can help grab attention. Color contrast can also make a sign easier to read. Make sure the letters are big enough to read from at least 8’ away. While there are different rules of thumb to guide you, one suggestion is that add one inch of letter height for every 10 feet of distance. If you want your sign to be seen as far as 300 feet away, your letters will need to be at least 30 inches tall. Consider using bigger letters for whatever you want customers to read first.

Most cities have a number of local sign-making companies. Another source is Fastsigns (https://www.fastsigns.com/), which is a national franchise operation and may have a location near you. If you want to consider online options, Vistaprint (www.vistaprint.com/signs-posters) is an example of a commonly used and reliable source for commercial signage, especially for banners, decals, and vehicle signage. They offer lots of signage templates for you to consider. Depending on the type of signage you are looking for, Etsy can also be a great option. In addition to these options, search your area for local printers who may be cheaper and more efficient. It is always a good idea to utilize other small businesses. Perhaps they are interested in trading services!

If you are planning to put a sign on a building you are renting, make sure you check the laws and regulations within your city, as well as your building codes by looking at the municipal website. For instance, in the City of Milwaukee, one of our partner cities, you can find signage rules here: https://city.milwaukee.gov/Designguidelines/UrbanDesignComponents/ Signage-Regulations. Also, please note that, if you have signed a lease agreement for the property where you are running your business, you should check to ensure whether the lease places any restrictions on signage.

If you are a business that goes to customer locations, signs can attract future business. If you are, for example, a traveling masseuse, mobile car detailer, landscaper, or decorator, bring with you a portable sign and ask your client if they’ll allow you to leave a sign on their lawn for the duration of the service, or longer! If it’s in your budget, travel in a vehicle with signage. There are so many creative ways advertise your business using signs.

Finally, don’t forget weather conditions. If there is lots of rain, snow, wind, freezing temperatures, or heat, your signage needs to be able to withstand such conditions. Even the A-frame sign above, if placed outside, needs sufficient weights or some other means of securing the sign should it be a windy day.

Now that you have signed a lease, purchased equipment, and prepared signage, it is time to make sure that your site is prepared to operate. This will look very different for every business and should be organized according to your operating model (see STEP 24). The layout and set-up of your premises is an area where you really need to focus on details. Start with a carefully thought out floor plan. Beyond you and any employees, all of your equipment, tools, paperwork, filing systems, computer systems, technology, and whatever else is necessary for seamless operation should be ready to go. Things do not need to be fancy, particularly if you lack resources. However, they must be professional in every possible aspect. You are a professional, and you want your place of business to reflect that professionalism.

Opening up is more than just your advance marketing or the holding of a grand opening event. It is “show time” and you need to be prepared. When a customer enters your business, great entrepreneurs are able to walk in their shoes. What will the customer see, think, feel, and do? What might be confusing to them? How easy are you to do business with? Keep in mind that customers make judgements about your quality based not just on the final product or service you provide, but on the things they encounter (the cues or evidence) during the process of visiting your location and doing business with you.

What is the image your place of business projects to others? Are floors, walls, counters, windows, blinds, and equipment clean? Are things neat and orderly? Are they laid out in a logical and flowing manner? Do you have appropriate signs that assist the customer experience (but not too many signs)? How is the lighting? If music is playing, is it the right kind of music for kind of customers you are serving? Is the cash register or point-of-sale system placed in an appropriate place? Are there distractions (e.g., noises, smells, holes in the wall) that take away from the customer’s ability to focus on you and the value you are providing? Does the work environment appear to be safe for employees?

If you are selling physical products in a retail location, then you want to arrange them in your facility in a creative manner. There is a psychology behind where retailers place products, and you can find a lot of advice online regarding how to place products. As an example, here are sample tips that some experts recommend (source: https://www.dotactiv.com/ blog/retail-product-placement):

1. Put the essentials toward the back of the store.

2. Place your higher-end products near the front of the store.

3. Place the best items at the customer’s eye level (a popular retail phrase is “eye level is buy level”)

4. Place complementary or products near one another.

5. Give your customer some room–don’t squeeze too much into too little space, or create a sense of clutter.

Accessibility to your facility is also a key consideration. If the people you are trying to attract to the business are older, or quite young, or have a disability, is it easy to enter your premises? How far away might they have to go to park a car? If they have to wait to be served, is there ample (and a comfortable) space to wait?

It is also critical that you focus on productivity. Have you concentrated too much on creating an attractive-looking work environment without ensuring the business is set up in a way that enables work to get done and customers to be served in an efficient manner? You may need to make tradeoffs between a physical environment that has aesthetic appeal, or that looks and feels good, and a place of business with functional appeal, where the focus is on practicality and serving the needs of customers.

Practice makes perfect! Before serving customers, it is important that you are sure your operations run smoothly. It is unlikely that your first trial will be seamless. There are likely some kinks that will need to be worked out. Whether selling a product or a service, it all begins with quality. It is impossible to know if you are providing good quality if you don’t first define your measure of quality. What is the metric or performance standard? For many entrepreneurs, you might have a couple of different quality indicators.

As examples, a restaurant might define quality in terms of how tasty the food is, the temperature of the food at the time it is served to the customer, the time it takes to get the food to the customer, and the friendliness of the food server. A business that transports people to medical appointments is likely to define quality in terms of on-time client pick-up, on-time client drop-off, the cleanliness of the vehicle, and the courtesy of the driver.

Your definition of quality should reflect what the customer expects, as well as what you can realistically accomplish and affordably achieve. If the entrepreneur is doing all the work, and has no employees, then the time it takes to provide the product or service to the customer is likely to take longer.

Customers care about quality, but they especially care about the CONSISTENCY of your quality. They develop an image of your business, and will make decisions on how often to buy from you, based on that consistency. So, it is vital that you set the quality standard based on what you know you can provide every single time. If it is sometimes better but is sometimes not as good, then you are undermining your image and the value you are creating for customers.

Doing some trial runs can help you set your quality standards, while also preparing you for properly handling customer orders. Consider a restaurant. Let’s assume the business has sixteen tables and each table seats four people. If all the tables are full, and each of the individuals at each table orders something different, think about the demands this places on your kitchen and your wait staff. Keep in mind that each item on your menu takes a different amount of time to prepare. If you are not ready to handle the demand, then the quality of the meal preparation can suffer, food takes longer to get out to the tables and so is not as warm, it does not come out to all the people given table at the same time, or other quality problems arise.

As a different example, consider an entrepreneur that makes five different types of leather bags. In this case, the trial run would focus on your production process. With the proper materials and tools at hand, and laid out in a consistent manner that allows you to function efficiently, practice making each of the products. How long does it take? How many errors or bottlenecks did you encounter? Were there any flaws in the finished goods? How many could you produce in a given block of time (say, for instance, four hours). Could you do it faster and better if you made multiple versions of one type of bag and then multiple versions of a different kind of bag? With this example, in addition to production, you might also do some trial runs involving customer interactions.

This discussion points to the central importance of having a well-designed model to guide your operations—the operating model was discussed in STEP 24. But even with a good operating model, you should do as many trial runs as you can before you start serving actual customers.

If you do a trial run with friends and supporters, make sure your space is properly prepared for operations and that everything is set up as it would be on a normal business day. In order to collect valuable data, your trial operating run will need to mimic as real of a scenario as possible. During test operations, it will help to have someone is taking notes, and paying close attention to what is working and what is not, and what can be improved. When the test operations are complete, reflect on what went smoothly, what did not, and how those things can be tweaked. Keep records for comparison, as you will be adjusting and improving operations for the entire lifespan of your business.

Based on your trial runs, you may also want to create a checklist to guide daily operations. While it depends entirely on the nature of your business, here are examples of items you might want to address in your checklist:

• Make sure all tools are clean, ready to use, and in the proper place 

• Check that all equipment is prepared and ready for the day 

• Ensure each customer is greeted as they enter your business 

• Check that all ingredients and materials are available in proper quantities 

• Ensure the products are properly displayed 

• Ensure your space is spotless and uncluttered 

• Have a schedule for who is working what hours 

• Check that all employees are prepared, dressed properly, have nametags on, and know what they need to do 

• Prepare you cash register or POS is prepared for transactions and to provide receipts 

• Have a script for selling your services 

• Ensure all contracts are error free and ready to go 

• If you are driving or canvassing, make sure your vehicle(s) are gassed-up and ready to go 

• Have contingency plans for possible problems that may arise (supplies delayed, power out, oven stops working, employee sick, etc.)

In STEP 24 you designed your operating model. While the operating model is concerned with mapping out how you deliver your service or make you products, businesses also need to establish processes for accomplishing many of the daily tasks involved in running the business in a consistent manner. You may need what are called standard operating procedures, or SOPs.

You might establish SOPs for any number of daily activities, but the focus should be on regularly occurring activities that affect your ability to operate efficiently and effectively. Having a step-by-step standardized approach ensures fewer mistakes. Examples could include:

• how the phone should be answered

• how to handle cash from customer purchases

• how to open the business each morning

• how to close the business and lock up at the end of the day

• how to interview a job candidate

• how to orient a new employee to the business

• how to prepare a social media post

• greeting and seating customers when they come in

• how a customer complaint should be handled

SOPs are directions for the smaller, more detailed activities that happen within a business. There are many potential areas in which SOPs might become relevant, particularly as you add employees and they will vary greatly depending on the business. A restaurant may include, food handling procedures, what to do when a customer sends their food back, or how to greet and seat customers. The SOPs for a hair salon may include how to book an appointment, what to do before and after each haircut, or how sweeping after each haircut is to be done.

To create SOPs you will want to begin by identifying key tasks that regularly occur in your business, where you do not want things done arbitrarily or with lots of discretion. These are tasks where standardizing the approach can reinforce professionalism, reduce critical mistakes, ensure consistency, save time, or add value. Make a list of these tasks, then document each process in detail. Start by writing down the steps involved in performing the process. Be specific and thorough. A step in the process that is obvious to you may not be obvious to an employee. Use diagrams or flowcharts to help illustrate the process. Include any forms, templates, or checklists used in the process.

Here is an example of a standard operating procedure for washing dishes:

• First, be sure to wash dishes in basin dedicated to dish washing. That basin should not be used to rinse food or wash hands.
  Put on cleaning gloves.

• Fill basin with 110 degree water, using thermometer to confirm temperature of water.

• Put in ¼ cup industrial dish washing soap.

• Before putting dishes in wash water, scrape off food.

• Wash each cup, dish, bowl, fork and spoon separately, one at a time.

• Take each item and cleanse it front and back 2 times to make sure nothing is missed.

• Put it in the second sink for rinsing.

• Rinse water should be changed regularly.

• Finally, sanitize each item in a third basin using the sanitizer provided for you, using ¼ cup per basin.

Procedures for some tasks or activities may seem unnecessary. However, others can greatly enhance your daily operations. For instance, you might wonder why directions on how to answer the phone are necessary? Standard Operating Procedures ensure that every task is completed exactly as you would like it to. Having a procedure for answering phone calls or booking appointments takes any arbitrariness out of the task while setting a standard for professionalism. Employees are able to quickly and effectively complete tasks without considering how it should be done. SOPs also ensure that every task completed is done in a way that aligns with the culture and values of your business.

Finally, while addressing the critical activities with SOPs can help ensure your professionalism and consistency, you don’t want to overdo it. Too many steps and procedures make it hard to adapt to situations or to flexibly respond to circumstances.

Related to our discussion on cash flow is the need to understand the patterns that emerge in your expenses. This step goes hand in hand with our next one, and so the two (STEPS 63 and 64) should be considered together. Expenses demonstrate patterns or behaviors over time. If you are keeping a monthly income statement, with expenses broken out in detail (see STEP 45), these patterns can be identified by regularly monitoring them. As you come to recognize these patterns, you will be better able to anticipate problems early when you see variations from the normal patterns.

To identify patterns in your expenses, you need to have a good feel for every dollar you spend in your business.

It is helpful to organize all expenses (or at lease ones above a certain dollar value) into five groups:

a. Expense items that tend to go up and down directly with sales: These are usually materials, ingredients or component parts that are regularly purchased in order to make products or complete jobs. They could also include packaging, shipping and transaction processing fees when you make sales. The more orders you get, or sales that you make, the more of these inputs you need. Earlier we called these variable costs. Given that these are usually a direct percentage of sales (e.g., let’s say that for every unit you produce or job that you complete, these costs represent about 40% of the sales price. So, if you sell an item for $20, these costs would be $8.

For these expense items, once you establish that they tend to be about 40% (as an example) of sales, then you must be vigilant in observing whether they have risen (say to 50% of the sales price), or have fallen (say to 30% of the sales price). You are trying to determine the reason why. Have you gotten less (or more) efficient in production? Are items being stolen? Did material or ingredients costs drop for some reason? Are you using more inferior ingredients or materials?

b. Expense items that remain fairly steady across the months of a year:

These are things like rent, business insurance, software subscriptions, office supplies, salaries, and depreciation on vehicles and equipment. They are relatively fixed costs from month to month or from quarter to quarter (for things like insurance that may be paid quarterly). These costs may go up at the end to a year, but usually not during the year. The entrepreneur monitors that they are not increasing or decreasing from month to month—and if so, he or she focuses on figuring out why and whether the business should switch to a different supplier (e.g., a different insurance company).

c. Expense items that are seasonal or tied directly to times of the year: These are expense items where the costs are driven up during times of the year when there is high demand or, alternatively, when supplies of the ingredient or material or part are down. Examples could include vegetables, fruits and meat products, components for high tech products, or fashion apparel. Utilities can represent another example, especially in geographic regions with very warm summers or severe winters. Here, the entrepreneur wants to develop a sense of the kind of range that these costs can vary, and plan for cash requirements to deal with these potential variations. It is also important to have a plan for extreme or abnormal spikes in these costs, such as using substitute inputs or changing one’s product offerings during these periods of time.

d. Expense items that fluctuate considerably with no single pattern: These are expenses like gasoline or building materials that can suddenly escalate or drop in price usually because of larger forces in the economy or the environment. A labor strike, natural disaster, war, or deliberate cut back in production by suppliers could be possible causes. The impact of the COVID-19 pandemic on supply chains would be another example. Having a category of expense items like this is critical, as the entrepreneur knows their prices can significantly change at any point in time. He or she needs to do online research and keep tabs on expectations and forecasts regarding future trends.

e. Major unexpected expenses or periodic one-time expenses that are tied to investing in growth: This category includes two types of expenses. The first are major expenses that were not expected or planned for, such as a machine that suddenly needs a major repair or replacement, or a business vehicle that is in an accident. Other examples could include costs or losses due to a robbery, or fire, or a broken pipe that causes a flood. Some of these might be covered by insurance if the entrepreneur has coverage, but even here there can be deductibles, and insurance payout is often not enough to actually replace what was lost. The second type is an expenditure to take advantage of a new opportunity, or to support growth or expansion. Both of these types of expenses occur above and beyond the entrepreneur’s normal conduct of business. The second type is easier to plan for, but both types suggest a need for a rainy day fund, or money that the entrepreneur sets aside and does not touch.

Once you’ve categorized and analyzed, you’ll have noticed where your expenses are the highest, and the lowest and can begin coming up with ways to reduce some of your higher costs. Might there be software that you could incorporate that would save on time and labor costs? Can you collaborate with other companies to get volume discounts on some items? What about taking advantage of bartering, free resources, and wholesale discounts? Maybe printing is costing you more than you can afford. Offer a service or product in exchange for free printing somewhere in your area. If one of your materials is costing you too much, and you have not yet looked into buying at wholesale, now is the time. Perhaps you can use an intern from a local high school or college instead of an employee. Legal services may be costing you an unnecessary amount of money, look into free legal services at universities, or your local courthouse. There is a chance you are also paying for things that are no longer necessary.