Ah, project cost management. One of the most dreaded things for business owners alike, no matter their location or the size of their business. Nobody likes costs. Nobody likes gauging costs either.
Yet you have no choice than track them (or at least try your best to do so), if you want to have your business operating as intended. Otherwise, you risk a soon-to-be sinking ship scenario.
With that said, a lot of people underestimate tracking their costs and setting a steady schedule to calculate and implement an extensive, properly formulated project cost management strategy. A huge case in mind are the numerous startups that come with the era of digitalization we live in. Mostly tech-related, they consist of amazing web developers or designers… who sadly lack the perspective of calculating and tracking their costs.
It might be a bit harsh, but the startup and small business scenes are really full of people who are careless of their budgeting. Yet when they fail, they blame it on something else. We’ve seen such cases and as you might guess, this was a motivation to include a project cost management tool in Cronforce.
But where are the pitfalls when it comes to project management – and the costs contained therein?
You Think “Costs” Is a Monolithic Term
Far too many people seem to think that costs are just costs, making no distinction between different types of expenses. Of course, there’s a great variety here: some small businesses or medium-size companies extensively rely on a specific type of costs, yet are low on other expenditures of another type.
What’s guaranteed is that you have overhead costs. These are the expenses that have to deal with advertising, rent, taxes, bills (electricity, phone), various utilities, fees (insurance, legal, accounting and other services). Like it or not, you’ll have some of these. This holds true especially for brick-and-mortar businesses tending to accumulate a lot of overhead due to building expenses (mainly rent). Cloud-based startups and Software as a Service (SaaS) ventures at least have it a bit lighter here, though web-based overheads can be cruel too.
Along with overheads, you’ll have various direct costs, fixed costs or variable costs. For example, direct costs are related to your actual product – when you sell it, what are the expenses it involves? Perhaps the shipping? No sale means no expenses in the case of direct costs. That doesn’t mean that you can get lighter on your overall project cost management practices, though.
The most important thing here is to start having an “all costs are not the same” mindset. Gauge your business and identify what type of costs you rely most on.
You Don’t Calculate Your Costs Properly
Feeling guilty as charged a bit? Don’t worry – lots of companies (especially small businesses) seem to mess up their expense management. After all, that’s why business consultants and project cost management tools and software exist.
However, a great chunk of companies don’t even identify that problem in order to seek a solution to repair the faulty financial pipeline at hand.
Before even starting a project, you should calculate all your costs immediately. What is, for example, your overhead cost per hour? What are the overhead costs related to various departments (if you have them, of course)? How much is your revenue and how are you currently allocating it? Who needs it the most? Have you actually set your product’s/service’s price to guarantee some juicy profits despite your overhead costs’ level?
Approach your business’ expenditures in a smart manner and from various viewpoints so as to gauge the financial situation to the optimum.
You Don’t Keep a Regular Track on Your Costs
Doing business is an extremely intensive thing to take part in. Variables are a constant here. Markets change, competitors come and go, customers’ preferences shift like crazy. What was once a fixed cost scenario can easily get shaky and need some tweaking. All of this especially holds true for eCommerce and tech-related small businesses/startups.
That’s why you need to always be in touch with what’s happening to your costs and all variables surrounding them. Not to mention that it’s about discipline – if you skip a week or two, it’s easier to fall into a downward spiral and ditch it for a long time. And then at the end of the year you’re left wondering what the hell happened and why your initial financial forecast didn’t turn out as planned.
Tweak your costs. Play around with your overheads. Be a dynamic swimmer, not a lethargic floater.
Project Cost Management Made Easy
Keeping a small business or even a medium-size company is a daunting task. It’s so demanding and requires of you to juggle so many things at once that sometimes the costs switch in your head might just shut down. We’re all human, after all.
That’s why we came up with a project cost management tool that you can utilize to become a flexible, functional and all-around efficient software sidekick of yours. What’s in the bag? Well, we:
- Make it easier for you to set up budgets and rates
- By providing you with a transparent, simple way to track your costs
- In real time, on the go
- With plenty convenient integrations with services such as QuickBooks or Paychex
What do you say about giving it a try for free and getting those costs settled once and for all? We reinvent project cost management tools. You draw the benefits.