COGS – do you know what this stands for?
COGS stands for cost of goods sold. What this means to your business is really a question for you. Do you understand what it really costs to sell whatever your item or service is?
Many times the business owner will randomly price their goods or services, making them competitive in the market or even below price. This can be a serious deadly sin in any entrepreneurial business. Unrealistic pricing, whether it’s too high or too low, can seriously harm your business’s ability to cover its cost of goods sold, pay its overhead expenses ( like rent and employees and the telephone bill), and of course, make a profit for you the owner.
When is the last time you looked at your percentage of cost of goods sold or overhead expenses as compared to your gross income to determine if you are in the right range for your industry?
Please remember, that being a business owner is your job to know that you should be looking at these items, and to actually look at them. You do not need to figure these out on your own. If you need help figuring out these percentages, or would like to know whether they are in the right range for your industry, please send me an e-mail and I would be happy to discuss it with you 🙂
