What you are seeing
The figures are invented to show the pattern. They are not what any business should expect.
| Number | Three months ago | Now |
|---|---|---|
| Revenue | R200 000 | R200 000 |
| Fixed costs | R60 000 | R66 000 |
| Break-even sales | R150 000 | R165 000 |
| Net profit | R20 000 | R14 000 |
Nothing dramatic happened in any one month. Fixed costs rose by R6 000, and profit fell by the same R6 000.
What it could be revealing
| It could be revealing | How to tell | You could |
|---|---|---|
| Small recurring costs are accumulating | Every recurring payment on the bank statement, listed | Cancel what nobody uses |
| Staff hours or overtime are creeping up | Payroll by month, and hours worked | Set an approval rule for overtime |
| Suppliers raised prices and yours did not move | Gross margin against three months ago | Update your prices |
| A lease or contract escalated | The escalation dates in your leases and contracts | Diarise them, and negotiate before they apply |
| Your own pay rose without a decision | What you took home, month by month | Compare it with your plan |
Check these first
- Net margin: which overhead line moved most?
- Break-even: how far has it risen?
- Gross margin: did it fall as well?
- Paying yourself: did your own pay change?
Questions people ask
How do I find costs that are creeping up?
Compare each expense line in your income statement with three months ago. Start with the lines that moved most, then check recurring payments and contracts for increases nobody approved.