EFFECTIVE
COSTING
Photo credits:
www.theguardian.com
By Kabo Madigele
At a superficial level, the principal locus of this
is insufficient capital to keep the business running. In addition, other factors also come into
It is alarming. If a recent
Bloomberg study is anything to go by, eight out of
play. More often than not, poor management
ten enterprises fail within
and lack of critical competencies such as in fi-
their first eighteen months.
nance, purchasing, production, selling and
A whooping eighty percent!
building strong teams. Top leadership may just
crumble as a result of self-sabotage inspired by
However, indicators of the sinking of the
poor decision making and dysfunctional struc-
ship begin well before the brutal titanic-
tures. Another root cause is the failure to un-
like financial catastrophe. One of them
derstand and interact with the market, which
is tantamount to the inability to craft a profitable business model with proven income
streams. Poor location, poor marketing, lack of
planning and bad expansion strategies add up
to the mix. The list goes on and on.
is ineffective costing. But before we can
delve much into it, what is a cost? Loosely
defined, it is any amount of money that
has to be paid to get something.