Business Revenue and Costs
All business organisations need to manage the finances. Failure to do this could ensure that AFC @BeeBusinessBee could get into financial difficulty. To do this successfully the club needs to ensure that it manages the revenue and costs in the business.
Revenue is all of the money that is coming into the business. In the case of AFC @BeeBusinessBee this could be from the sale of tickets to fans. So if each ticket sells for £20 and the club sells 100 tickets for a match, the revenue for that game would be £2000 (£20 x 100). Another source of revenue would be the sale of shirts and merchandise in the club shop.
Notice that revenue is not profit. Before we can calculate this we need to consider costs. There are different types of costs that AFC @BeeBusinessBee will have;
- Start Up Costs
- Fixed Costs
- Variable Costs
Start Up Costs are the one off costs that are associated with the setting up of AFC @BeeBusinessBee, for example in the club shop start up costs could include a till, shelving and carpet fitting. These costs are one off ones that you pay when setting up your business.
Fixed Costs are costs that do not change with output. What this means is these costs will remain the same, regardless of how many times the business uses the item. For example in AFC @BeeBusinessBee a fixed cost could be rent on the ground. This is because the club will have to pay the same amount of rent each month, regardless of how many customers (fans) visit the club. This means that Fixed Costs are still acquired even if no customers (fans) come to the matches.
Variable Costs are costs that do change with output. This means that every time the item is used then it costs the business more money. A example of this in AFC @BeeBusinessBee case would be the electric bill. The more electric that the club uses, the more that it is going to cost the business. This is why the club will not want to switch on the floodlights until it has to, as this helps to keep the costs down for the business.