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How to increase profits by lowering your billsEvery business wants to increase their profits and many people think that the best way to increase your profits is to increase your sales. But there is a small problem with that. If you do increase your sales you are going to increase the costs of running a business because of the increase in the amount of work that is now having to be done. So that leaves with you with one other option, you must lower your costs in order to increase your profit. In business there are two kinds of cost types: fixed and variable. Fixed costs are costs that do not change in relation to the amount of production or sales. Fixed costs can include but are not limited to insurance, rent, and utilities. Another thing about fixed costs is that they can become change over time, but the increase and decrease is not related to production. Variable costs are costs that change depending on the activity of the business. A great example of a variable cost is inventory and raw materials. If you are in the retail industry you have to keep inventory on hand and when your sales increase so does the amount of your inventory. The same holds true for raw materials, the more items that you are producing the more raw materials you are going to need.
So now you are probably wondering how to increase your profits by lowering your bills. The answer to this is not cut and dry because you will have to take a look at your entire business to see if you can cut costs without affecting your business in general. It is also good to keep in mind that sometimes you have to spend money to save money; this means you might need to upgrade some of your equipment. Let's take a look at some of the common areas that your business might be able to lower their bills in. Marketing: Information technology: Inventory:
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