The operating costs of a business, item by item

The ranking of cost items

After the cost of goods sold, which determines gross margin, three items dominate: staff, premises, and everything else. In most Swiss retail and catering businesses, staff costs weigh several times the rent.

That ranking guides the trade-offs. Saving ten per cent on the rent of a less well-placed unit and losing a point of productivity per employee is a bad deal in almost every configuration.

Staff and social security contributions

The employer cost clearly exceeds the gross salary. To it are added the employer share of old-age, disability and loss-of-earnings insurance, unemployment insurance, occupational pension contributions, occupational and non-occupational accident insurance, family allowances and, depending on the case, sickness loss-of-earnings insurance.

The usual order of magnitude is around fifteen to twenty per cent above gross salary, with appreciable variation depending on the age of the staff — occupational pension rates rise by age bracket — and on the canton and the fund.

A collective labour agreement may apply to the sector by operation of law and set minimum wages, supplements and working hours. Checking it comes before drawing up the payroll budget, not the other way round.

The premises

Net rent, service charges, electricity and heating, insurance for the premises and contents, routine maintenance. Commercial electricity deserves particular attention because its price varies strongly from one municipality to another, for identical consumption.

Goods, margin and shrinkage

Gross margin is the most structuring variable of the model, and the most sector-dependent. Two items nibble away at it and are regularly forgotten in the budget: shrinkage — theft, breakage, unsold items, expiry — and end-of-season discounts.

In fresh-produce activities, material loss is budgeted explicitly: treating it as a contingency amounts to overestimating the margin by several points.

The second-tier items that add up

• Professional liability, property and business interruption insurance.
• Payment terminal and card commissions, taken from every transaction.
• Till software, accounting, fiduciary services.
• Communication, signage, local search visibility.
• Cleaning, laundry, disposal of commercial waste.
• Any royalties for playing music.

Comparing yourself with your sector

A budget is judged in percentages, not in francs. Expressing each item as a share of turnover and comparing it with the sector average makes the anomaly stand out immediately. A staff ratio ten points above the sector indicates either overstaffing or a forecast turnover set too low — both deserve to be settled before opening.