Running a business is a complex endeavor, and costs can derive from a number of different business functions. Though sometimes expensive, neglecting to spend money on any of these functions can lead a business to an early grave.

Materials

Companies are constantly balancing quality with affordability. For example, a glass bottle might look more attractive to consumers purchasing tea, but glass is far costlier than plastic. Parts or ingredients are also business costs: Herbs, sweetener and water are material costs for tea.

Property, Plant and Equipment

These costs, also known as PP&E, factor into a company's bottom line. Be it a restaurant or factory, the cost of property must be considered. To manufacture a product requires a plant and equipment, like sewing machines or soda tab production machines.

Labor

Salaries and hourly wages must be paid to a company's workers. As explained in the book, "The Labor Relations Process," wages are such a large business cost that many companies outsource as a method of lowering these costs.

Marketing

In fiercely competitive markets, companies must spend money to gain brand recognition. Marketing is the method of persuading consumers to purchase their product over others that are often nearly identical.

Research and Development

Anticipating new trends in the marketplace requires money. Companies spend money on research and development by hiring teams to generate new ideas related to existing products, or to brainstorm entirely new products. BNet.com explains that this business function can be listed as an operational or expense cost.

Source:

The Labor Relations Process; William H. Holley, Kenneth M. Jennings, Roger S. Wolters: 2008

BNet.com: "Understanding Research and Development Accounting"

More Information:

Businessknowhow.com: "Business Startup Cost Calculator"