Gareth Hall’s Post

Stop Overpaying Per Unit. (every penny counts when you're running a business.) Understanding the true cost of your product is the first step to better pricing and smarter growth strategies. → Average Cost calculates the cost of producing each unit by dividing the total cost of production by the number of units produced. It’s crucial for setting prices that cover costs and yield a profit. → Formula to Remember: Average Cost = Total Cost / Number of Units Produced On the flip side, Marginal Cost measures the expense of producing one additional unit. This figure is vital for deciding whether to expand production. → Key Calculation: Marginal Cost = Change in Total Cost / Change in Quantity → Impact on Business: [1] Average Cost: Helps in setting prices that cover costs and ensure profitability. [2] Marginal Cost: Influences decision-making on whether increasing production is financially viable. Understanding both average and marginal costs is essential for managing your production efficiently and maximizing profitability. With this knowledge, you can make informed decisions that enhance your business's financial health. Which cost measure has been more influential in shaping your business decisions? Share your experiences! #averagecost #marginalcost #financeandaccounting

🚀 Excited to share a success story where we tackled purchase process bottlenecks with industry expert Gayatri Limaye, bringing remarkable efficiency gains for our client! 💼✨ A streamlined purchase process is critical for organizational success in today's fast-paced business world. But what does it take to achieve this? Let's break it down: 1️⃣ Identifying the Exact Process: The first step is to understand the intricacies of the purchase process. From requisitioning to payment processing, each stage plays a vital role in keeping operations running smoothly. 2️⃣ Addressing Bottlenecks: Bottlenecks can derail even the best-laid plans. That's where industry expertise comes in. Gayatri Limaye's intervention helped us identify and address bottlenecks head-on, ensuring seamless workflow continuity. 3️⃣ Optimizing Authorities and Timeframes: Approval hierarchies, sourcing, negotiation, receipt, and payment processing—each requires careful management. By optimizing authorities and timeframes, we minimized delays and enhanced efficiency at every turn. 4️⃣ Results Speak Louder: Our client saw tangible improvements in their purchase process. From faster approvals to smoother supplier negotiations, every aspect was perfectly fine-tuned. In a world where every minute counts, optimizing the purchase process isn't just a luxury—it's a necessity. With the right expertise and commitment to continuous improvement, businesses can unlock newfound efficiency and drive sustainable success. 💪📈 #Procurement #Efficiency #SuccessStory #ContinuousImprovement https://lnkd.in/g6Jezg7Q

How to Determine Profitability with Margins? FAQ: How do I calculate whether my business is truly profitable? Solution: Gross Profit Margin: Subtract cost of goods sold (COGS) from revenue and divide by revenue. Formula: (Revenue - COGS) ÷ Revenue × 100 Net Profit Margin: Subtract total expenses from revenue and divide by revenue. Formula: (Net Income ÷ Revenue) × 100 Compare to Industry Standards: Assess whether your margins are competitive. Analyze Over Time: Monitor trends to identify growth or problem areas. Adjust Operations: Improve margins by reducing costs, raising prices, or increasing efficiency. Understanding your margins is key to sustainable growth.

Here's how we approach 'cost saving' to get the very best, long-term results 👇

Identifying the cost drivers of a business is a game-changer for boosting profitability in your manufacturing company! Cost drivers are the factors that cause your costs to go up and down, and understanding them is a core component of effective cost management. Why Identify Cost Drivers? -  Optimize Efficiency: Pinpointing cost drivers helps streamline processes and reduce waste. -  Improved Decision-Making: Identifying cost drivers leads to smarter decisions about pricing, production, and investments. -  Boost Profitability: Targeting key cost drivers can significantly lower expenses and increase profits.  Common Cost Drivers in Manufacturing: -  Production volume -  Machine hours -  Labor hours -  Material usage -  Maintenance frequency -  Setup time Some not so common drivers I’ve seen used: -  Energy consumption -  Waste management -  Freight impact – either in miles or pounds By identifying and analyzing these cost drivers, you can gain deeper insights into what’s impacting your bottom line and take steps to improve profitability. The best part – there is no right answer, just what makes sense to you and your business! Questions about what cost drivers make sense for your manufacturing business? Send a message or leave a comment and we can discuss! Let’s turn cost chaos into clarity and drive your business growth! #ManufacturingFinance #CostAccounting #CostDrivers #ProfitabilityBoost #BusinessGrowth

Cost Efficiency vs Cost Effectiveness: A Complete Guide

Are overhead costs cutting into your profit margin? Our new post breaks down everything you need to manage and reduce these expenses effectively. #BusinessEfficiency https://lnkd.in/dHwejh7n

Many service organisations are focused on driving efficiency in their operations, but paradoxically a focus on efficiency can end up costing more. Smart businesses know that by improving their effectiveness, they can deliver better service at a lower cost. Talk to us to find out how to get started. www.service-economics.com

Why are efficiency ratios important? Efficiency ratios help evaluate how well a company utilizes its resources such as assets, inventory, and working capital to generate revenue. High efficiency ratios indicate that a company is making the most of its resources to drive sales and profits. By analyzing efficiency ratios, stakeholders can gauge how efficiently a company produces goods, manages inventory, collects payments, and manages its cash flow. Comparing efficiency ratios with industry peers and competitors provides context for a company's performance. It helps identify whether a company is performing better or worse than its counterparts and can provide insights into areas that need improvement. #ratioanalysis #efficiency #financialstatementsanalysis