how do production costs impact profit
how do production costs impact profit
Okay. This is the second video on increasing profits and the last video you remember we talked about expenses and how things can change as you grow your business, and it's not always easy to predict. You can't just go, well, if I increase sales, my profits will increase. Often that is not a straight line at now.
What gives me the right to talk about this stuff is, I suppose because in a small way, I've had an impact on many hundreds of businesses. I've worked with thousands, but I've had an impact on, on a few hundred. Because many businesses they have a stuck mindset. They believe that they know what they're doing.
how do production costs impact profit
No one can help them. And so they carry on doing what they're doing and the end up of what they've got. And often, the previous year is repeated in this year, and that'll be repeated next year because unless something changes dramatically, the results don't change. So that will get, you know, as an accountant, I understand numbers, but more than that now, because of my training, my involvement, close involvement with businesses, I understand marketing, understands systems, understand processes, understand a team on design leadership.
Honestly, on productivity, if these things have led me to an intricate knowledge of business, but also how to read the numbers, how to read a business, how to review a strategy and pick the things that are causing the business to be stuck. So that, I suppose is why I talk about this.
how do production costs impact profit
So the thing about expenses, you know, we sometimes look, we've got to minimize our expenses. And one of the dangers of that is you don't look at the quality of the expenses as some expenses can dramatically affect how much you can sell in some expenses and will actually unnecessary to improve yourself.
So let me give you some examples. Packaging. If you look at Apple and you look at their packaging, it is exquisite, isn't it? It comes in these beautifully fitted boxes and beautifully fitted inside. Now, it's not a mistake that they'd chose that they realize that their pricing and their positioning is based on people's perception of what they are getting in the first time.
Their whole that product and then at beautiful Apple box, so or phone telephone box or the the iPhone box or it is actually a miracle, you know? It's like, it's so beautiful. It's so smooth and is so well packaged and look so good. If they just put it into a cardboard box, you know, there wouldn't be the same perception.
how do production costs impact profit
They probably wouldn't get the same price. Would you agree. So sudden expenses are important in the same way. Let's go. Let's look at, so accountancy expenses or consulting expenses. Part of all service includes getting accounts out, but a lot of it is involved in interpreting the numbers, looking at what's going on in the business, looking at the metrics, looking at the, the business model.
And helping the business owner grow their business in a way that's sustainable in a way that's economical in a way that's, that's powerful, and repeatable. Now you compared that, so this with an accountant who just produces accounts, it's chalk and cheese, isn't it? And so sometimes you can't even compare, like to like, right.
how do production costs impact profit
Just accountancy fees can be. It can be, can hide a morass of stuff. We've taken on plants from accountants who've done even the accounts badly. So let alone we raised recently did some work for a client who had one of the largest firms in the world doing, doing some work for them. And we were picking errors in it, and it was shocked the client.
But it didn't shock us because we've had that before. So it's not care and attention and at stake. For this particular client, it was 80,000 pounds. I mean, goodness me. But for the big, these big organizations, they don't care right. It's not their money. Yeah. They don't have a close relationship with their clients like we do.
Who cares? So with expenses, you're going to be aware of which expenses you cutting. One of my mentors early on in my career. Which started to on the whole process of understanding business. He said to me, Gordon, you can cut expenses, but there's only so far you can cut expenses. When you've cut expenses, do zero.
how do production costs impact profit
You've got two things. You've got no expenses and you've got no business. And I am. That is so true. It's true of my business, and I suspect it's probably true in yours. So bear that in mind. It is. It is an important factor. So there we have an understanding now, deeper understanding of expenses in the pub they play in your business.
Please don't go too quickly and try to cut everything to the bone because that a fixed on what we're going to be talking about next, which is sales. And there's going to be a couple of videos on that and I think you'll get some value from that. If you'd like to know more, or if you'd like to book on one of my strategy calls.
Please get in touch with me. Just call it the profit propeller strategy session. BPS is completely free, 45 minutes, and we work out, uh, some key things will you, which I'll put a link home. If you contact me, I'll send you a link of what we're going to cover on that 45 minutes and you can book if you wish.
how do production costs impact profit
In the meantime, if you want to take, you know, download some of my books and stuff, uh, feel free to, to do that. All right. This is golden. Wishing you well. Take care. Speak to you on the next, uh, next video. Until we get a Johnson speak in person. Take care. Bye.
Follow us on Facebook!
