Unlock Profit Secrets: Calculate Your Business's True Cost in 1 Hour! #shorts
In this concise instructional short, Bill Canady advises business leaders to spend one hour with their CFO and controller to compute the true cost of their business. He outlines a two‑step calculation: first, build the numerator by taking revenue and subtracting all material‑related expenses (materials, purchased components, subcontracting, freight in/out, duties, royalties, rebates, cash discounts). Second, build the denominator by summing every dollar of human‑related costs across the organization, including direct labor, contractors, and professional employer organization (PEO) expenses. Dividing numerator by denominator yields the true cost ratio. Canady warns against letting the finance team develop a lengthy, six‑week model, arguing that such models are untrustworthy and waste time. Instead, he recommends arriving at two numbers on a whiteboard through live argument, which often uncovers hidden labor costs—he cites discovering that 11% of a workforce was previously invisible.
