The Cost of Chaos

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This is a one-hour course based on my in-depth discussions, and extensive surveys conducted with construction, manufacturing, and project-based business owners. This class illustrates the shocking magnitude of income lost by these businesses because they have not implemented good internal job-cost tracking systems and profit-seeking management controls.

The information presented is based on many live group-based presentations plus twenty-five years of implementing job-cost accounting systems, training, and consulting work.

Learning Outcomes

As a result of attending this course, learners will take away;

  1. Insights into 14 areas where company owners agree they are “leaking profits”
  2. How to quickly estimate and compute the potential lost profits for any company
  3. How sharing the magnitude of the problem – and the potential for higher income – can help motivate a company owner to invest in improvements
  4. Why company owners and supervisors should use job-cost reports to spot their “winners” and “losers” – and how to use this info today (and tomorrow) to increase profits.
  5. 4 primary ways to create major changes in profitability WITHOUT taking on more jobs, hiring more people, OR making the biggest mistake that most company owners make

Core Values

VISION:

Empower project or product-based company owners and their support teams to create more profitable, effective, and personally-rewarding businesses through the intelligent use of financial systems, information, and controls.

MISSION:

For project or product-based business owners and their support teams:

  • Provide financial and accounting systems coaching through one-to-one consulting and problem-solving, group mentoring programs, and recorded training.
  • Help (construction) companies find, choose, and implement financial software, systems, and services that will most appropriately fill their current and long-term financial and information needs.
  • Create and provide additional innovative, user-friendly, support products.

PURPOSE:

We serve and support project or product-based businesses by helping them learn about, implement, and proactively use, proven financial systems, information, and controls.

Course Outline and Topics Covered

Lecture 1 – The Cost of Chaos – How Bad Is It?

  • History behind the Cost of Chaos calculations
  • Show example basic financial statement scenario in Excel and comparison with recommended results.
  • Discuss the need to split out COGS and ID major cost groupings within COGS (+ several areas within expenses)
  • Explain potential profit leak scenarios
  • Compute the $ and % results of profit leak estimates provided by owners (from 2 online classes)
  • Discuss results
  • Show final impact of changes
  • Show “profit-booster” calculations for two recent clients

Lecture 2 – the Cost of Chaos – How to Combat and Conquer the Cost of Chaos

  • Outline primary causes behind profitability issues faced by many small and mid-sized business owners
  • Describe the single factor that can help them create order from chaos
  • Discuss the impact that LOSERS have on profits (wipe out the profits from the winners)
  • Show the “simple” form of job-costing – using accounts
  • Show the more detailed form of job-costing – using cost codes.
  • Show how eliminating the losers and creating consistent profit margins changes profit results
  • Discuss how most people try to increase profits from their companies (selling more) and review what those results could look like
  • Show the results of decreasing COGS costs on profits – based on using Job-Cost reports
  • Illustrate the results of increasing prices – based on using Job-Cost reports
  • Show the results of THEN increasing volume – which still may not be a profit-enhancing choice
  • Show the results that could be obtained by strategically shifting lower margin niche work into higher margin niche work

CPE Credit Value: 1 hour

Attendance and Grading: All learners who have registered must watch all videos and complete the required supplemental worksheets as homework. Learners will be prompted to verify their presence every ten minutes as they watch the lecture videos. Worksheets are graded as pass/fail based on meeting deadlines and completion of the exercise. It is recommended that you watch one pre-recorded video lesson per week. You must pass the quiz after each video in order to proceed to the next lesson.

Live Office Hours

Live office hours are crucial to your understanding and application of course concepts. This course is designed to elevate the learners understanding of the concepts and increase the sophistication and financial awareness of the student. To assist in this effort, your instructor will hold one (1 hour) live session though ZOOM during the course. You are required to attend. A ZOOM invitation will be sent to you as soon as you register for the course.

This ZOOM session will be a wrap up of all the key concepts learned during the three lessons and be an opportunity to answer any questions the learner might have.