Margin and Profits

Although many business owners believe that they are currently managing their costs appropriately in this tough economy, Executive Edge advisors often help their clients find new cost improvement opportunities.  With you, we assess your margin and profit capabilities by answering some of these key questions...

• What are the most important costs within our business?
• Which key resources are the most expensive and what value do they deliver?
• What activities are most expensive?
• Are there any non-critical activities we can outsource and what savings might we achieve?

Costs are generally driven by one of two cost models; cost-driven and value-driven.  Many business models fall between these two extremes.  Cost-driven business models focus on achieving the lowest cost structure wherever possible, while value-driven business models focus on delivering value creation (e.g. a high degree of personalized service). 

Cost structures that we help you assess often include:

• Fixed costs - costs that remain the same regardless of volume of business
• Variable costs - costs that vary proportionally with you volume of business
• Economies of scale - cost advantages based on increased volume
• Economies of scope - cost advantaged based on an increase in scope of the business (e.g. using the same distribution channel for a new line of business)

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