Randy H NelsonRandy H NelsonRandy H NelsonRandy H Nelson
  • Home
  • Meet Randy
    • Coaching
    • Speaking
  • Books
  • Decision Center
  • Quiz
  • Media
  • BLOG
    • Build Articles
    • Blend Articles
    • Maximize Articles
  • Contact
✕

COGS – nizance….What’s That??

Published by Randy H. Nelson
cost of goods sold

The Truth and the Trends

 

If you’ve read my book or articles you’ll know that I’m a big believer in being in tune with your COGS, or cost of goods sold hence the term, COGSnizance. So that exactly does it mean? To make sure we’re all on the same page, I’m defining COGS as all expenses in your business, in terms of percent of revenue, or at times, cents on the dollar. ­ The point is profit, and the key question is: What are you spending to create profit? The thing that is important is understanding the impact of ALL of your expenses—not just some of them, and not just the major categories of expense.

Getting Up Close and Personal with Your COGs

So you need to get cozy with, and thoroughly cognizant of, your COGS. How do you do this? I always suggest that companies maintain a rolling three-year COGS report that tells you not just the actual numbers, but also the percentage of your revenue that you’re spending on every expense in your business—especially payroll COGS.

As I’ve told many an entrepreneur, having numbers gets you started, but it’s only part of the analysis that’s necessary. You also need the percentages—the relative weight of the COGS in one area of your business compared with the others you track. It provides you, as CEO, with what I consider to be the Big Picture for your operation.

Percentages Are What You Want

Tracking COGS allows you to simplify the monitoring of your costs and, better yet, to add a crucial forward focus to your decision making. That’s because COGS percentages allow you to make apples-to-apples comparisons of your business, regardless of the differences in revenue from year to year. It gives you a macro perspective on where you can spend more money and where you need to spend less to ensure consistent profit as revenue fluctuates. By focusing on COGS, you’re not lost on a trend line plotted with actual numbers. You’re looking at a constant percentage that you’ve set as a goal for each category of expenditure, and that makes it easy: you simply adjust your strategy as you see the percentage ebb or flow.

Watching your COGS percentages is like watching body temperature rise and fall as the immune system identifies and deals with threats: the higher the temp, the greater the struggle going on within. In this way, a slight rise in payroll COGS can be seen as an indicator that the company is responding to a stress of some kind—either new competition or a drop in sales, for example. But, like a fever, that spike has to come down quickly. The higher and the more sustained the rise in the COGS percentage, the sicker the company is likely to become. But you can avoid the illness altogether just by setting up your own COGS-nizance system, and it’s not difficult.

No matter your company’s situation – whether in a successful period or downturn – turning to COGS will be your answer to continued sustainability. Get more specific guidance on COGS and how to set up your COGS table, get a copy of my book, The Second Decision, available here.

The Decision Series for Entrepreneurs

  • About
  • Latest Posts
Randy H. Nelson
Randy H. Nelson
Author and Serial Entrepreneur at The Decision Center
• has a long history of entrepreneurial leadership, stemming from his educational, military and business backgrounds. He has founded and built three successful businesses over the past 30+ years. He has written three best-selling books on entrepreneurship and leadership, and now seeks to help entrepreneurs and CEO’s everywhere through his coaching and growth advisory practice at The Decision Center in Garner, NC.
Randy H. Nelson
Latest posts by Randy H. Nelson (see all)
  • What is The Second Decision™? Becoming a Qualified Entrepreneur! - August 8, 2023
  • Was Your Day Busy or Productive? - June 6, 2022
  • Are Your Differentiators Defendable? - May 10, 2022

Share this:

  • Click to share on Facebook (Opens in new window) Facebook
  • Click to share on X (Opens in new window) X
  • Click to share on LinkedIn (Opens in new window) LinkedIn
  • Click to share on Pocket (Opens in new window) Pocket
  • Click to share on Telegram (Opens in new window) Telegram

Related

Share
0
Randy H. Nelson
Randy H. Nelson
• has a long history of entrepreneurial leadership, stemming from his educational, military and business backgrounds. He has founded and built three successful businesses over the past 30+ years. He has written three best-selling books on entrepreneurship and leadership, and now seeks to help entrepreneurs and CEO’s everywhere through his coaching and growth advisory practice at The Decision Center in Garner, NC.

Related posts

decision making
August 8, 2023

What is The Second Decision™? Becoming a Qualified Entrepreneur!


Read more
business man being productive

Businessman looking at laptop and thinking. Businessman reading emails on laptop in office lobby.

June 6, 2022

Was Your Day Busy or Productive?


Read more
Business Differentiators
May 10, 2022

Are Your Differentiators Defendable?


Read more

Comments are closed.

Search Our Site

✕
Certified Virtual Presenter

Get Randy’s Newsletter

 


Follow Randy

RSS
Follow by Email
Facebook
Twitter
Follow Me
LinkedIn

Randy’s Latest Articles

  • decision making
    What is The Second Decision™? Becoming a Qualified Entrepreneur!
    August 8, 2023
  • business man being productive0
    Was Your Day Busy or Productive?
    June 6, 2022


Have A Question?






    Name (required)

    Email (required)

    Message

    Tweets by @randyhnelson

    Subscribe

    Contact Randy


    (919) 333-7530
    info@randyhnelson.com

    Latest Article

    • decision making
      What is The Second Decision™? Becoming a Qualified Entrepreneur!
      August 8, 2023

    Randy H Nelson and The Decision Center | © 2013-2023 | All Rights Reserved
    Website designed by Success by Design

    This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
    Privacy & Cookies Policy

    Privacy Overview

    This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
    Necessary
    Always Enabled
    Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
    Non-necessary
    Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
    SAVE & ACCEPT