Neo- Billionaires ?

 Carnegie’s Cost Accounting

“The biggest room in the world is the room for improvement.”

—Colton

Anyone who has made it through business school has taken a course in cost accounting. Fewer make millions without business school these post –modern times. So, a few people realized that the subject was a significant reason why Andrew Carnegie became one of the wealthiest men the world has ever known. Carnegie learned about cost accounting during his twelve years with the Pennsylvania Railroad—considered by many as America’s “graduate school of business” in the mid-nineteenth century.

When he bought into the steel business, Carnegie found that most steel mills had no idea whether they were operating at a profit or a loss until their books were balanced at the end of the year.

 By instituting a weekly accounting of all functions and knowing precisely how much each activity cost, Carnegie lowered the cost of producing steel from $56 dollars per ton to $11.50 per ton.

Other steel producers scoffed at his efficiency techniques, saying that running the mills twenty-four hours a day would wear out the equipment. That was true, but Carnegie had counted the costs and constantly bought better equipment, replacing older, inefficient equipment even when it was not worn out.

 Many called him wasteful, but Carnegie’s mills made a profit while others barely survived. Even though Carnegie knew little about steel, he knew how to institute accounting techniques that would keep him in touch with costs and enable him to take advantage of economies of scale.

CONSIDER THIS: Do you know where your bottom line stands weekly? Have you analyzed each part of your organization to determine how much it contributes? Is your business always improving?

Do you know? 

To count the cost in business as well as counting the cost in life! Little do people realise the cost of living life that is not examined reflectively. Thoughtful living is just as intentional as mindful living. Checking in with a mentor every so often is good as checking in is with your God, if you believe. In fact, you can make your human coach more effective, if he or she-- and you are followers of Christ. Your contribution and God’s contribution maximises potential.

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