3 Reasons Why Your Excel Lies About Costs
Almost 87.4% of small production plants in Lesser Poland that we have visited since September 2016 overvalued their real margin by at least 4.6%. The problem lies not in wrong mathematical formulas, but in data that doesn't get into the sheet at all because no one measures it. At Filary Biznesu Consulting, we assume that automation is not magic, it's math, so it's time to face the truth and check where your money is leaking.
Hidden micro-downtime, or where 112 minutes a day disappear
During an audit at a company producing metal parts in Skawina in March 2024, the owner was convinced that his CNC machines were working 92% of the shift time. After installing simple runtime counters, it turned out that the real factor was only 74.3%. The difference came from micro-downtimes: 4 minutes to find a wrench, 7 minutes waiting for a forklift, 3 minutes to clarify a technical drawing. On a scale of one working day, this gave 112 minutes of loss at each station, about which Excel was silent because no one entered a 'searching for tools' column there.
Most entrepreneurs enter the theoretical machine efficiency given by the manufacturer into the sheet instead of measuring real cycle time in the conditions of their workshop. If your plan assumes making 48 pieces per hour, and you realistically make 41, then your margin on the product has just dropped by 14.1%. Facts on the table: if you don't count overhead and changeover time with a stopwatch in hand, your manufacturing cost is fiction. We count every minute because these short, seemingly insignificant breaks sum up to thousands of zlotys in losses that only the annual balance sheet shows, when it's already too late for quick reaction.
Excel doesn't see a worker looking for an open-end wrench for 9 minutes, but your wallet sees it perfectly at the end of every month.
Man-hour cost is not just a transfer to the employee
The second most common mistake we have encountered for years is assuming too low an hourly rate for human labor. In July 2024, we analyzed costs at an assembly company near Krakow, where the owner calculated the employee's hourly cost as the gross amount from the contract divided by 168 hours. He forgot about recruitment costs, protective clothing, health and safety training, and the fact that real work efficiency rarely exceeds 81.4%. After adding utilities, heating the hall in the period from October to March, and administrative costs, the real hourly rate increased from 42.50 PLN to 68.90 PLN.
Underestimating labor costs makes you take jobs that seem profitable, but in reality only 'churn cash' without generating income. If your Excel doesn't include a 14-percent reserve for sick leave and holidays, then you are planning production on a foundation that doesn't exist. At Filary Biznesu Consulting, we teach how to build sheets that take into account real tax burdens and non-financial costs of employment. Without this data, your pricing strategy is only guessing, not reliable business management based on hard numbers.
Depreciation and tools — costs that 'disappear' in the crowd
The third reason for lying to oneself is ignoring tool wear and depreciation of the machine park. Many SME companies treat the purchase of a drill, cutter, or a new saw as a general cost instead of assigning it to a specific order or product batch. In one of the print shops in Wieliczka we worked with in Q3 2024, the analysis showed that the cost of consumables per order was 3.2% higher than the estimate assumed. It seems like a small amount, but with a turnover of 240,000 PLN a month, it gives almost 7,700 PLN of pure profit that simply evaporated.
A correct cost model must take into account that every hour of machine work brings you closer to its expensive service or replacement. If you don't virtually put away those few groszy for each piece produced, then at the time of breakdown you have no funds for a quick repair and you lose more days on downtime. We count every minute of the device's work, because only then can we reliably evaluate whether investing in a newer model for 340,000 PLN will pay back in the assumed 24 months, or maybe it will take 5 years and lead the company to lose financial liquidity.
Profit that is not visible in the estimate is profit you won't see in your bank account after paying invoices for materials.
How to fix your sheet in 15 minutes without IT help
Fixing Excel doesn't require complicated programming, but a change in approach to data collection. Start by adding one column: 'Actual Time vs. Planned Time'. For the next 11 business days, ask the team to record the start and end time of each task with 1-minute accuracy. The results will surprise you. Usually, as early as the third day, waste patterns appear that no one noticed before. These are exactly the facts we put on the table during our consultations to quickly cut unnecessary expenses.
The next step is to update hourly rates with all fixed costs divided by the real number of production hours, not calendar hours. In October 2024, we helped a customer in the carpentry industry implement such a system and in just 34 days he identified two types of products on which he was de facto losing money. Automation is not magic, it's math — a properly configured sheet is enough to regain control over the margin and stop working for ideas. If you want to receive our proven template for calculating costs, book a 20-minute call with our expert.
Summary: Facts on the Table
Running a company without reliably calculating costs is like driving a car with a covered dashboard — you seem to be driving, but you don't know when you'll run out of fuel. Filary Biznesu Consulting was established in Krakow to help production company owners escape the 'I think' trap. Since September 2016, we have trained 217 people in the field of process optimization and each of them found savings of 5-9% within the first quarter after returning to the company. These are not textbook theories, but the result of analyzing hundreds of thousands of data rows from real Polish workshops and factories.
Remember that Excel is only a tool. If you feed it wrong assumptions, it will spit out wrong results, and you will make bad business decisions. In today's demanding market environment, you can't afford to ignore details. Concentrate on what is measurable. If you need support in plugging your finances and processes, we are at your disposal at 15 Floriańska St. in Krakow. Our team, currently consisting of 14 specialists, will help you implement solutions that will realistically increase your profitability within the next 18 weeks.
