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Casual Articles - Why Your Profit Margin Is Not Important
The annual review and analysis of corporate filings for public companies in full swing. Almost invariably, this scrutiny brings with it an outcry concerning the exorbitant levels of executive compensation and the lack of a direct relationship between what some executives made and th
I am sure you realize how many products you would have to sell to make any serious money.
But what if your profit margin was only 5% on a $100,000 sale?
Your ac
Although still a relatively new and emerging technology, companies are quickly realizing the many benefits of using electronic recording when it comes to storing important business documents. Believe it or not, there are still people slightly weary (or perhaps simply not aware) of t
Everyone from the CEO of General Motors to your average eBay seller is focused on it.
But think fo what a profit margin actually represents. It’s not an indication of how much money you are actually making, it’s only a figure that tells what the profit portion is as a percentage of the total sale.
In other words a $10 profit on a $100 sale means that your profit margin is 10%.
Now let me ask you this, let’s assume your average profit margin is 100%. That type of profit margin would make any business owner envious. But what if the total sale was only $2? Your actual profit would only be $1, even though you are working a high profit margin.
I am sure you realize how many products you would have to sell to make any serious money.
But what if your profit margin was only 5% on a $100,000 sale?
Your ac
So much has been written and said about the current prospects for the investment property market in Bulgaria now that the nation has joined the European Union; opinion ranges from those who believe the hike in property prices prior to EU accession represented the majority of the posi
In other words a $10 profit on a $100 sale means that your profit margin is 10%.
Now let me ask you this, let’s assume your average profit margin is 100%. That type of profit margin would make any business owner envious. But what if the total sale was only $2? Your actual profit would only be $1, even though you are working a high profit margin.
I am sure you realize how many products you would have to sell to make any serious money.
But what if your profit margin was only 5% on a $100,000 sale?
Your ac
Recently some televised sports events have begun using a system that makes billboards in stadiums appear to have ads they don't really have. The process is something like a digital version of chrome key, but it's much more powerful. In the next few years this technology will become e
In other words a $10 profit on a $100 sale means that your profit margin is 10%.
Now let me ask you this, let’s assume your average profit margin is 100%. That type of profit margin would make any business owner envious. But what if the total sale was only $2? Your actual profit would only be $1, even though you are working a high profit margin.
I am sure you realize how many products you would have to sell to make any serious money.
But what if your profit margin was only 5% on a $100,000 sale?
Your ac
The medical billing software company is a tough environment for everyone. However, it is probably the hardest on a support person for a variety of reasons. So when you're putting your company together, what do you look for in a support person? What qualities should they have? Wha
I am sure you realize how many products you would have to sell to make any serious money.
But what if your profit margin was only 5% on a $100,000 sale?
Your ac
Do you have any idea what role color plays in your marketing efforts? And if so, do you know what message your marketing efforts are conveying with the colors you use? Let me tell you that the colors you use in your marketing efforts – your brochures, business cards, letterhead, si
I am sure you realize how many products you would have to sell to make any serious money.
But what if your profit margin was only 5% on a $100,000 sale?
Your actual profit would be $5,000. In net terms you are making more money even though the profit margin is 20 times smaller than in the above example.
That’s the real reason your profit margin is not important. What is important is your actual net profit.
Profit margins are good formulas for general accounting and investment decisions. But as a business owner your determining concern should be your net profit.
Need more convincing?
Let’s look at your average dollar store compared to your average car dealer.
The dollar store is working on a profit margin of up to 300%, while the car dealer is working on a profit margin of as little as 10%. Let’s further assume that the dollar store sells strictly dollar items a
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