If you don’t make a good gross profit margin after you take out your direct costs, then you can’t pay your indirect costs and have enough money left over to make a profit.
Do you know how much gross profit you make?
Sometimes we make money on one kind of sale, but don’t make any money, or lose money, selling something else.
Do you know if you make money on everything you sell?
Know your accounting! If you are not making a profit, then why are you doing it? Not to say that there can’t be intrinsic value to answer that question, but if there is none then it isn’t fair that you should have to be in the red after doing all the work and the customer enjoys all the value. Time to reassess. Focus resources on better directions or improve your process. Accounting isn’t just about numbers on a page; it is about seeing the whole field.
I am definitely looking forward to Mark Daconto’s class on Keys to Profitability this weekend at Convention!
Larry,
I needed this today. We are having a sales meeting with Account Managers and I was at a loss as to putting this into simple directions. Made my job easy today. Thanks