What are your margins?
This week we had to put our beloved dog Roxy of 14 years down. It has been heartbreaking and I will be allowing myself to grieve fully. There is some peace and compassion in that, and she will be forever in my heart <3
Let’s get down to business this week and talk profits and margins :)Have a beautiful weekend!
First, I want to start of this week’s article with us focusing on what is really important to you in terms of profit. Have you taken the time to look at what type of lifestyle you are really wanting? If it’s been awhile, go ahead and do it again. Things shift, people change.
What do you really want? What is important to you? We want to be really mindful of not falling into comparisons and “shoulds” here. What is important to you in life and business? What type of business do you ultimately want to run, what support do you need and what does it look like cost wise? Do the same in your personal life. What lifestyle do you want and what is important to you? Is it travel, experiences with your family, savings, college funds, etc.? What is it for YOU?
Get clear on this first and drop the judgment and comparisons from there. This is about you living life to the fullest on your terms and no one else’s.
Second, take what others are saying with a grain of salt. When a business owner talks about how much their company did in a given month or year, this is typically gross, not net. It’s not a criticism, but something to keep in mind when you hear this info. so that it doesn’t bring you down and make you feel bad for not being where you want to be. You could be earning way less, but keeping way more. It’s all relative. A better determination of success is looking at your profit margin. How much are you earning versus how much you are keeping over a given period of time. That is a better indicator and most small businesses don’t look at that percentage.
You can calculate your profit margin by taking your total revenue and subtracting your total expenses, and then taking that number and dividing it by your total revenue to get the percentage. The percentage is your profit margin.
Start looking at this for your own company and determining what you would like to see happen. The average standard for a healthy business is having a profit margin of 25% or over, generally speaking to give you an idea. Once you figure out your own profit margin, you can then use your own business results to compare to and not others going forward. Let’s get you to where you want to be in your business and what feels good for you, and not for someone else.
Happy calculating and planning!