I love percentages, they tell you nothing.
Big companies can be found looking to their top line (sales turnover) and reaching to their bottom line via the percentage routes of scale and margins. Whereas the top line for the smaller business is looking to their bottom line: the net profit.
Percentage margins for sales growth aren’t the profit amount; neither is the profit amount a percentage of margins for profit.
Big companies think about their profit margins. When revenue is down, and margins are hit, job cuts are made. The smaller business owner has been known to fail in looking at their margins as a business metric, so the percentages can overtake. Their response? Sometimes it’s to mimic larger companies. They turn to wanting to increase volumes (looking to higher percentages) rather than looking at the percentage (or profit margin) on each unit, sale, or invoice. Or, making staff cuts before looking at what the staff member is capable of as value to the business (percentage of sales turnover).
The measurement tells you everything.
Image and Article credit: Copyright SUF © 2014
