Emerald Business Systems Blog

Profit Margins – Project Management Awareness Needed | MyProjectTracker – The Blog

Posted in General Business,POS by ebs4pos on March 6, 2010

“A profit margin on my project? – sure I got paid, isn’t that all that matters.” — End quote.

I’ve heard this four times in as many days and it is the theme tune of many small and not-so-small enterprises who are grateful for having cash flow. Big, big mistake. I call it Profit Margin Shame (PMS – what did you think I was talking about?)

When people (outside of big business) are asked about profit margins the reaction can be one of embarassment on the part of the business person. It is considered to be politically incorrect to even recognise the possibility that your company is making a profit and by inference a margin on every sale that you make.

Why is this? Margins are key to every businesses survival . Margins enable your business to grow and to continue to give your customers the quality of service that you aspire to deliver.

I would much rather know that a business I was dealing with was doing well as it instills a confidence on two fronts;

* the rather obvious “well at least they are going to stay in business while they are doing my job”

* but also the rather less obvious ” they are making money so therefore they have provided good service to their previous customer”.

Many believe that if a customer is aware of the fact that they make money/profit, that the customer will squeeze them on their delivery costs.

Really? Will they do that too much? Sure – they will haggle because that’s what is expected, but most customers are happy with value and will not contest a bill if they believe that they are getting this.

The trick for margins is to make sure that you deliver value and this is factored into your price.

How many times have you “covered your costs” to win the business (including your own time)?

More importantly, how many times have you not actually figured out how much it is going to cost you to do a job and just gone with the flow – this absence of margin calculation is a common theme amongst small enterprises in particular.

If you had considered a margin, how would your business have improved? How would your customer have benefited? What new concepts could you have researched and developed….? Oh, and how will you stay in business?

Margins – you need them!

via Profit Margins – Project Management Awareness Needed | MyProjectTracker – The Blog.


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