What Profit Margin Should My Business Make?
You're turning over well. But how much are you keeping?
Turnover tells you how busy you are. Margin tells you how profitable you are. They're not the same thing — and the difference matters.
Gross margin vs net margin
Gross margin is what's left after the direct costs of delivering your product or service. Net margin is what's left after everything — overheads, salaries, finance costs, the lot.
Both matter. But most businesses only look at one — or neither.
Why margins erode without you noticing
Costs creep. Scope expands. Discounts get given away in negotiations. Staff time gets underestimated on jobs. Each one is small — but together they quietly eat into what you actually keep.
Where to look first 👇
Pricing
Are you charging enough? When did you last review your rates?
Delivery costs
Are jobs being delivered within estimated time and cost?
Discounting
How often are you discounting — and do you know what it's costing you?
Supplier costs
When did you last renegotiate your key supplier contracts?
Worth knowing
A 2% improvement in margin on a £1m turnover business is £20,000 straight to the bottom line — with no extra sales required.
Set a target and track it
Know what margin you need to run a healthy, sustainable business. Then measure it monthly — by product, service line or client if you can. The detail is where the opportunity usually hides.
"Growing your turnover while your margins shrink is just running faster to stand still."