What Is Your Target Profit Margin?
I just finished up a marketing summit with a coaching organization I have belonged to for many years now. There was a stat that just blew my mind because it seems like everybody wants to go into business and be an entrepreneur and they dropped this statistic and I was surprised.
On average, across the United States, small businesses have a profit margin of about 9%. Nine percent! In other words, if you have a business that makes $100,000, small business owners on average actually walk away with just 9,000 bucks!
Now, I know that running a small business is hard. I am in the middle of it. Profit margin is one of the stats in our business that we pay attention to a lot. We are not here as a charity: the goal at the end of the day is to make a good living for ourselves, our agents, and all the folks that we employ. That is a lot of burden that we carry on our shoulders. But, it is a burden that we love.
It is mind-blowing to me that at the end of the day, after everything is said and done, the bills are paid and everything, you are really walking away with nine cents on the dollar. Holy cow! That is a lot of folks that need some help. We are not talking about McDonald's or Apple with their iPhone product line: these are small businesses. The total amount of money we are talking about is not just hundreds of millions of dollars and yet their take-home was only nine percent, on average. That is pretty crazy!
What do you think? If you are in business or if you work for a business, what is that profit margin that you shoot for? Realistically, nobody is making 100% of the money that they make. That is not the profit margin. I can tell you that for a long time when we did not have our eyes on the ball, our profit margin wasn’t good. It was in the high teens, low 20s. We have worked really hard to bring that number up pretty significantly. So now, when I talk with other business owners, I say, "You know what, the number that you should be shooting for in my mind is about 30 to 35%." That is a goal. If you are getting above that, kudos to you! You are doing well.
Let’s connect - I would love to be able to help. We have overcome a lot of hurdles ourselves in our own business.I would love to be able to pass that information along to you and see if we can succeed together.
If you ever have questions about anything about real estate or terms you hear, never hesitate to reach out. Call me at 571-393-1082 or email Alex@ValorGroupRE.com. I am always happy to help out.
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