Profitability Health Check
Margin reality, not gross-revenue theatre. Four inputs: gross margin, net margin, owner-take per dollar of revenue.
Four inputs. Out: gross margin, net margin, and owner-take per dollar of revenue. Results update as you type.
Margin reality, not gross-revenue theatre
Revenue is the number owners brag about; margin is the number that determines whether the business is actually worth running. The Profitability Health Check looks past top-line revenue to three truths: gross margin (what's left after delivery costs), net margin (what's left after everything), and owner-take per dollar of revenue (how much of each dollar actually reaches you).
Healthy benchmarks
For a B2B service business, healthy gross margin is typically 50–70% and healthy net margin 15–25%. Many owners are surprised how far below this they sit — a "$1M business" running at a 5% net margin is a hard, risky job, not a strong asset. Two service businesses with identical revenue can be worlds apart in value, and margin is the difference.
How to improve it
Margin improves by raising prices, tightening the cost of delivery, and cutting unprofitable services and clients — not by chasing more revenue at the same broken margin. Profitability is where the Foundation and Success Triad layers of the Business Evolution Framework meet: get the pricing and the cost structure right, and growth compounds instead of just adding work.
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