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What should your margins be? Hi, this is Judi Otton with GrowthCast, and that’s a question I always get. Let me give you three ways I look to see what your margins should be or where you should target.
The first one is Google, I Google profit margins or gross profit margins, for an architecture firm, or for women’s retail clothing, or for a restaurant. Whatever industry you happen to be in, there are metrics that describe a common range of margins and overhead and various other metrics.
The second thing I do is look back at your prior years to see where your margins have been. Last week or the week before we talked about inflation and you may want to try and get back to somewhere closer that you were in the past.
And the third thing, and this one might be a little uncomfortable or controversial, but I talk to people, I would talk to other people in your industry if you’re in an industry group or you have other contacts, especially if you’re not competing in the exact location, they may be very willing to share some of their metrics. So try it. It’s a great way to exchange ideas and help each other grow.
This is Judi Otton with GrowthCast, and if you want more great Fiscal Fitness Tips, subscribe to my playlist here and tune in next week when I’ll be back with a new one.