Focusing On The Margin

A growing business can be busier than ever and still feel like it is not getting ahead.

Growth is hungry. It demands cash, puts pressure on systems and processes, and stretches people beyond the level the business was previously built for. A team can be working incredibly hard without understanding which levers actually move the business forward. That is where a business can fall into the trap of busyness rather than good business.

One of the biggest traps is focusing on revenue without understanding margin. If the focus is purely on revenue, or turnover, the business can feel as though it is growing. The top line may show more sales, more activity, and more work coming through. But that does not automatically mean the business is getting ahead.

The danger is that people may not understand the true cost of acquiring new business. If a sales rep is not clear on the margin the business needs, they may use discounting to secure new customers. The sale may look good on the surface, but if the margin is too low, the business may be working harder without making enough profit.

When a rep understands that the goal is not simply to make more sales, but to make excellent sales at the right gross profit, they become more discerning. It is no longer just growth in volume. It becomes growth with profit.

That level of understanding cannot be assumed. For many leaders, business finance can fall into the space of the curse of knowledge. They understand gross profit, net profit, margin, ROI, and the investment required for growth, so it is easy to assume the team does too.

But many people have never been taught how business finances work. Profit can feel like an abstract company number rather than something they can influence. That is why leadership teams need to educate their people around what margin is, what profit is, how the company secures it, and why some sales are better for the business than others.

Leadership also needs to connect this education to the bigger vision. If the business is growing, people need to understand the opportunities ahead, the investment required, why the growing pains are happening, and why protecting profitability is everybody’s responsibility.

That includes reducing wastage, making better decisions, understanding the cost of discounting, and looking for ways to maximise profit wherever possible.

Growth should not only make a business busier. It should make the business stronger. That requires leaders to help their people understand the difference between more work and better business.

The challenge for leaders is to look at where the team may be chasing activity without understanding margin. Start with one conversation: what does a good sale look like here? Do your people understand the profit the business needs to sustain growth? Do they know how their decisions affect the bottom line?

When people understand margin, they are better equipped to help the business grow in a way that is profitable, sustainable, and worth the effort.