Notes for an Entrepreneur - Guarding your gross margins

One of things I have learned over the last 15 years of being an entrepreneur is that one has to hold gross profit margins sacrosanct. If you are running a business or thinking of starting one soon, decide now a gross profit margin in percentage terms that you will want. Then, draw this line in the sand.

Overheads have a nasty way of creeping up, and if you do not have strong gross margins, pretty soon you will find yourself cross subsidizing one line of product or service. The free hand of the market will then ensure that sooner rather than later, the only business you are able to get is the one where you make little or no money. Strong gross margins are critical to survival, the very first step.

Next you need to keep overheads in control and collect on time, but these are topics for other posts.