Monday, July 15, 2013
Insights and Opinions: The Power of Just ONE More Unit
Story by Dave Berkus
In our Insights and Opinions section, we feature, today we're feature more knowledge from angel investor and speaker Dave Berkus, who talks about the power of just one more incremental sale for your startup.
There is such leverage in high gross profit margins once a company is past breakeven. Every dollar of gross profit falls to the bottom line, increasing net profit faster with each transaction. A ten percent increase in revenues for a company with 50% gross margin and 5% net profit before the increase would double net profit for the period with that ten percent increase in revenue. Thatís impressive sales leverage. Just to be fair, a 5% cut in costs would also double net profit.
The point is that once a company is stable at or above the breakeven point, one incremental unit generates robust increases in net profit. (Continued...)
Read the rest of Dave's advice, The power of just ONE more unit.