NOTICE THE FOLLOWING:
1. Shop number two improved its Contribution Margin by one point by effectively reducing material costs which produced an additional $14,000 in profit.
2. Shop number three decreased its Contribution Margin by one point because it did not effectively manage its purchase orders. This produced a decrease in profit of $14,000. This means that the shop would have to increase sales by almost $30,000 to make up for that difference!
3. Shop four added a sales person and paid them six percent of sales. This reduced the Contribution Margin by six points, which means that the shop would have to produce additional sales of $200,000 to make up for the difference in profit!
CONTINUED --->
“After all, a business can grow its way to bankruptcy if the only measurement that mattered to it was top-line revenue growth.”
PIPELINE® | EDITION 2 2017 23
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