Advising a client this week on how to help his staff understand the damage that ‘discounting’ can do to his business. Did a training session which they understood – with the Gross Margin % like a pivot, upon which is a crowbar which is trying to lift a weight (Profits). Increasing sales is the pushing down force, but the overheads are pushing up against you. The nearer the pivot is to the weighted end of the crowbar, the easier it is to lift the weight (I understand pure mechanics as well!) Increasing your gross margin is the way to do that. Reducing it makes life very very tough – the ‘running faster to stand still’ syndrome! Given that he has given his staff some discretion in this area, such a simple session could make a big difference. Happy to replicate for anyone with a team who need to understand this without it being made complicated.
