As a sign shop owner, you have a lot of things to worry about, and unfortunately, the financial health and stability of your business may not always be on the top of that list. This is especially true in today’s constantly changing business landscape, where COVID-19 has made the future seem very uncertain in very many ways.
You may generally know that you’re making a profit in your sign business, but are you really on top of your income and expenses? Do you have insight into how financially stable your business is? Do you know your operating margin?
Understanding your operating margin can help you determine how to increase profitability and stability by lowering operating expenses.
What is Operating Margin?
Operating margin (also referred to as Earning Before Interest and Taxes) shows you how much profit you are making after paying operating expenses like cost of goods sold and wages. Your margin is calculated before paying tax or interest.
Your operating margin can be an indicator of how well your sign company is being run, and many investors and lenders will ask to see it if you are seeking financing or funding.
So just how do you calculate your operating margin, why is it so important, what is considered a good margin, and how can you use it to your advantage?
All of these questions and more are answered in Nav’s blog post explaining operating margins. Nav is an online platform that matches small business owners to their best financing options and gives free access to personal and business credit scores.
Take control of your sign shop’s future and get better acquainted with this important metric.