ITERAQ / Economy & future
Profit & resilience
How much profit is enough? Start with your costs, cash needs and a target you can explain. Test the numbers before you commit.
Use one currency and figures excluding VAT. Include owner pay in fixed costs. Operating profit here is revenue minus variable and fixed operating costs, before interest and tax. Cash runway assumes immediate receipts and payments, no investment, debt or tax payments. A full cash-flow forecast may differ.
Set a target that fits the business
There is no profit percentage that every company must achieve. Compare the same margin definition, industry, company size and period. A growing revenue figure means little if customers pay late or every extra sale loses money.
| Measure | What it tells you |
|---|---|
| Contribution margin | Revenue left after variable costs, available to cover fixed costs and profit. |
| Net margin | Net profit divided by revenue. Includes the effects of interest and tax; it is not calculated by this operating model. |
| Markup is not margin | Cost 80, selling price 100: markup is 25% of cost; gross margin is 20% of sales. |