Do all businesses work on a 30% profit margin?

[mandyky]

I watched Laurie Garrett on CSpan's Washington Journal yesterday and she mentioned media wanting a 30%. Do all publicly traded companies work on the 30% profit margin goal? Can a business make less and still be"successful"?

What is successful profit margin for small businesses not traded on Wall Street?

[rooboy]

1. What?? Lots of businesses trade on 1 and 2 percent...

there are lots of considerations to recognize. Some businesses trade on such low margins because their turnover is very high, and others will persist with low margins because the business itself gains value as an asset in its own right (and can then be sold for lots of money). Thirty percent is quite a high margin, especially in an industry as big as that imo. Just another sign of how deregulation is letting businesses screw the little guy.

[htuttle]

2. Ha! 30%?

Well, in the taxi industry, we expect about 1% - 2% net profit.

In my experience in retail dry goods, 10%-15% is a good haul.

When I managed a gas station, we made about 2% on gasoline, and maybe 15%-25% on crap (candy, cigarettes, etc...). In the garage, we made 100% profit on parts (they always double what they pay for them, you know).

But saying 30% is average -- I don't think so.

[mandyky]

5. Maybe she was just talking about media, then

I wondered!!! 30% sounded high.

[HereSince1628]

3. No, some businesses like grocery retailing do small margins

hoping large volume makes up for it.

MegaMart, a corporation that operates stores in northern Illinois, Wisconsin and parts of Minnesota claims to have a little over a 1% margin.

One issue for any business is can it out perform investing money otherwise? If the answer is no, then its more profitable to close up shop and put the money into other accounts.

[RoeBear]

4. I'm not sure I understand the question...

do you mean the difference between what a company pays to buy a product versus what they sell it for?

For example your car dealer probably has a 5% mark up over what he pays for the vehicle from the manufacturer.

And grocery store work on very small margins, they make there money on the volume of sales.

Certain items like clothes are marked up 100% over what the retailer pays for the goods.

Did I answer your question?

[Peregrine]

6. Was she refering to margin or profit

2 different things. Defense contractors generally aim for 5 - 7% (11 - 12 for a mfg company) profit, but their margin is generally 35% for a well managed company that does mostly mfg to 100%+ for a poorly managed services company.

[Redstone]

7. In manufacturing, a 15% GPM is considered good.

That's gross, not net. 30% even at gross, would be damn nice.

Redstone

[seabeyond]

8. personally i am more comfortable with the number of 40%

that is the number i was always taught thru business school and business owners. thereis a lot of overhead to be paid. rent on building, utilities, wages, health care, and all the misc. my husband in the computer business selling a computer could only mark up 10-15% and he lost money on the transactions, so he no longer sells the hardware, just does the servicing of it. was killing his business selling the hardware

[SlackJawedYokel]

9. I know for a fact that in the grocery industry

a 4-5% margin means you are absolutely kicking ass.

Food service works on a higher margin... 40-60% because most of their cost is in labor.
I mean think about the actual cost of what is in a Big Mac and compare that to the minimum wage a MacDrone makes.

30% for media seems about right... higher than most because of labor costs.

Cletus

[TreasonousBastard]

10. Note they "want" a 30% margin, not...

that they have it. And not too many of them are closing shop because they didn't meet that goal. 30% is pretty high for any business in a competitive environment. Name one auto company, airline, insurance company, retailer, or other mature company that gets that high consistantly.

In drygoods retail, we tried to take a 100% markup, but pretax profits obviously weren't nearly that high after all of the other expenses.

Supermarkets run on maybe 2% if they're lucky, but the turnover is weekly, not seasonally, so that's 2% per week, which pretty damn good, but costs are high.

Media is more like a service, so there's no "markup." They'll still take revenues and subtract expenses, though, and I could see that as a goal, but not one easy to get to.

With most companies now, "successful" is not losing money and, hopefully, to make more than you would make just by closing shop and putting all your cashed out assets into Treasuries.

[tsuki]

11. Gross or Net?

[KharmaTrain]

12. What Was She Smoking???

Try this for starters...

Clear Channel Posts $4.7B Loss in 4Q
http://www.democraticunderground.com/discuss/duboard.ph...
Fri Feb 25, 2:54 PM ET Business - AP


By T.A. BADGER, AP Business Writer

SAN ANTONIO - Clear Channel Communications Inc. on Friday reported a loss of $4.7 billion in the fourth quarter of 2004, all of it due to an accounting change to comply with federal regulations.

snip...


Other media corporates are not doing as well, either...a combination of a poor advertising market (thanks to this regime's destructive economic practices), mounting corporate debts (used to build their obscene empire) and a profits at all cost mentality that has ruined many stations.

I've operated businesses for nearly 20 years, and if I had one that clipped at 30% profit, I'd double-check the books for a math error...either that or I must be overcharging and trying to screw the client.

Media has claimed large profits in recent years, but that's a misleading since this also includes gains in their stock prices and non-broadcast/print related activities. In the late 90's and in 2000, many of these companies claimed profits of around 15-20% (the high watermark), and none have come in at their projections since.

These talking heads throw around figures without any concept of the marketplace...that's why they're in "think tanks" rather than in the real world.

[izzie]

13. I always heard it was down under 5%

I have an uncle that made a very good living and that is how he talked as did my father and another uncle who ran their own business. I also recall my father playing the bond market on low grade bonds as he could lose the money if need be but was taking a bet he would do well. No way did they make 30 % but he did do well on them. I do not think Companies buy a business now to pay it off in say 20 years, They want their money back in one year. You hear the same thing when people buy a home. "Greed is great"

[seabeyond]

16. greed is great.............

with that kind of attitude to a business, greed is great, what kind of employee do you make. i ask this because, running a business and having 7-14 employees at any given time, depending on the work contracting we get, i have people. regular people that are living lives. those lives are put in our office. we are all 20's to 50's paying our bills, kids in school yada yada. and i am having a particular problem with employees that are given a god wage, and health care, easy ours, few demands getting pissed if they have to answer the phone. i mean mature adults in there 40's making 30-50 a year mad because one is always calling in sick, and they want me, not on payroll to come in and answer a phone.

and read du.............wink. cause after all i am just sittin on my ass all day

so......

as i look at different employees i ask myself what am i willing to live with as summer comes up, and i have other things to do.

greedy little self

[seabeyond]

14. on the one hand i see and listen to a lot of people

that want business on american soil. and a good working wage so they can take care of their needs and a lot of their wants with a desire met here and there

yet on the other hand, i see such animosity to business. and we say corporate, but i dont see the distinction in many of the conversations. the ideal is for the employee to want the company to be successful. an odd concept i know. but i would hope we would rather that.

the demands of the employees, with least production and the demands of the government with the least encouragement to small business leaves the average business owner doing quite a dance. and regardless how well that dance is preformed for so many seems to want more and more and more.

it would behove all of us to start encouraging our business owners. maybe a little empathy here and there as they try to keep business healthy in a really challenging time so they can continue to pay the wage of so many, so they in turn can have a healthy and happy life, and feed their kids.

i see the same phenonomon with parenting. such demand from society, yet.............every step of the way hurdle after hurdle is put in front of the parent to jump, and as good as we become, more and more are thrown in front of us. and then literal tantrums from those that are not doing, if our children fuck up

damn,...........we are all pretty hard and demanding on ourselves

[kodi]

15. that 30% excludes so many costs. usually it reflects only gross margins

in my business anyways.

[Toots]

17. I tried to maintain a twenty five percent margin

It is quite hard to do with constantly changing freight expenses and prices rising weekly...