Focusing solely on gross margin is like training for a marathon by carb-loading on pasta: You’re reducing a complex exercise to the part that can get very unhealthy – fast. Meanwhile, your more sophisticated competitors are whipping their organizations into lean, mean, automated and intelligent profit-generating machines, and they’re going to zoom right past you while you’re huffing and puffing at mile two. Yes, gross margin matters, Ian Heller writes, but it’s just the starting point. He encourages distributors to stop holding it up as the scoreboard for profitability. While it’s important, distributors also need to focus on other areas that can collectively drive much bigger gains to their bottom line without running the risks of overpricing yourself in the marketplace. Read more: https://lnkd.in/gBvqfjC2 Our Profit & Productivity Summit for Distributors is coming up Nov. 11-13 in Chicago. Learn more or register now: https://lnkd.in/guwXmdE7
Great analogy! I never thought about gross margin in that light. Your insights are always spot on, thank you!"
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This is a much-needed reminder that overemphasizing gross margin can lead to a narrow-minded approach in business. In our race to drive profitability, it's crucial to adopt a more holistic strategy that embraces automation, intelligence, and efficiency. By doing so, we not only strengthen our competitive edge but also foster long-term growth and success. Let's keep this in mind as we navigate the ever-evolving business landscape and strive to stay ahead of the game!
Ian Heller’s view on holistic profitability is spot-on. Focusing beyond gross margin builds smarter, sustainable growth and keeps us competitive long-term.
What a creative analogy!Focusing solely on gross margin is like training for a marathon by carb-loading on pasta because:*Just as carb-loading on pasta may provide short-term energy, but neglects other essential nutrients for optimal performance, focusing solely on gross margin:*1. Provides short-term financial gains, but overlooks other critical aspects of business health.2. Neglects the importance of operating expenses, profitability, and cash flow.3. Overlooks investments in research, development, and innovation, which drive long-term growth.4. Ignores the impact of customer satisfaction, retention, and acquisition costs.5. Fails to consider the role of marketing, sales, and distribution channels.
One of my favorite quotes from a former CEO on margin "I can't buy a cheeseburger with margin %". While there are always nuances, i find that there is an inverse relationship between the focus on growth potential / expectations and margin %. When potential for growth is low, the focus on margin % is high. Again, not always the case and earning both is best, but as Jason said below - 48% of something is better than 52% of nothing.
That's a great analogy. Focusing only on gross margin can be limiting. Just like a marathon requires consistent effort and preparation, overall business sustainability and success needs a well-rounded approach, including long-term strategy, innovation, and market adaptation.
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"Insightful post! Focusing solely on gross margin is indeed limiting and can be detrimental. A holistic approach involving efficiency, automation, and strategic intelligence is essential to stay ahead in a competitive landscape. It's time to rethink profitability beyond just numbers!"
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1dThis serves as an important reminder that placing too much focus on gross margin can result in a limited perspective in business. As we pursue profitability, it's essential to embrace a more comprehensive strategy that incorporates automation, intelligence, and efficiency. This approach not only enhances our competitive advantage but also promotes sustainable growth and success. Let’s remember this as we navigate the constantly changing business environment and work to maintain our lead!