Where’s the Money Going? Spotting and Stopping Cash and Profit Leaks in Your Business Running a business is tough enough without your hard-earned money quietly slipping through the cracks. But that’s exactly what happens when your business has cash or profit leakages—and most businesses don’t even realise it’s happening until the damage is done. This […]
Tracking your gross profit margin (GPM) is one of the most crucial financial metrics for small and medium-sized businesses (SMBs). GPM helps business owners understand how efficiently they manage production costs in relation to revenue, providing insights into profitability and pricing strategy. A healthy GPM ensures that your business is retaining enough profit after covering the cost of goods sold (COGS) to sustain operations and plan for future growth.
However, it’s essential to recognize that gross profit margin and cash flow are different. While GPM reflects profitability, cash flow measures the money moving in and out of the business. Strong profit margins don’t always guarantee strong cash flow, so SMB owners need to monitor both closely.
By consistently tracking GPM and understanding how it impacts cash flow, SMBs can improve financial health, plan for sustainable growth, and remain competitive in their industries.
