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What is a decent profit?

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According to Statistics Canada, the average small company in Canada generates a profit before taxes of 5 to 10 percent of sales. This is not the only indicator of the health of a company but it is a good first step. With healthy profits, cash will be relatively easy to manage; Accounts Payable will be smaller than Accounts Receivable, the bills can be paid without having to hound customers who are just a few days late to cut you a check. If you miss a few weeks looking at the cash flow, it just doesn’t matter too much.

I don’t like averages; so what should the numbers be for my company?

Would you like to know what the median numbers are for your type of company? Wouldn’t it be great to know if your percentage of profit or sales costs or even rent is “normal?” There are some ways to get that information. Quite often there are industry organizations that conduct “cost of doing business” surveys annually. By joining a trade association, you could get a survey and compare your own financial statements. Sometimes the previous year’s survey is available at a small cost to give you a taste of the benefits of joining a trade association.

Pricing Strategies for Small Business

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