The fifth cause of poor cashflow - Gross profit margins are too low

Anna Stubbs • April 19, 2024

Your gross profit margin is what is left from your total sales after variable costs are deducted.

For example, if you're a retailer and your sales in a given period are £1,000,000, and the cost of the goods you sell in that period is £650,000, then your gross profit margin is £350,000, or 35%.

In the above example, if you implement some strategies to improve the margin from 35% to 39%, your gross profit will improve from £350,000 to £390,000. That’s an increase in profit of £40,000. You may need to increase your overheads a little to get that increase, however, if you get the results, it will be well worth your investment and energy.


There are many ways to lift gross profit. Some will be appropriate for your business, and some won’t.


For example, if you’re a retailer, you could focus on reducing stock shrinkage and theft, avoiding some discounting, and making sure you minimise obsolete stock.

If you’re a contractor, you might focus on rework and wastage, ensuring all work and materials on jobs get billed, and team member productivity.


We can help you to determine the best strategies to lift your margins. We can then run your figures through our Cashflow & Profit Improvement Calculator to show you the impact of seemingly small changes.


Don’t let poor margins destroy your cashflow and working capital. Get some help from us to make a better plan.

The Man on the Moon Principle

By Anna Stubbs • October 22, 2025
In 1961, President John F Kennedy famously announced his goal of landing a man on the moon and returning him safely to Earth before the decade was out. As we know, in July 1969, Neil Armstrong and Buzz Aldrin became the first people to walk on the moon, and were brought back to Earth safely, achieving JFK’s goal.  At a time when most people hadn’t even been on an aeroplane, landing on the moon would’ve felt unachievable and overwhelming. However, such a massive goal united people with a purpose; the story goes that even a cleaner mopping the floor at the space station said his job was to help put a man on the moon. So, how did they make the goal achievable? They broke it down into milestones, with each one taking them closer and closer to achieving their ultimate goal. The first milestone was to achieve lift off. So, they set about resolving this challenge. The next milestone was to reach orbit, so they had a team working on this milestone. Then, they had to reach the moon’s atmosphere, land safely on the moon, take off from the moon, enter Earth’s atmosphere and land safely back down to Earth. You can see how breaking the goal down into milestones gave everyone a more achievable objective to focus on which was less overwhelming. Those milestones were then broken down into the actions which needed to be completed. Each action was essentially a small step towards reaching the ultimate goal.

5 signs you’re undercharging

By Anna Stubbs • October 22, 2025
Are you undercharging for your services? It can be hard to tell, particularly if you’re in a niche industry or you’re a contractor. Costs have been rising, so it may be time to rethink your own pricing.

Understanding your revenue drivers

By Anna Stubbs • October 22, 2025
For your business to make money, you need to generate revenue. You produce revenue through your usual business activity, by making sales, getting your invoices paid, or taking cash from paying customers. So, the better you are at selling your products/services and bringing money into the business, the higher your revenue levels will be. But what actually drives these revenue levels? And how do you get in control of these drivers?