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Here at Big Red Cloud we encourage you to keep your accounts up to date so that you can get critical performance information on your business.

Profit margins are a critical part of understanding your business’ financial records and what comes from the day to day work that you put in.

A profit margin is a ratio calculation which shows how much out of your overall sales the company actually keeps.

There are two common profit margin calculations. One for gross profit and one for net profit. The figures for both gross and net profit can be found in your Profit and Loss account. Your gross profit is your sales figure minus the cost of goods sold or services provided. It shows how much profit the company made after deducting the costs directly associated with producing the goods or providing the services they received revenue for.

This shows how profitable your core business activity is. By running a gross profit margin we are able to see what proportion of money we have kept after our cost of sales or services outgoings have been deducted.

Gross Profit Margin = Gross Profit/Sales

Our net profit shows the money that the business has held onto after expenses are deducted from gross profit. Expenses outgoings that aren’t directly related to the core business. For example, for most businesses, a bill from their telephone provider would be classified as an expense.

Usually, businesses are taxed on this net profit number. We can run a net profit margin to show us what proportion of the money we make from sales we are actually holding on to after all outgoings have been accounted for. A businesses net profit margin should always be lower than its gross profit margin as it accounts for expenses.

Using profit margins is important, by doing so, you will know how profitable your business is and whether outgoings are mainly coming from core business activities or from expenses. Armed with this information, you can start to make decisions to allow your business hold on to even more money from each and every sale it makes.

Marc O'Dwyer

After completing a Graduate program in Marketing, Marc’s impressive sales career began at Allied Irish Banks, Pitney Bowes and Panasonic where he received numerous Irish and European sales performance awards and consistently exceeded targets and expectations. In 1992, Marc’s entrepreneurial spirit led him to set up his own business, Irish International Sales (IIS). Initially, this company was a reseller for Take 5 Accounts and Payroll software. Within four years, IIS became the largest reseller of Take 5 in Ireland, acquiring four other Take 5 resellers. He also found time to set up two mobile phone shops under the Cellular World brand and a web design company offering website design services for small businesses. In 2001, he bought the majority share in a small Irish software business, Big Red Book. At that time, the company was losing money. The company became profitable within two months, and Marc then acquired a payroll company to compliment Big Red Books Accounting products. In 2003, IIS were appointed as Channel Partners with SAP for their new SME product, SAP Business One. Marc sold his Take 5 business and concentrated on developing this new market for SAP As a result, by 2007, IIS was recognised as the largest Channel Partner for SAP in EMEA (Europe Middle East and Africa). In 2008, the IIS Sales Manager bought the Company from Marc in an MBO. He launched Big red cloud in June 2012, the online version of big red book, to date the company successfully converts 59% of trials into sales and the number of customers is growing rapidly. Marc continues to run both Big Red Book and Big Red Cloud which now support 75,000 businesses. He is a very keen sportsman, having played rugby for 20 years, represented Leinster at under 16 and under 20 levels, and league squash with Fitzwilliam Lawn Tennis Club for 10 years. Marc has competed in 11 Marathons, including the London and Boston Marathons, and has completed several Triathlons and Half Ironman races. He has also completed six Ironman Races in Austria(x2), Frankfurt (Germany), Nice (France) , Mallorca (Spain) and Copenhagen (Denmark)

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