Net Margin vs Industry Averages“What Cholesterol Has to Do with Your Profit Margin”
You can feel fine and still have cholesterol quietly building up where it shouldn’t. That’s why doctors don’t rely on how you feel—they run a lipid panel, compare your LDL, HDL, and triglycerides to healthy ranges, and assess true risk.
Your business finances work the same way.
Revenue Alone Is Like Saying “I Feel Fine”
A business can bring in steady revenue and look successful from the outside… but just like cholesterol, numbers without benchmarks don’t tell you if you’re actually healthy.
That’s where net margin comes in. It’s the percentage of your revenue you actually keep after expenses.
Revenue tells you what came in.
Net margin tells you what stayed.
Lipid Panel vs Net Margin Panel
LDL (bad cholesterol) → Overhead creeping up (profit being eaten month after month)
HDL (good cholesterol) → Healthy margin percentage (cushion for taxes, growth, slow months)
Triglycerides → Subscriptions, contractors, underpriced services (gradual margin erosion)
Cholesterol Ratio → Net Margin vs Industry Average (are you actually performing well or just getting by?)
A person can have a cholesterol level of 190 and think they’re fine—until the doctor compares it to healthy ranges.
Your net margin means nothing until it’s compared to your industry average.
Business Comorbidities That Accelerate Margin Failure
Just like comorbidities increase clinical risk, stacked financial stressors increase your risk of profit collapse—even when revenue still looks fine.
Clinical Risk Factor: High Blood Pressure
Business Equivalent: Tight Cash Flow
Revenue is coming in, but timing is too tight
Stress increases even when sales look stable
Clinical Risk Factor: Diabetes (slow recovery)
Business Equivalent: High Accounts Receivable / Slow Paying Clients
Income is “earned” but not collected
Margin suffocates while expenses still process on time
Clinical Risk Factor: Smoking (constant underlying strain)
Business Equivalent: Underpricing Services
Chronic margin suppression becomes the norm
Business appears busy but never actually gets ahead
Clinical Risk Factor: Sedentary Lifestyle (passive decline)
Business Equivalent: Set-It-and-Forget-It Bookkeeping
Numbers are entered, but not reviewed with intention
Silent leaks continue unchecked month after month
Clinical Risk Factor: Family History / Known Risk Environment
Business Equivalent: Industry Cost Trends & Seasonal Patterns
Software fees, payroll taxes, card processing, seasonal dips are predictable
Without proactive margin management, even expected costs create damage
The Silent Risk of Profit Erosion
Just like plaque buildup, profit erosion is gradual and rarely obvious at first.
A subscription here.
A fee increase there.
A client rate that hasn’t been updated in two years.
By the time you feel it—it’s already critical.
If you're realizing that margin erosion isn't just a bookkeeping issue but a pricing and operations conversation, my Monthly Bookkeeping Service ensures your numbers are reviewed proactively—not just recorded.
And if your current QuickBooks setup doesn’t give you clear, real-time margin insights, we start with a structured QuickBooks Setup & Support session to configure your books for financial clarity.
And if you're ready to go beyond bookkeeping and start using your financial data to plan forward with intention, my upcoming Fractional CFO Strategy for Growth helps you forecast, price correctly, and make decisions based on margin strength—not guesswork.
Time for a Financial Health Check
Doctors don’t wait for symptoms—they run panels and compare your numbers to healthy ranges.
Your books deserve the same level of care.
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