Why You Shouldn't Start a Business With Low Margins

[Spencer]

Business with low margins are not scalable and can become hectic and if you don't have a big enough capital to sustain the business it's going to incredibly hard to get it going, what is a business with a low margin? A business with a low margin is a business that after you subtract expenses from the revenue you are left with a tiny amount as a profit.

The business might be making 100,000 but expenses are 95,000, if there isn't ways to mitigate the expenses it's going to be hard to turn it around, a business with 25% or above should be your target.

 

[Highs]

Beginning with low margins can also often be dangerous in business. Low profit margin means you earn virtually nothing on each sale you make in your business. it becomes difficult to pay bills such as rent, wages, or stock when costs increase or when there is poor sales, . Yet there is less space in it to grow, or even to address certain issues that emerge on the way. This way you manage to sell many and make very little profit. It is preferable to decide on an enterprise in which it is possible to earn more in each individual transaction.