Your financials probably won’t look the same on Day 1 or even Year 2 as they will once you’ve grown to be a “real” company. In the beginning overhead might look low because the company isn't paying any salaries. Maybe it looks high because you’ve just gotten started and your internet utility bill represents 20% of YTD sales. It’s helpful to get some reference points and to monitor your current conditions against future expectations and evolving competition. There are often some helpful “industry reports” available. You’ll have to dig in on some details depending on your particular business-scape but broad guidelines are better than none at all. Sales is the number we naturally go to first, but expenses add up fast and margin needs constant attention. Margin is lifeblood. Don’t settle on a terrible margin thinking it will resolve itself in the future or with volume. If you have to settle now, what are you getting in trade? If you settle now, be clear on the steps and timeline to healthy margin. Remember, that there is no guarantee you’ll live through tomorrow so don’t start making trades with expected payoff too far out.
