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One Overlooked Metric That Could Transform Your Company’s Value

Andre Abi Awad
The Freedom Owner
Published in
4 min readDec 20, 2024

You know gross margin impacts your profit, but have you considered the impact it has on the value of your company?

When assessing your company’s value, acquirers and investors will often scrutinize your gross profit margin. Gross profit margin is the difference between a company’s revenue and its cost of goods sold. In other words, it’s the profit a company makes from each unit of product or service sold after accounting for the cost of producing or delivering that unit but does not include other fixed expenses. For example, if a company sells a product for $100 and it costs $70 to produce and deliver it, the gross profit margin would be $30, or 30%.

A high gross profit margin is a crucial factor for investors and potential acquirers as it indicates that a company has established pricing power through marketing differentiation and possesses a competitive advantage. A strong competitive moat is an indicator of a company’s long-term sustainability, making it more appealing to potential investors.

When a company’s gross margin shrinks, it indicates to investors that the company may be competing on price. This is typically a sign that the business lacks a unique value proposition or marketing differentiation and that competing on price is the only way to attract customers. A shallow moat…

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The Freedom Owner
The Freedom Owner

Published in The Freedom Owner

If you’re like most business owners, you aspire to have the freedom that comes from owning your own business. Unfortunately, growing a larger business gets you further from your ultimate goal of freedom. Read this publication to claim back your Freedom.

Andre Abi Awad
Andre Abi Awad

Written by Andre Abi Awad

Claim your Freedom as a Business Owner — Read more on “The Freedom Owner” publication on my profile. Helping Entrepreneurs in 54 countries since 2008.

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