Increasing Pressure on Profit Margin

Various internal and external elements place pressure on profit margins.

Solution Path

Determining the source(s) of the profit margin pressure is the critical first step.  The normal temptation is to focus on overhead.  Stepping back and taking a more holistic approach will produce more meaningful  results.

Depending on the source, the following tools can be used to work towards a solution. These include:

• value driver modeling
• market analysis
• competitor assessments
• client assessments
• production process analysis
• overhead analysis
• sales checkup
• compensation benchmarking 

Typically there will be a number of items that have evolved over the firm's history that slowly eat away at profit margin.