Spruce up your operating margin without inflating it — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
Always estimate your operating income conservatively. Your operating income is the sum of your company’s gross income minus the cash spent on expenses. There are three types of expenses: general, administrative and sales. By opting for a safe, realistic figure, you put yourself in the enviable position of exceeding your projections. This makes you look like a genius. Use the industry average as a benchmark. You can find it by checking trade group studies or research by investment bankers who specialize in cutting deals in your business. If your operating income exceeds the industry average, give reasons, such as your new expense controls. And don’t ignore taxes: Factor in your company’s projected after-tax income, because that’s a more accurate, complete way to interpret the numbers.
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