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The best net profit margin for your business depends on what industry you're business is in, which means you shouldn't compare your margins to companies in other industries.<ref>[https://www.investopedia.com/articles/personal-finance/093015/whats-good-profit-margin-new-business.asp What’s a Good Profit Margin for a New Business?]</ref>}}
The best net profit margin for your business depends on what industry you're business is in, which means you shouldn't compare your margins to companies in other industries.<ref>[https://www.investopedia.com/articles/personal-finance/093015/whats-good-profit-margin-new-business.asp What’s a Good Profit Margin for a New Business?]</ref>}}
== Low, medium and high profit margins for a business ==
Brex Incorporated, an American financial service and technology company, indicates:
{{Cquote|[http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html An NYU report on U.S. margins] revealed the average net profit margin is 7.71% across different industries. But that doesn’t mean your ideal profit margin will align with this number.
As a rule of thumb, 5% is a low margin, 10% is a healthy margin, and 20% is a high margin. But a one-size-fits-all approach isn’t the best way to set goals for your business profitability.
First, some companies are inherently high-margin or low-margin ventures. For instance, grocery stores and retailers are low-margin. They have high expenses, as they need to purchase inventory, employ corporate employees and labor workers, facilitate shipping and distribution, and rent bigger facilities as their sales grow. But low-margin goods, like food and some consumer products, are usually easier to sell. A highly competitive market, like the rideshare war between Uber and Lyft, can also create thin margins.
By contrast, businesses like consulting firms and software-as-a-service (SaaS) companies generally have high gross margins. These businesses have fewer operating costs, no inventory, and require less [https://www.brex.com/journal/startup-funding startup capital] to launch. Companies that sell high-dollar products, like jewelry stores, can also fall into this category. Read more here about the [https://www.lendio.com/news/small-business-outlook/most-profitable-businesses/ most profitable and least profitable industries].</ref>
== References ==
== References ==
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[[Category:Business]]
[[Category:Business]]