Turnover is vanity, profit is sanity

It’s very easy to fall in to the trap of thinking increased turnover is always a good thing. In business circles you often hear people talking of how much they’ve increased the size of their business and what their projected turnover is but turnover means very very little.

Allow me to illustrate this with 3 scenarios and then I’ll draw comparisons with the marquee industry afterwards:

Job 1: Jim runs a company in the service industry, he has a turnover of £100k, has very very low overheads as it’s only him and his salary is £90k

Job 2: Dave runs a medium sized company, it employs 10 people, it has a turnover of £1.5m and he’s the highest earner at £60k

Job 3: Ian runs an international company but the overheads are very high. Sales last year was £8m but costs were £8.8m

Jim, Dave & Ian go out for a meal. Ian will talk about flying all over the world, how his company has grown in the last couple of years (turnover has gone up you see) and how high his stress levels are (often seen as a badge of honour for some bizarre reason). Jim will sit there contently with probably the lowest stress levels and confident that it won’t be his card that bounces when the bill arrives.

So bringing this back to the marquee hire industry (that being the purpose of this blog after all) keep in mind that the larger the span of marquee the higher the costs -purchase price, running costs and storage.

If you’re running a healthy marquee hire business offering whatever size marquees you do then don’t assume offering larger marquees will add to your profit. They will certainly increase costs, stress levels and turnover but that doesn’t always convert to increased profits.

Please don’t interpret this as I am against increasing turnover per se, growth is good and increased turnover is good provided it is increasing your profit.

Similarly I am not for corner-cutting to increase profits.  Cutting corners can lead to disgruntled customers and therefore increased stress for very marginal increases in profits. Much better to do a consistently good job.

I believe being successful in any business is finding your personal balance of stress vs reward.

Thanks for reading

Spencer

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