shops making hay while the prices go up

pumpkin89

Nelliegrace said:

I wonder how many British farms they have put out of business, like dairy farmers, egg producers and British fruit and vegetable growers, to get this level of profit.

You say that like it's an incredible amount of profit.  Tesco's profit last year was 1.1% of sales.  Very few businesses operate on such slim margins.

p00hsticks

pumpkin89 said:

Nelliegrace said:

I wonder how many British farms they have put out of business, like dairy farmers, egg producers and British fruit and vegetable growers, to get this level of profit.

You say that like it's an incredible amount of profit.  Tesco's profit last year was 1.1% of sales.  Very few businesses operate on such slim margins.

Yes - I was about to comment that while those figures look incredibly large, it would perhaps give a clearer picture if looked at expressed as a percentage of their turnover. 

Rosa_Damascena

pumpkin89 said:

Nelliegrace said:

I wonder how many British farms they have put out of business, like dairy farmers, egg producers and British fruit and vegetable growers, to get this level of profit.

You say that like it's an incredible amount of profit.  Tesco's profit last year was 1.1% of sales.  Very few businesses operate on such slim margins.

The margins may be slim, but absolute profit is healthy. 

There has been an expectation of cheap food by the consumer (I particularly dislike spending money on food), the proportion of expenditure accounting for 16% of household income in 2017 compared to 33% in 1957. Funny how the same source spews out different data (in this case the ONS) but I'm sure the devil is in the detail!

CKhalvashi

Rosa_Damascena said:

pumpkin89 said:

Nelliegrace said:

I wonder how many British farms they have put out of business, like dairy farmers, egg producers and British fruit and vegetable growers, to get this level of profit.

You say that like it's an incredible amount of profit.  Tesco's profit last year was 1.1% of sales.  Very few businesses operate on such slim margins.

The margins may be slim, but absolute profit is healthy. 

There has been an expectation of cheap food by the consumer (I particularly dislike spending money on food), the proportion of expenditure accounting for 16% of household income in 2017 compared to 33% in 1957. Funny how the same source spews out different data (in this case the ONS) but I'm sure the devil is in the detail!

But the problem with a 1% profit margin is that there's not much room for error in that.

Our gross margin is hovering around 20% at the moment and once you take the fixed and capital costs out of that I wonder occasionally if it's worth it of if I'd be better off working for someone else. Just for clarity, those net margins are higher than the supermarkets listed.

arnoldy

The fact is the 1% supermarket margin is often less less than the payments skimmed off by credit cards, PayPal, Google and Apple pay, debit cards etc etc when we pay for our food shopping. Oh and Tesco, Morrisons, Sainsbury have a habit of paying their taxes (and a lot of it) & paying dividends that we all rely on in our pension pots to keep us out of poverty in old age.

Rosa_Damascena

CKhalvashi said:

Rosa_Damascena said:

pumpkin89 said:

Nelliegrace said:

I wonder how many British farms they have put out of business, like dairy farmers, egg producers and British fruit and vegetable growers, to get this level of profit.

You say that like it's an incredible amount of profit.  Tesco's profit last year was 1.1% of sales.  Very few businesses operate on such slim margins.

The margins may be slim, but absolute profit is healthy. 

There has been an expectation of cheap food by the consumer (I particularly dislike spending money on food), the proportion of expenditure accounting for 16% of household income in 2017 compared to 33% in 1957. Funny how the same source spews out different data (in this case the ONS) but I'm sure the devil is in the detail!

But the problem with a 1% profit margin is that there's not much room for error in that.

Our gross margin is hovering around 20% at the moment and once you take the fixed and capital costs out of that I wonder occasionally if it's worth it of if I'd be better off working for someone else. Just for clarity, those net margins are higher than the supermarkets listed.

I dare say you did not take home a salary of £4.5 million last year?

arnoldy

Rosa_Damascena said:

I dare say you did not take home a salary of £4.5 million last year?

There will always be people richer or poorer than one in life, but the great thing is if it bothers you that the CEO is paid that much avoid it. I tend to choose a Supermarket (or Airline/Energy Company/Car/Restaurant etc) based on price, quality and convenience - not CEO pay. 

MattMattMattUK

CKhalvashi said:

Rosa_Damascena said:

pumpkin89 said:

Nelliegrace said:

I wonder how many British farms they have put out of business, like dairy farmers, egg producers and British fruit and vegetable growers, to get this level of profit.

You say that like it's an incredible amount of profit.  Tesco's profit last year was 1.1% of sales.  Very few businesses operate on such slim margins.

The margins may be slim, but absolute profit is healthy. 

There has been an expectation of cheap food by the consumer (I particularly dislike spending money on food), the proportion of expenditure accounting for 16% of household income in 2017 compared to 33% in 1957. Funny how the same source spews out different data (in this case the ONS) but I'm sure the devil is in the detail!

But the problem with a 1% profit margin is that there's not much room for error in that.

Our gross margin is hovering around 20% at the moment and once you take the fixed and capital costs out of that I wonder occasionally if it's worth it of if I'd be better off working for someone else. Just for clarity, those net margins are higher than the supermarkets listed.

My gross hovers at around 38%, but I am the same in that when I factor in the other costs, as well as the personal investment in running a business I do sometimes question whether I would be better off working for someone. The money would probably be slightly less, much more so in good years, I would lose flexibility, but at the same time I would also have a far easier work life. 

On the slim margins, many people seem to be unable to understand percentages these days, it is why news reports have reverted to "one in ten people" instead of "10%" because much of the general population did not understand what 10% was, so expecting them to understand gross, net, EBITDA etc.is a lost cause.

CKhalvashi

MattMattMattUK said:

CKhalvashi said:

Rosa_Damascena said:

pumpkin89 said:

Nelliegrace said:

I wonder how many British farms they have put out of business, like dairy farmers, egg producers and British fruit and vegetable growers, to get this level of profit.

You say that like it's an incredible amount of profit.  Tesco's profit last year was 1.1% of sales.  Very few businesses operate on such slim margins.

The margins may be slim, but absolute profit is healthy. 

There has been an expectation of cheap food by the consumer (I particularly dislike spending money on food), the proportion of expenditure accounting for 16% of household income in 2017 compared to 33% in 1957. Funny how the same source spews out different data (in this case the ONS) but I'm sure the devil is in the detail!

But the problem with a 1% profit margin is that there's not much room for error in that.

Our gross margin is hovering around 20% at the moment and once you take the fixed and capital costs out of that I wonder occasionally if it's worth it of if I'd be better off working for someone else. Just for clarity, those net margins are higher than the supermarkets listed.

My gross hovers at around 38%, but I am the same in that when I factor in the other costs, as well as the personal investment in running a business I do sometimes question whether I would be better off working for someone. The money would probably be slightly less, much more so in good years, I would lose flexibility, but at the same time I would also have a far easier work life. 

On the slim margins, many people seem to be unable to understand percentages these days, it is why news reports have reverted to "one in ten people" instead of "10%" because much of the general population did not understand what 10% was, so expecting them to understand gross, net, EBITDA etc.is a lost cause.

Always the difficult thing.

The fact we're doing what I'd deem to be the 'moral' thing at the moment and investing in areas of importance to clients (in many cases turning their own plans into something commercially viable on some areas and expanding the potential client base on others) is something I love and probably wouldn't get commercial backing from a 'major' for, I wouldn't swap that for the world, but definitely financially sometimes it doesn't make sense.

To put our figures into perspective for a general understanding;

We make £1000 in sales
Gross profit on that is around £200 (after costs and the client/who we represent has been paid). That gives a gross profit.
We then have to pay for an office, staff for that office, that gives us an EBITDA.
We then take the capital costs out of that to give the net profit.
Then we pay tax on that number.

We need to be doing reasonably high numbers to make it viable, need to have about 20% of that revenue (or roughly the gross profit on that) tied up for 3 months prior for current sales and need the specialist equipment to make everything happen, which is more money tied up. In addition for some activities the money needs to be held in a client account until that activity has taken place. Funnily enough, many people aren't happy to wait to be paid for 3 months so that needs to remain in the business.

It's not as easy as many people make out.

Rosa_Damascena said:

CKhalvashi said:

Rosa_Damascena said:

pumpkin89 said:

Nelliegrace said:

I wonder how many British farms they have put out of business, like dairy farmers, egg producers and British fruit and vegetable growers, to get this level of profit.

You say that like it's an incredible amount of profit.  Tesco's profit last year was 1.1% of sales.  Very few businesses operate on such slim margins.

The margins may be slim, but absolute profit is healthy. 

There has been an expectation of cheap food by the consumer (I particularly dislike spending money on food), the proportion of expenditure accounting for 16% of household income in 2017 compared to 33% in 1957. Funny how the same source spews out different data (in this case the ONS) but I'm sure the devil is in the detail!

But the problem with a 1% profit margin is that there's not much room for error in that.

Our gross margin is hovering around 20% at the moment and once you take the fixed and capital costs out of that I wonder occasionally if it's worth it of if I'd be better off working for someone else. Just for clarity, those net margins are higher than the supermarkets listed.

I dare say you did not take home a salary of £4.5 million last year?

I can wish, but sadly not.

With scale comes percentages and that salary is about 0.007% of the total sales of the company he works for. My salary is about 0.02% and he is running a far more complex operation.

I'm also not answerable to shareholders or to any real extent members of the public regarding my pricing (although we need to remain competitive to stay in business), that's something I'd never want to be in itself.

Rosa_Damascena

arnoldy said:

Rosa_Damascena said:

I dare say you did not take home a salary of £4.5 million last year?

There will always be people richer or poorer than one in life, but the great thing is if it bothers you that the CEO is paid that much avoid it. I tend to choose a Supermarket (or Airline/Energy Company/Car/Restaurant etc) based on price, quality and convenience - not CEO pay. 

It doesn't bother me - I am inured to capitalism and accept it as necessary to our national infrastructure - but the profit is calculated after everyone is paid. So there is still plenty to go round, albeit the thought of the cash flow needed to keep the business afloat sends a shiver down my spine.