Strategy & numbers

The margin you think you have

Quoted margin and realised margin are different numbers. Most firms only ever look at the first one.

Every quote you send carries a margin. It is calculated, it is checked against a floor, and if it clears the floor the job goes ahead. That number is a forecast. The margin you actually realise on the job is a different number, and in most small firms nobody ever puts the two side by side.

Where it leaks

The gap is rarely one big thing. It is an accumulation of small ones that each felt reasonable at the time: a discount given at the close to get the signature, a delivery cost absorbed rather than passed on, a supplier price that moved between quoting and ordering, a rework because the specification was ambiguous, an hour of someone senior spent fixing something nobody billed for.

Each of those is defensible. Together they are the difference between the business you think you are running and the one you are.

The comparison that fixes it

You do not need a costing system to start. Take the last twenty completed jobs. For each, write the margin you quoted and the margin you realised once every actual cost was in — including the ones that arrived on a supplier invoice weeks later, and the ones that never appear on any invoice at all.

Two things usually fall out. First, an average gap, which tells you how much to inflate your floor so that clearing it means something. Second, a pattern: a client, a product line or a job type where the gap is consistently worse than average. That pattern is worth more than the average, because it is actionable on Monday.

Why it stays hidden

Accounting answers whether the year was profitable. It is not built to tell you which jobs made it profitable and which quietly took from the pile. That question needs the comparison above, and nobody is going to ask it for you.