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How to Negotiate by Chloe Askwith

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15. Your Profit Margin and Cash Flow

HAVING A GOOD grip on your finances is really important in deciding both how much you can pay for a product and on which areas of your deal you are going to try harder. A first step is to understand your profit. Here is a good explanation from Emily Coltman, chief accountant at FreeAgent:

“For a service-based business, profit margin is a key metric. A business’s profit is its income less all its day-to-day running costs, such as the cost of travelling to visit clients, or buying a new power pack for your computer. The profit margin is the profit divided by the sales and is usually shown as a percentage, for example a business with £100,000 worth of sales in a year and £75,000 worth of running costs has ...

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