In Deal Note 183, we discussed the importance of gross margin management. Today, we focus on a related topic: margin visibility by product or service.
Many founder-owned aerospace and defense companies maintain strong overall profitability, yet margin data is often summarized only at the company or division level. This can make it difficult to pinpoint pricing issues, production inefficiencies, or underperforming customers.
Maintaining clear visibility into gross margins by product or service demonstrates disciplined cost control and pricing power, two hallmarks of a well-managed business. It also enables buyers to identify where profits are concentrated, determine which programs are critical to the company’s success, and eliminate unprofitable accounts.
Refining gross margin tracking is a relatively low-cost initiative that delivers meaningful benefits in both day-to-day management and the sale process. While this may take time and refinement of your existing operations or accounting policies, improving margin visibility not only enhances decision-making in the current business, but also strengthens buyer confidence.
Have a great day everyone,
Troy Medeiros
Vice President
