That is a LOUSY return. You'd be better off putting the money in a savings account in the bank.
I do not know your industry well, but in mine (Marketing Agency) I aim for a net profit of 15% after paying corporate taxes, wages and all overheads.
Dear Fledgling Entrepreneur,
Cheers to making a profit! Industry statistics are everywhere for you to find. I think you'll see anything above 6% and below 30% would be better. Running a business is difficult and you have cashflow. This is great. Now it's time to look at inflow and outflow to make massive improvements.
Here's one direction to go next - call me and we'll discuss.
1. Get financial controls - particularly with an Income Statement. Use it to see the particular activities (expenses) that are bringing in the revenue the most. You are spending money in certain areas to earn the most money -- so make decisions to exploit that insight. Think about the 20% of action that is bringing the 80% of revenue.
2. Fully utilize an online presence. An online presence is a 24/7/365 store, sales tool, lead generator...it never sleeps and is always open. As a marketing channel, it has one of the best ROIs - this is my specialty. Use this to your advantage and you will find that leveraging the Internet will increase your bottom line. Call me up and we can discuss all the opportunities available to generate immediate cash.
In my opinion it should be bit greater than 1.6%. Manufacturers, retailers, and the service industry use this as a measure of the profitability of individual goods and services. / revenue x 100 = gross profit margin. “Cost” in this equation, also known as prime cost, is the total cost of materials and labour required to provide a service or manufacture a good. Only direct materials and direct labour are to be considered here. Indirect materials and indirect labour are important operating expenses to track, but they are not part of the gross profit margin calculation. Direct materials can be tricky to add up, and there is a lot of variation between operators. The total direct materials cost in our example is $149.33. A single-unit crown gives us an 86% gross profit margin. Put another way, 86% of our crown fee is our profit after paying for our assistant’s time and our crown materials.
You can read more here: https://www.dentaleconomics.com/practice/article/16389638/gross-profit-margin-an-underutilized-tool-in-managing-profitability
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath