Find the margin that is already in the business
A diagnostic pass on unit economics, gross margin by segment, customer and product profitability, and owner perks. Most $2M to $50M companies are 300 to 800 basis points of margin away from their real profit number. The work is finding which 300 to 800 and installing the discipline to keep it.
The Challenge
The P&L says gross margin is 42 percent. You have believed that number for three years. But the blended average hides the truth. Some customers are 58 percent margin and some are 18. Some products are profitable and some are subsidized. Some service lines are paying for themselves and some are paying for other service lines. The owner is running meaningful personal expenses through the business that mask the real operating margin. No one has run the numbers at the customer, product, or service-line level in two years, and decisions about pricing, discounting, and new hires are being made off the blended number that does not exist in the real business.
You do not have a revenue problem. You have a measurement problem. The margin is already in the business. You cannot see it because the P&L was built for tax compliance, not for operating decisions.
Our Approach
We run a diagnostic pass on the actual economics of the business: gross margin by customer, by product, by service line, and by channel. We separate fixed costs from variable costs cleanly. We identify and quantify owner perks, one-time items, and non-recurring expenses so you see the true operating margin, not the tax-presented one. We build an adjusted EBITDA bridge that reconciles the P&L to the real economics, the same way a quality-of-earnings review does before a sale.
Then we turn the diagnostic into action. The output is a prioritized list of where the margin is hiding: the three customers whose pricing has drifted below cost, the product line subsidizing a different product line, the service offering whose true margin is negative once loaded costs are applied, the pricing changes that move the blended number by 200 to 400 basis points. We stay through the implementation, not just the diagnosis.
What You Get
- Gross margin breakdown by customer, product, service line, and channel
- Fixed versus variable cost separation with explicit assumptions
- Owner perks and non-recurring items quantified and documented
- Adjusted EBITDA bridge reconciling P&L to true operating economics
- Customer profitability ranking with action recommendations
- Pricing analysis showing drift between list, sold, and realized rates
- Prioritized margin improvement list with estimated basis point impact per action
- Implementation support through pricing changes, customer renegotiations, and cost adjustments
Engagement Model
Diagnostic phase runs 4 to 6 weeks. Implementation phase runs 8 to 12 weeks thereafter, depending on scope. Can run as a standalone project, as part of Fractional CFO, or as preparation for a capital event where adjusted EBITDA accuracy matters. Month-to-month with 30-day notice during implementation.
Who It's For
Built for $2M to $50M companies where gross margin has been flat or declining, where the owner suspects the true economics are different from what the P&L shows, or where a capital event is on the calendar and adjusted EBITDA needs to be defensible. Typical triggers are a missed margin target, a buyer or lender asking for an adjusted EBITDA bridge, a new product line being considered, or a pricing decision that leadership cannot defend with current data. We are not the right fit for companies where the P&L is already broken out by segment, owner perks are already quantified, and customer profitability is already tracked. Those businesses do not need this project.
Related Services
Financial Planning & Analysis
Driver-based FP&A built to run the business, not to sit in a deck. Rolling forecast, variance commentary, and monthly reporting pack on a standing cadence.
Learn more →Revenue Cycle Optimization
Tighten the cycle from sale to cash. Billing accuracy, collections discipline, DSO reduction, and revenue recognition that stands up to an audit.
Learn more →Strategic Finance Advisory
Project-based finance leadership for a fundraise, sale, audit, or refinance. Institutional-grade work product on a defined timeline.
Learn more →Frequently Asked Questions
Ready to Get Started with Profitability & Margin Analysis?
Schedule a complimentary consultation and we will map out a practical financial plan tailored to your goals.