The idea

Your company can be drawn.

A margin graph is a picture of where every euro of a sale goes, in the order it leaves, measured against the money that is actually yours. It is made from figures you already have. Almost no small company has ever seen its own.

Every owner has sat in the meeting. The accountant walks through the annual accounts, the words are all English or all Dutch, and none of it lands. Most people conclude they are bad with numbers.

They are not. The numbers are in the wrong order, measured against the wrong base, for a different reader.

A profit and loss account exists to arrive at taxable profit, in a sequence the law prescribes, for the tax office. It does that job properly. But the figures you need to steer a company are not the figures your bookkeeper gives you. Not worse figures, not wrong ones. The same ones, rearranged.

That rearrangement is a margin graph. Two moves, both simple.

The three principles

01Turnover is not your money

What you bought and resold was never yours. It passed through your account on the way to a supplier. Gross profit, what is left after buying, is the first money that actually belongs to you. So every cost should be measured against that, not against turnover. Measured against turnover, every cost looks small, because you are dividing by money that was never yours to spend.

02Sort costs by distance from the sale

Your ledger sorts costs by account number, which is the order a bookkeeper files them in. A margin graph sorts the same costs by how close they sit to the sale: what it cost to buy, to deliver, to win the order, and to keep the company standing. Four steps. Each one fails differently, each one is fixed differently, and each one belongs to a different conversation: your supplier, your logistics partner, your marketing, yourself.

03Your only honest benchmark is your own last period

Industry averages mix a barber, a wholesaler and a software company into one number, dominated by firms a hundred times your size. We do not use them. The comparison that cannot lie to you is your own company against your own company, one period earlier, measured the same way both times. Which step widened, by how much, and what that costs at your turnover.

What one looks like

A real quarter at a real trading company, anonymised. Turnover came in 46% under budget. In euros, every cost line sat close to plan, so the accounting package flagged nothing. Drawn as a margin graph, the same quarter reads:

Of every euro kept after buying

Fulfilling the order: was 1937 cents
Winning the order: was 35 cents
Running the company: was 4173 cents
Left over: −15 cents

One line tells the story. Fulfilment nearly doubled its share while staying on budget in euros: a contract that did not notice the company got smaller. That is not a cost problem, it is one phone call, and it was invisible in the ledger order.

The three rules we hold ourselves to

An idea about honest numbers only counts if the product is held to the same standard.

The arithmetic has to close first

Before anything runs, every subtotal in your file is added back up from the lines above it. If one does not reconcile, we name the cell and ask. We never quietly decide what you meant.

Every figure carries its workings

Each amount in a report comes with the sum that produced it, so you can redo it in ten seconds. A number you cannot check is a number you should not act on, including ours.

The analysis runs before the payment

You see what we found, and how much it is worth, before anything is for sale. Under €90 found, no payment screen appears. The guarantee is the order of operations, not a refund policy.

Where the idea comes from

None of it is invented here, and we would distrust it if it were. Sorting costs by contribution is management accounting older than the computer. Measuring people against gross profit is Greg Crabtree's labour efficiency ratio. Refusing benchmarks that were not measured on companies like yours is ordinary statistical honesty.

What MarginGraph adds is the part that never got done: a machine that reads the file you already have, draws the graph, and points at the step that moved. The method was always available. It just cost a consultant's day rate, so almost nobody at €2m turnover ever saw it. Now it costs €9, and the first look is free.

The longer version, with worked examples for goods and services companies, is in the guide on where your margin actually goes.

See your own margin graph

Send the profit and loss account you already have. We draw the graph, run the analysis, and show you what we found before anything is for sale.

Send your figures