π€ Quality Sleep and πΈ Quality Margins Check-in!
I announced in December my theme for 2026: Sleep + Margins.
To keep it front and center, I'm making it an entire section of the newsletter. Thanks for following along!
SLEEP:
I thought I had done, but then my family and I got a new puppy. instead of details, you can see this adorable picture of the two blockers to a full night of sleep.
MARGINS:
What margins matter most? It depends on your business and your goals. This past week, a few things came up that I wanted to share.
1) One of my clients in the process of refinancing debt with alternative lenders. On a call with a potential lender, there was an explicit question about gross margin by product line. If you have multiple products or services and can tie cost to each of those individually, I reccoemnd keeping that clear in the P&L. In this instance, all the COGS are labor so they don't distinguish and that's okay. The lenders understood. Do what is best for your business when the data is clear, and know how to explain it externally. I personally, still want to see those margins by product.
2) Splitting labor between COGS lines and OPEX can be a challenge For another client, we discussed what labor should go into COGS, R&D, and Overhead. Their business is small, in these instances, sometimes it's not worth the effort to do allocations of labor between buckets. Instead I recommend splitting people into departments on your payroll software and then allocating those or detailing what vendors should go into each bucket, but not doing much more than that unless there's a very compelling reason.
β