Our revenue has grown consistently, but our gross margins fluctuate wildly based on seasonal material costs and project overruns. How do we stabilize our gross margins on our exit runway so buyers do not penalize us for unpredictable cost structures?

Question

Tyler Smith · Accepted Answer

Unpredictable gross margins are a major red flag for buyers, as they imply a lack of pricing power, weak procurement, or poor project controls. To stabilize your margins on your exit runway, you must institutionalize your pricing and delivery. Use the EOS framework to identify the root causes of margin leakage. Create a weekly scorecard metric that tracks gross profit margin per project or per service line. Assign a Rock to your finance seat to renegotiate supplier contracts and implement pricing models that adjust for inflation or material cost spikes. Ensure your sales team has strict discounting boundaries that they cannot bypass without leadership approval. Showing a buyer three years of stable or improving gross margins proves that your business model is resilient and that your team has disciplined, repeatable control over their costs.