“Someday this will all be yours,” I said, waving my hand across the aisles of the Piggly Wiggly. I was trying to ingratiate myself with my boss, the general manager for the biggest grocery store in Clarksville, Texas. He just smirked and shook his head. “For every dollar in sales, how much do you think this stores earns in profit?”
At the time I was taking high school economics and considered myself something of a financial savant because I knew the difference between stocks and bonds. Still, I was in full-on toady mode and thought it best to undershoot what I believed the true profit margin to be. I went with a safe number that I knew must be far too low. “About forty cents?” I asked.
“One cent,” he said. “For every dollar we put in the cash register we keep about one penny in profit.”
I was stunned, both by the skimpy profit margin and by my astoundingly shoddy ability at financial estimation. Unfortunately, I wasn’t alone. A poll taken last year asked a random sample of American adults, “Just a rough guess, what percent profit on each dollar of sales do you think the average company makes after taxes?” The average response was 36 percent.