Operating margins refer to a company’s profit performance in relation to its sales performance. Margins are expressed as a percentage to allow for easy, meaningful comparisons of financial performance.

Two operating margins that are crucial to managing a growing company with precision are the gross profit margin and the operating income margin.

Venture capital funds prefer to invest in companies with the long-term potential to deliver gross profit margins that exceed specific industry averages and operating profit margins within a 15% to 25% range. During the early years of a high-growth company, margin expectations are more forgiving as a company invests to build market share and operating capacity.