Managing the Margins: More Than Just Profit

I'm writing this from Alyeska Ski Resort in Alaska, where it is -10 degrees on the mountain and the wind is making sure you know it. It’s serene here. I’m next to a moose mount hanging above a fire place and drinking Kaladi’s coffee. And yesterday was pretty awesome on the mountain. I’ve had the privilege of traveling to some amazing places in the world. I don’t know if it is nostalgia from skiing here growing up, or reality, but you just can’t beat it here.

Skiing Alyeska is a little different than skiing down south. Not too long ago, I skied Breckenridge and it was refined, smooth, and expansive. Alyeska is a little more rustic and narrow. It’s steeper in places and not always forgiving. At times, you look like if you ski fast enough you could fly into the ocean inlet below. It can be icy, unpredictable, and majestic at the same time. The night skiing…The spring skiing. Pretty awesome. And as compared to many other mountains, Alyeska simply has less margin for error.

I've watched good skiers move through it with confidence and grace — not because the mountain is easy for them, but because they have enough margin built up in their skills and experience to absorb what it throws at them. Less experienced skiers get humbled quickly, because here the margin for error simply isn't generous. You best figure out the ski signs.

Now that I live in the south a lot of people ask me what its like living in Alaska. Alyeska is a microcosm of the broader answer. When I think about it, it comes down to margin. Alaska is amazing. But at times, the environment can be unforgiving; the margin for error is small. So if unprepared, untrained, or inexperienced, problems could surface.

The River That Demands Everything

Not long ago, I read the book, “The Rise of Roosevelt.” Long book, but was worth reading about the man who lived in the arena. Overcoming obstacles, finding new challenges, and living courageously; he certainly pushed the margins. The hardship he chose helped develop his ability to withstand hardships he didn’t. This isn’t in the book, but in 1914, at the age of 55, he decided to go into another environment where the margin for error was low; the uncharted rivers in the Amazon called Rio da Duvida. The River of Doubt - name might have been a clue.

The jungle there ate their lunch. They lost supplies, and worse yet, they lost men. Roosevelt developed a severe infection and fever and at one point, thought there was no way out. He eventually made it out, but forever impacted.

When you think about a guy that seemed uniquely prepared for an adventure like that, Roosevelt might have been that person. He built a lifetime of mental and physical reserves by ignoring comfort. And in that environment, it was barely enough.

The point I see is that the margin we have in a crisis is the deposit of everything we did when there was no crises.

What Margin Actually Means

In business we talk about margin almost exclusively in financial terms. EBITDA margin. PTNI margin. Gross margin. And so on. These metrics matter enormously — but if they’re the only margins you’re managing, you’re reading one instrument on a very complicated dashboard.

For leaders, margin is a much broader concept. It is the space between where you are and where things break. Roosevelt didn’t just have physical margin going into the Amazon — he had mental margin, emotional margin, reserves built across a lifetime of deliberate discomfort. The experienced skier at Alyeska doesn’t just have technique — they have instinct, fitness, and the ability to read terrain before committing to it. The margin that saves you is rarely just one thing. It’s the sum of everything you’ve built across the spectrum of your preparedness.

The same is true in business.

In my current role, from day one through present, we’ve worked hard to diversify our portfolio away from dangerous revenue concentration into a much healthier position. A company can have strong profit margins and still be one customer, one contract, or one industry shift away from serious trouble. If 90% of your profit flows from a single source, the distance between your present reality and real damage is razor thin. That distance — that gap — is margin too. And when it disappears, it disappears fast, the same way a comfortable ski run can turn on you when the terrain changes and you have nothing left to draw on.

This extends beyond revenue. Redundant systems, leadership depth, supplier diversity, cash reserves — these are all expressions of the same principle. When I evaluate a business for potential acquisition, I’m looking at margins broadly: financial margins, diversity of revenue and profit streams, operational redundancy, preparedness for a downturn, reliance on one or two key people. A business that looks healthy on a P&L but fails the other tests is a business with almost no margin. It’s running at risk. And running hot is how catastrophic failures happen — ask the engineers who tried to stop the Challenger launch and were told to put their management hat on instead of their engineering one. The margin for honest dissent was gone before the margin for safety ever failed.

And then there’s the one margin that rarely shows up in any business review at all — the personal one. If you have built your entire identity into your role or your title, with no relationships outside of work, no hobbies, no space that is just yours, what happens when the business hits a wall? Because it will. The environment always shifts eventually. Alaska teaches you that. The question is whether you have anything left to stand on when it does — or whether you’ve poured every last reserve into the job and left nothing for yourself.

Competent leaders are prepared leaders. They understand that margin management is not a finance function — it’s a leadership discipline. It’s how you build resilience, sustain performance over the long term, and create the kind of business that can weather what’s coming without knowing exactly what that is. Margin may not show up cleanly in a shareholder report, but it is what protects and ultimately creates the value that does.

What margins are you actively protecting right now — and which ones have you quietly let erode?