What’s your business revenue milestone? Maybe your first six figures. Maybe crossing over into seven. Whatever your number is, I’ll bet it looks good on paper and feels even better to think about it.
And when you achieve it? Heck, it’ll be great to mention this achievement at networking events or drop casually when someone asks how business is going.
But chances are high that you’re not thinking about how much of that money will actually make it into your pocket.
I’ve watched business owners celebrate revenue numbers while simultaneously stressing about making payroll. They’re bringing in more than ever, working harder than ever, and somehow ending the year wondering where it all went. The revenue keeps climbing, but their bank balance doesn’t.
What I want you to deeply understand is that revenue isn’t what you need to focus on.
Chasing revenue will backfire every time
The generic growth playbook looks something like this: get more leads, close more deals, add more products, hire more people. It’s all about more, more, more.
But it only sort of works. When revenue goes up, so do expenses, complexity, and your stress level.
Only roughly 65% of small businesses report being profitable. One in 3 business owners is generating revenue without actually making money! They’re running hard on a treadmill that isn’t going anywhere.
Is it any wonder that so many small businesses fail?
The better metric to track
Revenue measures activity. It tells you how much money flowed into your business, and that’s it. It’s a fun thing to look at. It gives you a sense of success because people are willing to pay for your product or service.
Unfortunately, you can be incredibly busy generating revenue while barely breaking even. Or worse, operating at a loss, you don’t even see often until it’s too late.
I once met a business owner who was thrilled to be pulling in a nice, fat 5 figures a month. But very little of it made it to her pocket at the end of the year. She desperately needed a profit strategy and not more customers.
The better metric to track is profit. Profit is what’s left after you’ve paid for everything it took to generate that revenue.
It takes things like salaries, software subscriptions, and shipping costs to get money flowing into your business.
Profit is the money you can actually use to pay yourself fairly, to reinvest strategically, and to build a financial cushion.
I love this saying: “Revenue is vanity, profit is sanity.” Vanity metrics make you feel successful. Sanity metrics tell you whether you really are.
What most business owners don’t realize is that revenue and profit don’t move in lockstep. You can double your revenue and barely move your profit margin. You can even double revenue and make less money than before, once you account for the additional costs required to generate all that new business.
What really drives bankable revenue
Business revenue results from multiple factors working together.
When you stop to think about what has to happen for money to flow into your business, you’ll recognize that…
You need qualified leads, the right people finding you in the first place. Then several of those leads need to move from curious to genuinely interested. Some of those interested prospects become paying clients. Those clients stay (or they don’t). When they do buy, they spend a certain amount. And they buy at a certain frequency over time. You need to consistently attract and retain ideal clients and not just one-time buyers.
Each of these factors impacts the others. If you want to increase how much of your revenue actually becomes income, focus on improving your overall business performance, not just top-line growth (aka revenue).
What this means is that if you make small improvements in many of these areas, you can achieve disproportionately large results.
It’s exciting to contemplate, isn’t it?
However, none of that matters if your costs eat everything you generate.
Q: What’s the difference between revenue and profit in a small business?
A: Revenue is the total money your business brings in. Profit is what’s left after you subtract all costs. Most business owners focus too much on growing revenue and ignore what matters: how much they actually keep.
The profit equation most owners ignore
Costs get treated like background noise. They’re ignored.
You’ve got to pay attention to your costs, both fixed and variable.
Fixed costs: Stay the same no matter how much you sell, but tend to increase as your revenue grows. Think things like salary, rent, and insurance.
Variable costs: Rise with sales, but can be controlled. You can negotiate better rates, improve efficiency, and reduce delivery waste.
Why most owners can’t see their own profit leaks
Everything I just described probably makes sense to you. Revenue versus profit. The levers that drive it. The costs that erode it.
But if there’s one thing I’ve seen again and again working with business owners, it’s that understanding the math doesn’t mean they can see where their money is going.
How about you? Are you too close to your own numbers? The expenses that should jump out at you have become invisible because you’ve been looking at them for years. The pricing you should have raised feels risky because you remember when you set it and why. The clients who drain your margin don’t feel unprofitable because you’ve rationalized the relationship.
This is how smart business owners stay stuck. Even when they know what to look for, most owners miss the profit leaks hiding in plain sight.
The real question
Growing revenue feels like progress. Sometimes it is. But the question that actually matters isn’t “How do I make more money?”
It’s “How do I keep more of the money I’m already making?”
When you shift from chasing revenue to building profit, something changes. The pressure decreases. The decisions get clearer. The business starts working for you instead of the other way around.
That’s revenue you can take to the bank.
Now you know the difference between vanity metrics and real profitability. If you’re ready to stop chasing more and start keeping more, download The Business Growth Plan. It gives you real-world, no-cost and low-cost strategies to grow profit and not just revenue.
