«I did €100,000 last year» sounds great. But it answers the wrong question. The real one is: how much of it did you keep? That is where a lot of owners discover they work hard to earn very little.
Revenue: what you take in
Revenue is the total of everything you sell. It is the biggest, most visible number — and the one that misleads, because it says nothing about what those sales cost you to produce.
Profit: what is left
Profit is what remains after you have paid for everything: materials, rent, tools, contractors, whatever you owe the authorities where you operate, and your own time. A simple example:
- Revenue: €100,000
- Total costs: €80,000
- Actual profit: €20,000 (not 100,000)
Two businesses with identical revenue can end up with completely different profit. The one that keeps its costs under control wins, even selling exactly the same amount.
Tax and social contributions belong in that cost list too. The rules and rates depend on where you are and how you are set up, so we will not pretend there is a single number here — but the principle holds everywhere: set money aside before you spend it, and judge the year on what is left after that, not before.
Why «selling more» sometimes makes you less money
If growing revenue means taking low-margin jobs, hiring in a hurry or buying more stock, costs can rise faster than sales. The result: more money in, less money kept, and you are more tired on top of it. Growing without watching your margin is a trap.
The 3 numbers to check every month
- Revenue — what came in.
- Margin — what is left on each sale after the direct costs.
- Net profit — what is left at the end of it all.
Track only the first and you do not really know how you are doing. Track all three and you see where you are losing money before it hurts. Once you know them, the next step is working out your break-even point: the minimum revenue that covers all your costs.
Vanteo keeps these numbers for you over time and tells you what to change to grow the profit, not just the revenue. Related: how to set the right price.