You’ve grown the business you built, and there’s still no more money left at the end of the year.

That’s not because you’re doing anything wrong, and it’s probably not tax. Your turnover gets looked at every week, and your profit usually gets looked at once a year, so it can be a year or more before anyone sees the profit growth is not as expected. This is operational and structural, and it is definitely fixable.

Where’s my profit growth?

Five questions, two minutes, no cost.

Turnover’s up, you’re working harder than ever, and the profit hasn’t followed it

“I am working harder than ever and revenues are growing. But for some reason we’re just not making any more money at the end of the year, and I don’t really get it.”

Every week, the turnover tells you the business is growing.

“I’m buoyed up and I’m given confidence that the actions I’m taking are doing the right thing to ultimately grow my business. And revenue... It’s going up. Why wouldn’t I be happy?”

“I’m excited. I think I’m doing the right things.”

“My revenue target, which is in my weekly metrics and my monthly metrics, is showing me great direction.”

Then the accounts land, usually once a year, and tell you something else.

“It can’t be right, can it, that I’ve made more revenue. It’s felt like I’m working harder and it’s felt like the business is growing. And yet, ultimately, we’ve made the same or less than the year before.”

“I think there’s just more tax and charges in the system.”

“I’ve looked at my costs, but I don’t see anything that can drop.”

None of that is unusual, and none of it means the business is in trouble. You’re doing what owners do, which is bringing the revenue in, and every week the numbers tell you it’s working.

Here’s why you don’t see it until the end of the year

Your turnover gets looked at every week. Your profit usually gets looked at once a year, when the accounts are done, and it’s normally your accountant who tells you. So if the growth has cost more than it’s brought in, you won’t know for a year, and it often takes two years before it really registers, because in the first year you think you’ll see the benefit in the second.

Some of that growth will have cost more to win and more to deliver than the work it replaced. It might have come through a part of the business with a smaller margin, or needed discounts, delivery, advertising, new software or more people to get it done. Those costs land in different places in the accounts from the revenue they brought in, so nothing in the numbers you watch every week ever connects the two.

That’s why selling more of the same doesn’t fix it, and it can make it worse. Nobody has been measuring what the revenue actually costs, so nobody was ever going to see it.

Turnover: looked at every week

Profit: looked at once a year

None of this is because you’re not good at running the business

A lot of business owners I speak to are in exactly this position, and it has nothing to do with you not being a great business owner. This is not about how hard you work, and it is not about how hard your team works, if you’ve got one. This is operational and structural, and it is fixable.

I’m not going to tell you to cut everything back or to go out and sell more. You’ve probably been through the costs already and found nothing obvious to drop, and you’re probably right.

What changes is what you measure, and how often. Once you can see what each part of the business costs against what it brings in, every month rather than once a year, it becomes clear which revenue is worth having and which isn’t. Then you can stop paying to win the revenue that loses you money.

I won’t promise you a fast number. The tracking goes in first, and the first figures worth trusting usually land two to three months later.

I’ve seen this happen in my own business

I owned a retail business for nine and a half years, with a physical shop and an online store. We moved from small premises to larger ones, which I paid for with my own money. We were a profitable business when we moved, not very much, but we were profitable, and our first full year in the new shop, 2018, was the best year we’d ever done.

In 2019 we were really putting the energy and effort in, particularly into the website, and revenue went up. But it went up on the online side, which had a smaller profit margin, and it brought delivery, discounts to win the business, advertising, the upkeep of the new website and money paid to affiliates with it. Whilst my revenue was bigger, my ultimate profit was lower, because I was giving stuff away to win that revenue.

Because I tracked my profits monthly, it hit me after about six months rather than at the end of the year. After that, I started to meticulously question whether the revenue growth I was going after was ultimately worth it. I worked out how much of each part of the revenue actually turned into profit, and I learned that vanity does not create a living.

Alongside that, I’ve spent 20+ years leading operational improvement across UK and international finance and retail, so I know what it takes to put that kind of tracking in, in a big business and in a small one.

Can we get the growth to show up in your profit? Give me two minutes and let’s find out

Five questions about your business and how you keep track of it. You’ll get a score out of 15, some pointers as to where the growth might be going, and the first thing that might be worth changing.

It won’t tell you your margin, and it won’t fix anything by itself. What it will tell you is whether the way you track the business is the reason you can’t see where the money’s going, and if that’s something you can change.

Where’s my profit growth?

No cost and no obligation.

Who this is for

Owners of profitable businesses in the UK and Ireland.

You’re the owner, the turnover has gone up over the last couple of years, and the profit hasn’t followed it. You might have a team, you might not. You see your turnover every week and find out what you actually made once a year, usually from your accountant. You want to know where it’s going before another year goes the same way.

Who this isn’t for

This is not for startups, or for a business that is not making a profit yet.

It is not for a business that needs money this month. If cash is the problem right now, this is the wrong kind of help.

It is not for employees looking at somebody else’s numbers. This is for owners.

It is not for anyone chasing a bigger turnover number for the look of it, when they already know the profit hasn’t moved.

And it is not for anyone who wants the books done for them. That’s your accountant’s job. This is coaching, so you end up with something you run yourself.