Many business owners feel happy when revenue increases. And yes, growth is good.
But here’s the truth most people learn the hard way. Revenue is vanity. Profit is reality.
A business can earn ₹10 lakh per month and still struggle to pay bills. That’s why the real question is not only “How much did we sell?” The real question is “How much did we keep?”
Revenue is your total sales.
For example, if you sold products worth ₹5,00,000 this month, then ₹5,00,000 is your revenue.
Revenue helps you understand market demand, sales performance, and your growth trend. But revenue alone does not tell you whether you are actually making money.
Profit is what remains after your costs and expenses.
There are two important types of profit every small business should know.
Gross Profit = Sales minus Product Cost
Gross profit shows your margin strength. It tells you whether your pricing and product cost are working in your favor.
Net Profit = Gross Profit minus All Expenses
Net profit shows what you actually keep after paying rent, salaries, marketing, delivery, and all other running costs. Net profit is the real goal.
Sometimes revenue grows but profit falls. This is more common than people think.
One reason is discounts. You sell more, but at lower margins, so the business looks busy but the money doesn’t stay.
Another reason is rising costs. Supplier prices go up, but your selling price stays the same, which slowly kills your profit.
Marketing can also become a problem. Sales may increase, but if your advertising cost doubles, your profit may drop even with higher revenue.
And then there are operational expenses. Rent, salaries, delivery, packaging, and other costs often rise silently in the background. So revenue goes up, but the business still feels tight.
Instead of asking, “How much did we sell?”, start asking, “How much did we keep?”
Revenue gives confidence. Profit gives stability. Cash gives survival.
If you want to build a business that lasts, don’t chase revenue alone. Track profit consistently and make decisions that protect your margins.