The High Revenue Low Profit Cycle
You’re working harder than ever, your calendar is packed with clients, and money is flowing into your business account.
Yet somehow, you still feel like you’re running on a financial treadmill, never quite getting ahead.
The brutal truth is that most small business owners are flying blind when it comes to their actual profitability.
You might know your monthly revenue and you definitely feel the stress of your expenses, but the real story of which parts of your business are making money versus draining it remains a complete mystery.
This financial fog creates a dangerous cycle where you keep pouring time and resources into activities that feel busy but aren’t actually building wealth.
Without clear visibility into your true profitability, you’re essentially running your business based on gut feelings and assumptions.
You might be working 60-hour weeks on projects that barely break even while missing opportunities to scale the services that could transform your income overnight.
Does this service based entrepreneur’s story sound familiar?
Let me tell you about Madeline, a former client who owns a carpentry and residential renovations business.
When Madeline first came to me, she was convinced her bathroom renovation projects were her bread and butter because they brought in the biggest checks.
She was booking every bathroom job she could find and turning down smaller repair work to focus on these “high-value” projects.
Madeline was putting in 12-hour days, her bright pink work truck was always loaded with expensive materials, and her invoices looked impressive. But despite all that revenue, she was constantly stressed about money and couldn’t understand why her business account never seemed to grow.
When we dug into her bookkeeping using my Sharp Books method, the reality was shocking.
Those bathroom renovations were barely profitable once we factored in materials, permits, unexpected complications, and the true cost of his time. Meanwhile, the small repair jobs she’d been avoiding were generating nearly 70% profit margins because they required minimal materials and she could complete three or four in the time it took to finish one bathroom.
Help from a professional bookkeeper
As a professional bookkeeper who specializes in helping small business owners gain financial clarity, this is something I see all the time with my clients.
Business owners make critical decisions based on revenue numbers alone, never realizing that their biggest income streams might be their smallest profit generators.
Through our work together with the Sharp Books Method, Madeline completely transformed her business approach. We organized her financial records to track profitability by service type, not just total revenue.
Within six months, she had shifted 80% of her focus to high-margin repair work and selective remodeling projects. Her revenue dropped slightly at first, but her actual profit nearly doubled.
More importantly, she reclaimed her evenings and weekends because she wasn’t constantly scrambling to cover expenses from low-profit jobs.
Revenue versus profit
The difference between revenue and profit isn’t just an accounting concept – it’s the difference between working harder and working smarter.
Three crucial questions every business owner needs to answer
Which of your services or products are actually making you money versus just keeping you busy?
It’s important because you might be spending 80% of your time on activities that generate only 20% of your actual profit. Without this clarity, you’re essentially paying yourself minimum wage to do maximum work.
It’s kind of like thinking you’re getting a great deal on groceries because your cart is full, only to discover at checkout that you’ve been shopping in the expensive organic section all along.
How much does it really cost you to deliver each service when you factor in your time, materials, overhead, and hidden expenses?
It’s important because most business owners dramatically underestimate their true costs and end up pricing themselves out of profitability. Every hour you spend on an unprofitable service is an hour stolen from activities that could actually build your wealth.
It’s kind of like running a lemonade stand where you count the quarters coming in but forget to subtract the cost of lemons, sugar, cups, and the time you spent making each pitcher.
What opportunities are you missing because you don’t have clear financial data to guide your decisions?
It’s important because without accurate profitability tracking, you can’t confidently invest in growth, raise your prices, or eliminate the services that are draining your resources. You’re making million-dollar business decisions with incomplete information.
It’s kind of like trying to navigate a road trip with a map that only shows the highways but not the dead ends, construction zones, or scenic routes that could save you hours.
The path forward starts with getting brutally honest about your numbers. You need a system that tracks not just what money comes in, but where your real profits are hiding and which activities are quietly sabotaging your financial goals.
Stop guessing about your profitability and start making decisions based on data that reveals the true financial story of your business. The clarity you gain will transform not just your income, but your entire relationship with your work.