How to Know if Your Business is Truly Profitable (and Why Revenue Alone is Misleading)
- Kelsea Koenreich
- 5 hours ago
- 5 min read
As entrepreneurs, we love to celebrate milestones.
The $10K month. The $100K launch. The $1M year.
And while those numbers can look amazing on Instagram graphics, here’s the truth most business owners don’t want to admit: revenue doesn’t tell you if your business is healthy. Profit does.
In fact, I like to say:
Revenue is vanity. Profit is sanity.
Because at the end of the day, it doesn’t matter how much money you make if you’re not keeping any of it.
In this article, we’ll break down:
Why profitability is the true measure of a business’s health
How to calculate your profit margins
The 3 key questions every CEO should ask to assess their financial stability
Common “profit killers” draining your business (and how to fix them)
Why women entrepreneurs, in particular, need to talk openly about money
A step-by-step audit you can do in less than 10 minutes to check if your business is profitable enough
This is about more than spreadsheets.
Profitability is about freedom, stability, and building a business that supports your life—not one that drains you.
Why Profitability Matters More Than Revenue
Revenue will tell you how big your business looks. Profit will tell you how healthy it actually is.
You can run a multi-million-dollar company and still feel broke if your expenses eat everything you bring in. Profitability is what creates the margin for breathing room — the ability to save for taxes, invest in growth, and pay yourself without stress.
Revenue is the vanity metric. Profit is the freedom metric. And until you focus on profit, you’ll always feel like you’re hustling just to keep up.
Revenue vs. Profit: What’s the Difference?
For clarity, let’s define terms:
Revenue = All of the money coming into your business before expenses.
Profit = What’s left after you subtract expenses (including your own salary).
Example: If your business brings in $50,000 in revenue this month but your expenses (team, software, rent, marketing, payroll, etc.) add up to $48,000, your profit is only $2,000.
That’s just a 4% profit margin. And while you “made” $50K, the reality is you barely broke even.
What is a Healthy Profit Margin?
Profit margins vary by industry, but here’s a helpful guideline:
30–50% profit margins → Strong and healthy
20–30% profit margins → Manageable, but room for improvement
Below 20% → A red flag you need to make changes
For my clients, I don’t like to see anything below 30%. That margin allows for stability, choice, and overflow—because your business should do more than just cover the bills.
3 Profit Benchmarks Every CEO Should Measure
Numbers don’t lie — and the right ones tell you whether your business is thriving or bleeding cash. Here are three benchmarks to check right now:
Profit Margin: Are you keeping 30% or more of what you earn? This ratio reveals if your model is truly sustainable.
Owner Pay: Are you consistently cutting yourself a paycheck? If not, you’re working for free — and that’s not a business, it’s a trap.
Predictable Revenue: Do you have recurring or retainer income? Without it, cash flow will always feel like a rollercoaster.
Think of these like your vital signs as a CEO. If any are weak, it’s time to adjust before the business flatlines.
4 Silent Profit Killers Draining Your Business
Even when sales look good, profits can vanish thanks to hidden leaks. The biggest offenders I see?
Scope Creep: Doing unpaid extras that eat time and payroll.
Low Pricing: Staying at old rates while your costs climb.
Subscriptions: Paying for tools and software you rarely use.
Team Gaps: Misaligned roles and unclear delegation that create inefficiency.
Plugging these leaks can instantly boost your bottom line — without needing a single new client.
Why Women Entrepreneurs Need This Conversation
Historically, money conversations have been dominated by men. Ten years ago, most books about building wealth or scaling companies were written by male entrepreneurs.
Thankfully, things are shifting. More women are openly sharing their financial wins and breaking the taboo around money. This matters because:
It normalizes ambition for women in business.
It helps us see what’s possible when we claim financial success.
It challenges the scarcity mindset many of us grew up with.
Still, comparison can creep in. When you see another entrepreneur celebrating her “$100K month,” it’s easy to feel like you’re behind.
But here’s the truth: your capacity, your season of life, and your definition of success are uniquely yours.
For me? That means working an average of 25 hours a week while my kids are in school, prioritizing my health, and being present with my family. That balance matters as much as my revenue goals.
The key is to define success on your own terms—and build a business model that aligns with it.
How to Perform a Quick Profitability Check
Ready to see where you stand? Here’s a simple 10-minute audit:
Pull your last 3–6 months of P&Ls.
Calculate your profit margin. Divide net profit by revenue.
Check your margin. Are you keeping at least 30%?
Review your pay. Are you consistently paying yourself your “dream number” (the take-home amount that gives you freedom and flexibility)?
Evaluate predictability. Do you have recurring revenue or reliable payment plans built into your model?
If you’re falling short in one or more of these areas, you have clarity on where to focus next.
Steps to Increase Profitability in Your Business
Here’s how to strengthen your bottom line without adding more hours to your plate:
Audit your pricing. Raise rates where necessary and align offers with the real value you provide.
Streamline your offers. Cut or repackage services that drain resources and focus on high-margin offerings.
Audit expenses quarterly. Eliminate wasteful tools, subscriptions, or duplicated services.
Tighten team roles. Ensure every team member is working in their zone of genius and that tasks are delegated efficiently.
Add recurring revenue. Whether it’s retainers, memberships, or payment plans, stability reduces stress and increases profit predictability.
Track data. Review numbers monthly to make decisions based on reality, not gut feelings.
Why Profitability Is About More Than Money
Profitability isn’t just about the numbers. It’s about the life your business allows you to live.
Are you paying yourself enough to enjoy the lifestyle you want?
Are you able to take time off without panicking about cash flow?
Are you building a business that supports your family, your health, and your future?
Overflow is your birthright. You deserve to have more than “just enough.”
Don’t Avoid the Numbers
It’s easy to stay busy serving clients and checking tasks off your list while ignoring the financial health of your business. But avoidance won’t protect you—it just keeps you stuck.
Clarity is power. When you know your numbers, you can make decisions with confidence. You can course-correct when needed. And you can finally create the freedom and abundance you started your business for in the first place.
So ask yourself:
Am I truly profitable?
Am I paying myself enough?
Am I building overflow, not just survival?
If you don’t like your answers, the good news is this: you can change it.
Join My Free Masterclass
If you’re ready to raise your profit margins and actually keep more of what you earn, join me for my upcoming live masterclass on September 24th: Your Most Profitable Quarter Yet.
Inside, I’ll show you how to:
Clean up your pricing and offers
Increase sales without adding more hours
Create a quarterly plan that drives both revenue and profit
This is about building a business that pays you well and supports your life—not one that drains you.
