Business and Startups2 min read

Revenue

Total income before costs

It's the money that comes into your company from sales, before subtracting expenses. It's not profit. If you sell 100 products at $50, your revenue is $5,000 even if your costs are $4,000.

How to explain revenue vs. profit to your team?

Say: 'Revenue is everything we sell ($100K). Profit is what's left after costs ($20K). We can have high revenue and low profit if we spend a lot. The goal is to grow both, but profit is the real health.'

Real examples

Celebrating revenue milestone

Instead of: 'We achieved $1M in sales.' Better: 'We achieved $1M in annual revenue. With 30% profit margin, we generate $300K in profit. Revenue shows demand, margin shows sustainability.'

Investor asks about unit economics

Instead of: 'We sell a lot.' Better: 'Revenue per customer: $500/year. Acquisition cost: $100. Service cost: $150/year. Each customer generates $250 in profit. Revenue grows, and it's profitable.'

Team confuses revenue with available budget

Instead of: 'We have $50K, we can spend.' Better: '$50K is revenue this month. After operating costs ($35K) and salaries ($40K), we have a deficit. Revenue is not available cash.'

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