The day I realised revenue could destroy a business
When I created my business, like many entrepreneurs, I believed growth meant increasing revenue above all. It seemed obvious: a business that sells more should naturally earn more. For a long time, I managed with that logic in mind. More customers, more contracts, more sales.
Looking back, I realise that view was incomplete. It led me to some of the most costly mistakes of my journey as a business owner.
During a period of strong growth, I set ambitious targets for my salesperson. Each month, I expected a higher revenue figure. I followed results closely and applied considerable pressure. My intention was good: develop the business. Yet unintentionally, I had created a system that encouraged selling more rather than selling well.
Gradually, operational teams began raising concerns. Some contracts looked attractive on paper but became problematic in practice. Looking more closely, I discovered the unintended effects of our revenue obsession. To meet targets, the salesperson sometimes offered excessive discounts, accepted complex logistical constraints or agreed to special requests that substantially reduced actual profitability.
I remember orders requiring more than an hour’s drive to serve a small number of low-value meals. The quote showed an acceptable margin. In practice, once fuel, staff time, equipment setup and organisation were included, the profit almost disappeared.
That experience taught me an essential lesson: selling is not an end in itself. What really matters is selling profitably.
A few years later, a second experience reinforced that conviction.
We won a contract worth around one million euros a year—the sort of opportunity an SME dreams of. We studied prices, calculated margins and enthusiastically approved the project. Yet despite our analysis, we had overlooked something fundamental: the cost of growth itself.
We thought increasing production simply meant doing more of what we already did. Reality was very different. Beyond a certain volume, requirements change completely: more staff, equipment, storage and coordination, and sometimes new production processes.
Producing 3,000 units is not simply six times as complicated as producing 500. Sometimes it requires an entirely different organisation.
Very quickly, we had to recruit, invest in equipment, adapt our methods and absorb indirect costs we had not adequately anticipated. The long-term contract had fixed prices, so we could not pass those extra costs on to the customer.
The paradox was striking: revenue rose sharply while profitability fell. Our established activities were gradually financing losses generated by growth.
For a while, nobody saw it. Rising sales make indicators seem reassuring. But behind the apparent growth, value creation was disappearing.
We then undertook much more rigorous analysis: contract by contract, customer by customer, activity by activity. Only then did we identify the segments destroying value rather than creating it.
We corrected some activities and discontinued others. All of them taught us something.
Today, when I analyse a new contract, I look beyond the revenue it might bring. I examine actual profitability, resources, investment requirements and risks for the organisation. I consider how it will interact with other activities and whether our structure can truly absorb it.
That is probably the most important lesson I learned: never analyse a contract in isolation. Examine it in the context of the whole business.
Revenue is attractive because it is visible. It reassures teams, partners and sometimes banks. But revenue alone does not pay the bills. Margins, productivity, cash flow and the ability to deliver contracts profitably are what matter.
Since then, I have been cautious about rapid growth. It magnifies everything: opportunities and mistakes, profits and losses, successes and weaknesses.
The day I understood that, I stopped chasing revenue.
I started pursuing value creation.
Looking back, some of the most important lessons of my career came from mistakes rather than successes.
That is why I share these experiences today. If my journey helps an owner avoid a poor contract, assess a growth project more carefully or ask the right questions before signing, those years of learning will have value far beyond my own business.
It is also one of my missions through JM Conseils: sharing hands-on experience, including successes and mistakes, to help other business owners make better-informed decisions.