Why Chasing More Sales Can Kill Your Business if You Ignore Margins
Every business, from the neighborhood pizza shop to national tech firms, has fallen for the trap—chasing more sales without thinking about whether those sales actually make money. Imagine a store manager exclaiming that sales “are up 25%!” only to realize a month later there’s still barely enough cash to pay bills. The solution isn’t just to sell more, but to sell smarter. This means understanding the difference between revenue—the total money coming in—and margin, the real money left over after covering direct costs. For a surprising number of businesses, big sales numbers can be a mirage: low-margin work can suck up time, capital, and whole weekends while delivering little real gain.
Start by listing your real best-sellers, even if they surprise you. For each, do the math—subtract the direct costs to see what’s really left after each deal. Highlight the low-margin culprits, the ones you hustle hardest for but see little real payoff. Now, channel your energy into those products or services that bring strong margins, even if it feels uncomfortable to say no to other business. Try it for a month, watch your stress drop, and notice the difference in your actual take-home gains.
What You'll Achieve
By focusing on margins rather than just chasing sales, you’ll improve your net income, reduce unnecessary stress, and protect your business from cash shortfalls. Internally, you’ll feel more in control and confident in your decision-making.
Map Your Sales to Profit, Not Just Revenue
Identify your top-selling products or services.
Look at the last three months and list your best sellers. Be honest—don’t focus only on what you like, but on what brings in the most revenue.
Calculate gross profit for each item.
For every product/service, subtract the cost of goods sold (COGS) from sales to get the gross profit; then, divide gross profit by sales for the gross margin percentage.
Spot low-margin culprits.
Highlight items with much lower margins—even if they’re popular. For service businesses, factor in time and direct labor as COGS.
Decide which sales to pursue or trim.
Choose to spend more energy on high-margin offerings. Test saying 'no' to low-margin deals, or gently raise prices where justified.
Reflection Questions
- Which sales drain your energy but contribute little profit?
- Where are you underpricing yourself, and why?
- How would you feel about saying no to a customer or deal that doesn’t pay enough?
- What’s your biggest fear about prioritizing margins over volume?
Personalization Tips
- A freelance designer realizes she’s earning less on business cards than on website projects and decides to refer out low-margin work.
- A bakery owner sees cupcakes sell fast but earn little; he shifts focus to custom cakes, which have higher margins and loyal repeat customers.
- A student selling class notes online tracks which subjects generate worthwhile pay for the effort, dropping topics that don’t earn enough.
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