I've had the same conversation hundreds of times. A business owner sits across from me, their revenue well past a million dollars, and the question written across their face before they even open their mouth is, “Where is it all going?”
Here's the thing most people get wrong: more revenue is not the answer.
Profit matters more than revenue, and cash matters more than profit. Revenue tells your marketing and sales story, profit reveals insights about your P&L, and cash speaks to your balance sheet. That last piece is the one that trips up most owners.
By the time someone comes to me, they've usually hit some version of bottom: a surprise tax bill, payroll that almost didn't clear, or the realization that they've been driving revenue for years and the cash still hasn't shown up.
This is usually not a revenue problem. It's a visibility problem, and it becomes evident in the same handful of places every time.
Here’s how to handle it.
Start by looking at your labor costs
When businesses grow past a million dollars, owners tend to step back from day-to-day execution. That's natural, but it also means that labor costs start running on autopilot, and sometimes, nobody's watching the meter.
Think about it like this: most small businesses have never built the systems that a company like McDonald's runs on. Every McDonald's employee knows exactly how to cook a French fry the same way. Your team probably doesn't have that, which means they're playing telephone: what you said, what they heard, and what they actually did. Without clear expectations in place, you're paying for output you can't measure.
When I look at a profit and loss statement (P&L), I can usually tell when a business is spending too much on labor. The owner almost always pushes back with “We're too busy, we can't cut anyone,” but I've seen it play out the same way over and over again. With fewer people, you can often get more work done with less chaos.
The takeaway? Pull your P&L and look at labor as a percentage of revenue. If it's out of line, start asking who in the system is creating fires instead of putting them out.
Get paid before your expenses hit
Slow billing and weak collections are some of the most expensive habits a $1M+ business can have. And they're almost always traced back to the same root cause: no one ever had the payment conversation.
Have that conversation before you start the work. Specifically:
Know when you expect to get paid—within 10 days of sending the invoice, Net 30, or whatever your terms are.
If you're working with a larger company, find out their payment cycle before you sign anything.
Build the cost of borrowing into your pricing if your expenses hit before your payments do.
These aren't awkward questions. They're the cost of doing business.
You'd be surprised how many businesses in the trades don't even send an invoice and go six months without getting paid. It happens more than anyone wants to admit. Get paid ahead of your expenses whenever you can.
Before you reinvest, answer this question
Almost every owner I work with says some version of the same thing: "I'm reinvesting in the business." My response is always the same: what's the return on that investment? What's the payback schedule? When does the money come back?
Imagine that another business owner came to you wanting to borrow money. What questions would you ask them? Now ask those same questions of yourself. If you can't answer them, that's not an investment. It's a hope.
Audit your recurring costs now
At this revenue level, recurring costs accumulate silently. These can include software you signed up for two years ago and stopped using, vendor relationships that made sense when you were smaller, or perks and services that felt justified when business was booming.
None of these are dramatic on their own. But together, they can represent a meaningful chunk of your overhead—money leaving every month for things that aren't moving the business forward.
This is one of the easiest leaks to fix. Pull every recurring charge and ask one question about each: is this still earning its place? If you can't answer yes immediately, cut it.
The question isn’t how to make more, it’s where the money went
Every business has dials it can turn: pricing, gross profit, overhead, collections, and payroll efficiency. One of them is almost always the culprit when you’re looking for the cash.
A 10% price increase, depending on your margins, can easily lead to a 100% increase in profit. You just have to know which dial to turn.
If you want to see where your business stands, run your own numbers using the Profit Answer Man calculator. It walks you through each of the levers (revenue, pricing, gross profit, and overhead) so you can pinpoint exactly where the leak is happening and what fixing it could mean for your bottom line.
The business you've built is already generating revenue, so cash should follow. If it's not, something in the system is off. You’ve now got all the tools you need to find the leak and fix it.
Set up your accounts so the money has a job
This one surprises people the most. You check your balance, it looks fine, but that number doesn't tell you what's already spoken for.
Most owners at the $1M level are still running everything through one or two accounts. That means your operating cash, tax reserve, payroll, and profit are all sitting in one pile.
When money comes in, the instinct is to spend it because it looks like you have it. And that's exactly the problem that Profit First solves. The idea is to give every dollar a job before it gets spent on the wrong thing.
There's also a timing issue that usually doesn't show up until it's too late. If you're collecting deposits for future work and spending them today, when the work actually needs to happen, the money isn't there to pay for it.
Set up dedicated accounts for profit, taxes, operating expenses, and owner pay. Tools like Relay make it easy to establish that structure and see in real time what's allocated versus what's available.
Relay is a financial technology company and is not an FDIC-insured bank. Banking services provided by Thread Bank, Member FDIC. FDIC deposit insurance covers the failure of an insured bank. Certain conditions must be satisfied for pass-through deposit insurance coverage to apply.
