When you turn over 1.5 million but profit is only 20 thousand

When you turn over 1.5 million but profit is only 20 thousand

And 98% of your family income depends on this

Does this sound familiar?

• You turn over €1.5M a year (sounds like a lot)
• But net profit is €20K (a 1.33% margin)
• You resell other companies' software under licence (ERP, HR)
• 10 employees, high fixed costs
• 98% of your family income depends on this business
• A demotivated team, internal friction, an owner who doesn't invest in training

---

The trap of revenue without margin

The numbers seem good.

€1.5 million in revenue.
10 employees.
Clients won over the years.
Enterprise software (ERP, HR) sold to SMEs.

From the outside, it looks like a solid company.

But the reality of the numbers is brutal:

Net profit: €20,000 on €1,500,000 of revenue.

Net margin: 1.33%

That means that for every €100 you bring in, only €1.33 stays with you.
The rest goes on costs.

---

What happens when margins strangle you

On the financial front:

• High revenue but virtually no profitability
• Every unexpected event (a client who doesn't pay, a necessary investment) eats into your already minimal reserves
• Impossible to save or invest in growth
• Total dependency: 98% of your family income comes from here
• One bad year = personal disaster

On the operational front:

• You work to "keep the machine running", not to create value
• Every sale generates costs almost equal to the revenue
• Business model: reselling other companies' software
• Margins squeezed by the licence fees owed to software vendors
• After-sales support and assistance that erode profitability

On the team front:

• Widespread demotivation: "We work so hard, so where does the money go?"
• An owner who doesn't invest in training or research (because there's no margin to do so)
• Staff who feel their efforts are undervalued
• Friction and a lack of communication
• Constant worry: "Am I losing my grip on leadership?"

On the sales front:

• Difficulty getting past initial screening (2 out of 10 conversion)
• Only 2 hours a week for prospecting (too little, but you're buried in operations)
• A need to win clients, but with no defined strategy
• Head-to-head competition with other resellers of the same software
• No strategy for winning ideal clients

---

Why it happens

You've built a business with a structurally low margin.

You're a reseller, not a manufacturer.
You sell software you don't own.
You pay licence fees, renewals, commissions to the vendor.
You provide installation, configuration, support.

But most of the value (and the margin) stays with the software manufacturer.
You do the heavy lifting (sales, support, customisation)
but you get the crumbs.

And without margin:

• You can't invest in training your team
• You can't hire dedicated sales staff
• You can't run structured marketing
• You can't innovate or differentiate

Result: you run just to stand still.
You generate revenue, but you don't earn.

---

The (wrong) path many try

The apparent solution: "Let's increase revenue, so even 1% becomes more"

But if the margin stays at 1.33%, growing only means:

• More work
  
• More stress
  
• More costs
  
• The same problem, amplified

Growing on negative margins sinks you, it doesn't save you.

---

The method in 5 steps:

1. A brutally honest analysis of the model
   → Identify where you're losing money
   → Which clients or services generate negative margin?
   → Which activities devour profitability?
   → Map out the real flow of value
2. A strategic decision: ownership or partnership?
   → Option A: Develop your own IP (custom modules, add-ons)
   → Option B: Negotiate more favourable partnerships with vendors
   → Option C: Switch to a vendor with software offering better margins
   → Option D: Exit reselling, focus on high-value services
3. Repositioning around high-margin services
   → Not just sales plus installation (low margin)
   → But: strategic consulting, customisation, advanced training
   → Recurring services (maintenance, optimisation, evolution)
   → Value-based pricing, not cost-plus
4. Fierce operational efficiency
   → Automate everything that can be automated
   → Standardised processes to cut support costs
   → Cut "courtesy" services that erode margin
   → Unprofitable clients: renegotiate or let them go
5. Team as partners
   → Transparency on the numbers: "Here's why we can't invest"
   → Involve them in solutions: "How do we increase margins?"
   → Incentives tied to profitability, not just revenue
   → Invest in training when margins allow it

---

What changes afterwards

You're no longer a slave to revenue.

Profit grows faster than revenue.
Every sale generates real value, not just cash movement.
You can invest in your team, sales, innovation.

And above all: 98% of your family income no longer depends on a company that doesn't earn.
You have room to manoeuvre, options, breathing space.

You're no longer working to "keep the machine running".
You're working to build wealth.