Running a business that pays its bills isn’t the same as running a profitable one but the difference can be harder to spot than you might think.
Many entrepreneurs confuse positive cash flow with genuine profitability, or mistake busy periods for sustainable growth. They’re caught in what experts call “survival mode,” where every dollar coming in immediately goes back out to cover expenses, payroll, and operational costs. There’s no cushion, no true surplus, and certainly no room for the kind of strategic investments that separate thriving businesses from those just treading water.
The warning signs are often subtle: relying on credit to smooth over cash flow gaps, constantly deferring equipment upgrades or team expansion, or feeling like you’re always one bad month away from serious trouble. Meanwhile, truly profitable businesses build reserves, reinvest in growth opportunities, and weather downturns without panic.
In this week’s edition of Let’s Talk, our experts look at the critical metrics every business owner should monitor, the psychological traps that make survival feel like success, and the strategic shifts needed to move from simply staying afloat to building genuine, sustainable profitability.
Let’s Talk!
James Roberts-Thomson, Head of Revolut Business, Australia
“The key difference between a business that’s merely surviving and one that’s truly profitable lies in how it manages its finances. Survival mode is all about managing cash flow – making sure there’s enough money to pay the bills and keep the lights on. Profitability, on the other hand, is about understanding gross and net profit margins to build long-term financial health and growth.
“A surviving business often focuses on its top-line revenue without a clear view of where all the money is going. This can lead to a false sense of security. A profitable business, however, goes beyond just the numbers in their account. They leverage tools that provide a granular view of their finances. With Revolut Business, owners can get real-time analytics and expense management tools that lets them see exactly how every dollar is spent.
“For Australian businesses, our platform helps owners track, categorise, and reconcile expenses instantly. This allows them to spot inefficiencies and make data-driven decisions. They can also set spend controls for their team, automate expense reports, and sync their accounting software to get a clear picture of profit. This shift from reactive to proactive financial management is what enables a business to move from just surviving to thriving.”
Greg Wilkes, CEO of Develop Coaching
“Let’s be honest: turning over £1m doesn’t mean you’ve got a profitable business. I’ve coached plenty of construction company owners who looked busy, vans on the road, lads on site but at the end of the year, there was barely enough left to pay themselves properly. That’s not profit. That’s survival.
“A business model is truly profitable when three things are in place:
- Consistent Margins: If your net profit margin is below 5%, you’re running on life support. A healthy construction business should be closer to 10–15%. Anything less and one bad job wipes you out.
- Cash Reserves: Profitability isn’t just about paper numbers. If you’re constantly chasing payments, dipping into overdrafts, or robbing Peter to pay Paul, you’re not profitable you’re fragile.
- Owner’s Lifestyle: Can the business pay you a wage that reflects your responsibility and risk, while also funding growth? If not, you’re still stuck in a job, not running a business. In summary: A profitable business model gives you healthy margins, predictable cashflow, and pays you properly as the owner. If even one of those is missing, you’re surviving, not thriving.
“Action Steps:
- Check your last 12 months’ net profit margin.
- Build a monthly cashflow forecast.
- Pay yourself first, then see if the business still works.
“A business that only survives drains you. A profitable model funds your freedom. Which one are you running?”
Tania Evans, Founder and CEO, WorkPro
“When WorkPro began nearly twenty years ago, profitability looked very different to how it does today. We were a small team with a simple idea: make workforce compliance easier. In those early years, survival meant managing cashflow carefully and ensuring every dollar worked hard. But the real lesson wasn’t in the spreadsheets, it was in the people we served.
“For leaders questioning whether their business model is sustainable, I’d encourage you to ask: are you adding significant value to your customers? If the answer is yes, profit naturally follows. Customers who feel understood and supported return, refer, and remain. Over time, this creates compounding returns that no short-term tactic can match.
“Whilst profitability is measured by margins and revenue lines, the enduring metric is resilience. Markets shift, competitors arrive, and technology changes at pace. If your model is anchored in genuine customer value, these shifts become opportunities rather than threats.
“At WorkPro, that principle has never failed us. Profitability is the by-product of relevance, and relevance comes from continually solving problems that matter to the people you serve. Get that right, and your business does more than survive, it endures.”
Keval Padia, CEO, Nimblechapps Pvt. Ltd.
“One of the clearest signs your business is only surviving, not profitable, is when sales are growing but you’re still struggling to pay bills on time. Profit isn’t just having cash in the bank — it’s revenue consistently exceeding all expenses, without relying on loans or delayed payments.
“A simple test is to check your gross and net profit margins regularly. If margins are thin, or if customer acquisition costs outweigh customer lifetime value, the model isn’t truly sustainable. On the other hand, a profitable business consistently generates cash from operations, not from outside funding.
“Review your numbers often, track cash flow alongside profitability, and use real-time dashboards to spot problems early. This lets you cut waste, double down on high-ROI activities, and turn a business from barely surviving into one that’s steadily and sustainably profitable.”
Elise Balsillie, Head of Thryv Australia and New Zealand
“I often meet business owners who are constantly busy, yet still unsure if their hard work is translating into genuine profitability. Activity alone doesn’t tell the full story. What matters is clarity on how your business actually performs beneath the surface.
“One place to start is with cash flow. When systems give you a clear, real-time picture of payments and forecasts, you gain the confidence to make decisions without second-guessing. Margins are another crucial marker. The ability to see which products or services bring in healthy returns, and which quietly dilute them, helps you focus energy in the right areas.
“Time also deserves attention. Many owners lose hours to repetitive admin, scattered platforms and chasing invoices. Streamlined solutions that reduce these distractions give you the space to plan, innovate and deliver more value to clients.
“Resilience is the final signal. Businesses with connected, transparent systems are better positioned to handle late payments or seasonal fluctuations without being thrown off balance.
“Profitability is about creating the right conditions – clarity, efficiency and resilience – so that growth feels deliberate and sustainable, rather than reactive.”
Hunter Leonard, Founder and CEO, Blue Frog Marketing
“Don’t wait for your accountant.
“You must do the maths right at the beginning. Whether you have a product or service, make sure you know all the costs of delivering that product or service to the customer, and what you will make out of each ‘unit of delivery’ – per product, per hour, per day – whatever measure is relevant. Be dilligent in working out all costs including insurance, shipping, marketing, software subscriptions, labour and so forth.
“The second thing to know is at what scale you will make the return/margin/profit you need to meet your own goals. Many business owners end up paying themselves last, but you should turn this around and make sure you will make enough money to feed yourself and your family.
“So it is a must to know the profit per unit before you even start (yes you’ll make mistakes and have surprises, but do as best you can) and then the scale at which you make enough or hit personal income targets.
“Never, ever wait until your accountant produces a tax return or a BAS return to know if you’ve made any money.”
Jenny Stilwell, Strategy Advisor and Business Mentor, Hanby Park Consulting Pty Ltd
“The numbers don’t lie. You need to know your numbers and understand where you are making money, and what is eroding your cash.
Margins
The difference between surviving and thriving lies in knowing which products, which clients and which channels are making healthy margins. You must account for the real costs in each area, to know the real margin you are making. Failure to get this right can erode cash and profit.
Profit leaks
If you fail to review exactly what your company’s expenses are, and cull those that add little or no value, these will erode profit over time. Regular reviews are important. Cashflow can be severely impacted by having unfavourable terms for your business, where you fund the delivery of products or services to your clients upfront, and wait weeks or months to be paid. Profit can be impacted if the costs of major projects creep up without being managed.
Forecasting
Finally, realistically assess how much you need to spend to service your growing business, based on accurate margins once you know them, and be conservative with projected sales to test your business model.”
John Harding, general manager, managed services, Konica Minolta Australia
“A business that’s merely surviving can generate revenue; however, it lacks the margin, scalability, or operational efficiency to sustain growth. Profitability requires a clear understanding of costs, long-term revenue potential, and the ability to reinvest in innovation.
“There are two key indicators:
- Information management. Decision-making is reactive and short-sighted when data is fragmented and siloed across the business. By integrating information systems this helps businesses to better track performance, identify inefficiencies, and make evidence-based decisions that strengthen margins. This reveals whether revenue translates into actual profit or simply fuels ongoing operations without generating returns.
- Resilience. Survival-focused organisations may continue daily operations though lack the ability to pivot effectively, exposing them to setbacks like economic shifts, cyberattacks, or supply chain disruption. Profitable businesses can adapt quickly to disruptions when they plan for scalability and recovery by aligning technology and strategy to maintain operations while creating new growth opportunities.
“True profitability is evidenced by consistent reinvestment into innovation, improved customer experiences, and long-term value creation, not cash flow alone. Leaders who continuously review their business model against these criteria can identify whether they are simply staying afloat or genuinely building a foundation for sustainable success.”
Shani Taylor, CEO, Shani Taylor
“Most businesses aren’t “working”, they’re surviving and it’s because they don’t know what business model they’re operating in.
“Survival looks like chasing leads that never buy, patching holes in cash flow and praying the next month doesn’t wipe you out. That’s not strategy, it’s a slow death. A working business model is the opposite: it’s built to attract BUYERS not leads. It runs on predictable profit, not panic. It compounds without you hustling 24/7. You can step back, make strategic moves, and know the machine keeps producing. The litmus test is simple: does your business drain you or expand you? If it’s draining – you’re surviving. If it’s expanding – you’ve got a business model doing what it’s supposed to be doing – an asset that produces without your time.”
Frank Versace, Chief Customer Officer, Judo Bank
“There are the obvious profitability and cashflow measures typically well understood conceptually by business owners. However, their ability to manage cashflow drivers, even in otherwise profitable businesses, are often where they come unstuck.
“For me, the less obvious and infrequently discussed hallmark of SMEs with true ‘profitability’ are that they generate returns sufficiently above the ‘fair’ wage the owner could receive for doing the same role elsewhere.
“Owner wage drawing practices vary greatly across SMEs and often the financials are not a true reflection of the underlying profitability of a business because owner effort is not properly accounted for.
“Setting up a business takes courage. Running one is complicated and brings with it serious responsibilities and risks. It’s essential therefore that business owners are appropriately rewarded, in a way that materially exceeds what would be generated from being a wage earner and performing the same tasks the business owner does in their own business – also known as an ‘equity return’.
“Through normalising this concept, only then can a business owner truly understand if they have a profitable business or have just created a difficult and risky way to earn a wage.”
Eric Dill, Co-founder of and co-CEO at Quickli
“The difference between profitable and surviving comes down to honest accounting and forward-looking cash flow, not just revenue growth.
“First, strip away the vanity metrics. Revenue means nothing if your unit economics don’t work. Calculate your true cost per customer acquisition, including all the hidden costs like support, refunds, and churn replacement. Then measure lifetime value honestly – not the optimistic projections, but what customers actually spend over time.
“Look at your cash conversion cycle. How long does it take to turn an investment into actual cash in the bank? If you’re constantly fundraising or extending payment terms to stay afloat, you’re surviving, not thriving.
“The real test: can you grow without external funding? At Quickli, we bootstrapped precisely because profitable unit economics matter more than growth at any cost. If your business model requires constant capital injection to function, you haven’t built a business – you’ve built an expensive customer acquisition machine.
“Focus on sustainable growth over impressive headlines.”
Anton Onufriienko, Managing Director, Devart BU, Devart
“The simplest way to determine if your business model is effective is to examine its unit economics. At its core, this means comparing Lifetime Value (LTV) with Customer Acquisition Cost (CAC)
- CAC is how much you spend to acquire a new customer — advertising, sales calls, discounts, commissions.
- LTV is how much revenue a customer generates during their whole relationship with your business.
“This ratio — LTV: CAC — is the foundation of unit economics. And it quickly reveals whether your business is truly profitable or merely surviving.
“The “golden ratio” is 3:1:
- 3:1 is ideal. For every $1 you invest in acquiring a customer, you should earn $3 back. That’s a healthy and sustainable model.
- Less than 3:1 means your model is weak: acquisition costs are eating too much margin, or customers aren’t staying long enough.
- A ratio of more than 3:1 suggests you may be underinvesting in growth. If $1 reliably brings $5 or $6, you could safely scale marketing and sales faster.
“For example, spend $100 to acquire a customer, and if they generate $300 in revenue, your ratio is 3:1 — exactly on target.
“If you don’t know your LTV: CAC, you don’t really understand your unit economics. And without unit economics, you can’t be sure your growth is profitable.”
Vanessa Norman, Founder/CEO, Vanessa Norman NDIS Business Coach
“Most NDIS providers I speak with think their business is profitable because money is coming in. The invoices get paid. The bank balance looks okay. But when we dig a little deeper, the truth often comes out, they’re not profitable, they’re just surviving.
“So how do you know the difference?
“If your profit disappears the moment you cover wages, compliance costs, insurances and your own salary, you’re not running a profitable model. You’re spinning the wheels just to keep the lights on.
“A profitable business model is one that pays you, covers your obligations, and still has margin left to reinvest into growth. That margin might look like marketing spend, staff development, or building your systems so the business doesn’t rely on you alone.
“Here’s the test. If you stopped working frontline tomorrow, would the business still pay you and continue to operate? If the answer is no, you’re surviving, not thriving.
“Profitability is not about turnover. It’s about structure, systems and knowing your numbers. And the sooner you face those numbers honestly, the sooner you can make the changes that turn a stressful business into a sustainable one.”
Loz Antonenko, Founder & CEO, Loz Life
“Most business owners don’t realise they’re stuck in “busy but broke” mode until it’s almost too late. Just because money is flowing through your business doesn’t mean it’s profitable; survival is not the same as sustainability.
“The simplest way to tell if your model is truly profitable is to look beyond revenue and check what’s left once the bills, wages, and overheads are paid. If you’re constantly robbing Peter to pay Paul, or paying yourself last (or not at all), you’re surviving, not thriving.
“A profitable business pays you a fair wage, covers expenses without constant panic, and has enough left over to reinvest or build a buffer. Profit isn’t what’s left at the end of the year; it’s a habit you create from day one.
“I tell my clients to run a “profit stress test”: could your business keep operating if you took a holiday or hit a slow patch? If the answer is no, you’ve got a survival model, not a profitable one.
“The goal isn’t just to stay afloat, it’s to build a business that fuels your life, not one that drains it. Profit is proof your model works.”
Hilary Saxton, CEO, Property Mastermind
“In business, it’s easy to mistake survival for success. You might be busy, your team might be working hard, and revenue might be coming in, but that doesn’t automatically mean you’re profitable. A business that’s just surviving is a ticking time bomb. The key is to stop just looking at the top-line numbers and start drilling down into the metrics that truly matter.
“To know if your business model is actually profitable, you must first understand your profit margins on every product, service, and project. A business can’t be sustained on revenue alone; you need healthy margins that account for all overheads, not just direct costs. This requires a ruthless commitment to due diligence – not just in the market, but within your own operations.
“Ask yourself: Are you truly charging what you’re worth? Are you systematically identifying and eliminating inefficiencies? Do you have a clear, repeatable process that maximises returns?
“Survival mode is reactive. Profitability is proactive. You need a robust, proven framework that helps you make unemotional decisions and allows you to lean in and learn from the data. Only then can you become a master of your numbers.”
Ryan Zahrai, Founder at Zed Law
“Profitability isn’t just about revenue, it’s about clarity on whether your model is creating value that outpaces the costs of delivering it. A profitable model shows itself in consistency. You’re not holding your breath each month waiting to see if the numbers stack up. Your pricing reflects the real cost of your inputs such as people, product, compliance and still leaves room for margin. Cash flow feels manageable, not like a constant fire drill.
“If you’re just surviving, the signs are obvious but often ignored: you rely on one or two big clients to keep the lights on and you confuse turnover with profit. The test is simple once you strip away the noise. After paying everyone and covering your obligations, is there a sustainable surplus that allows reinvestment and breathing space? If the answer is no, the model isn’t broken beyond repair but it needs recalibration. Survival isn’t a strategy, its about creating a business where profit is clarity.”
Steven Nicholson, Founder, GearChange Business Advisory
“Many business owners feel like they are just surviving even when they believe they have a profitable business. In my experience, this comes down to two main reasons.
“Firstly, owners confuse profitability with positive operating cash flow. The feeling of struggle comes from a business model that is not generating sufficient cash flow to cover all costs, including periodic tax payments, investment in growth, and debt servicing.
“Your business should have a 12-month rolling cash flow forecast that adjusts for differences in debtor and supplier payment cycles, inventory levels, periodic tax payments and purchase of business assets.
“Secondly, if your “profitable” business is not generating positive cash flow, turn to your profit margins, as poorly constructed pricing and costings are likely to be the reason.
“Measure margins by product or service line, factoring in overhead allocation. Many “profitable” businesses find their real margins shrink significantly when they factor in all costs, including owner’s time, indirect costs such as office costs, staff overheads and marketing.
“For your business to thrive, not just survive, you need accurate and insightful financial information. It may be time to bring in a CFO-level advisor to help turn your numbers into strategy before survival becomes crisis.”
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