finance
Revenue / Turnover
Total sales in a period, before any costs. A size metric, not a profitability metric.
Definition
Revenue (or turnover) is total recorded sales in a period. It sits at the top of the P&L and is the base for every other metric. Founders tend to celebrate revenue because it feels like 'size', but it tells the least important part of the story. A $10M business with $50K net profit is in worse shape than a $1M business with $200K net profit. Sophisticated investors decompose revenue into quality: recurring vs one-time, concentration (share from the single biggest customer), gross margin per stream, and growth rate. Revenue is reported net of sales tax / VAT - those collected amounts belong to the tax authority, not the business.
In your business
- →Track recurring vs one-time revenue separately
- →Watch concentration - more than 30% from a single customer is a structural risk
- →Set growth targets paired with margin targets, not in isolation