Sales grow, but profit stays flat.
- What to measure
- The additional profit from new sales after variable costs and any new fixed costs.
- The decision to test
- Review pricing or scope for offers with a low contribution before pursuing more volume.
Finance and strategy · France and Switzerland
How can you improve business profitability?
You work hard and your business makes sales. But it is unclear which customers, projects or products create the profit. Mercova helps you identify where to act and track the effect of your decisions.
Revenue alone does not show what you earn
Two services at the same price can require very different amounts of time and cost. Subcontracting, discounts, rework and unbilled time can change the margin. We separate activity related costs from overheads to understand the contribution to profit.
Understand relevant margins
Analyse activities, customers or projects according to available data, using explicit cost allocation rules. Identify limitations before making comparisons.
Compare pricing and operations
Test the effect of price, volume, cost or production time. Include commercial consequences rather than assuming sales will remain unchanged.
Check the actual effect
Track contribution, expenses and cash after taking action. A higher margin percentage is insufficient if volumes or collections deteriorate.
Which profitability lever should you test first?
Start by identifying what is reducing profit. For each lever, compare the expected gain in money, implementation cost and commercial risk. Test one measurable change before applying it more widely.
The team is busy, but margins remain low.
- What to measure
- Actual time spent per project, rework, discounts and unbilled services.
- The decision to test
- Test a clearer scope or charge for additional requests.
A large customer uses substantial resources.
- What to measure
- Their contribution, the capacity used and costs that would remain if the contract ended.
- The decision to test
- Compare renegotiating with reducing scope, without assuming all costs would disappear.
Profit is positive, but the bank balance falls.
- What to measure
- Receivables, inventory, investments, debt repayments and taxes separately from profit.
- The decision to test
- Build a cash forecast before concluding that margins are too low.
Each month, we compare the chosen action with its results: contribution in money, workload and collections. This ongoing review helps you keep, adjust or stop the action rather than commission another isolated assessment.
Fictional example · no client results
Higher sales can leave profit unchanged
Simplified monthly example: €100,000 of sales less €60,000 in variable costs gives a €40,000 contribution. After €35,000 in fixed expenses, €5,000 remains. At €120,000 of sales and €80,000 in variable costs, profit remains €5,000 if fixed expenses are unchanged.
Decision to consider: review the contribution of additional sales before pursuing more volume. The calculation excludes tax and financing items; it explains a mechanism without forecasting your profit.
Illustrative amounts in euros. For a Swiss business, the analysis uses its management currency, payment schedule and specific assumptions.
Regular analysis that supports your decisions
We start with your data and the decision ahead. The scope and frequency of discussions are agreed before the engagement starts.
Understand your position
Accounting records, bank balances, invoices, commitments and sales assumptions: we reconcile the information and identify remaining uncertainties.
Compare your options
We explain variances, build relevant scenarios and identify the assumptions that change the decision.
Follow through on actions
Each agreed action has an owner and a deadline. Regular reviews compare forecasts with actual results to adjust subsequent decisions.
For business owners who want to act on their numbers
For owners of SMEs and startups in France and Switzerland with established operations, accessible data and decisions to prepare. The work complements your accountant or Swiss accounting adviser.
Bookkeeping and tax filings remain with your usual professionals. Financial management does not guarantee funding or increased profitability.
What we review together each month
Ongoing support helps explain differences and choose the next actions. The numbers remain connected to a concrete decision.
- Contribution: identify the customers, activities or projects behind differences using consistent costing rules.
- Pricing and capacity: test a different price or scope while allowing for volume and workload changes.
- Actual effect: track contribution in currency, avoidable costs and cash. Distinguish projected and realised savings.
Fictional example illustrating our financial management method.
1. Revenue grows. Do earnings follow?
The extra €25,000 of sales adds only €5,000 of contribution, absorbed by €5,000 of extra fixed costs. Before seeking more volume, we examine pricing, sales mix, costs and one off items.
See the figures and assumptionsExplore your situation
Other decisions to prepare
Which decision is unclear today?
Describe your business, the difficulty and your next deadline. The initial conversation helps establish whether Mercova is suited to your situation.
Preparing for the first conversation
Your business, the decision on your mind and the information already available are enough to start the discussion. The initial conversation checks fit before defining annual support and its scope.
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