Up to one in five Brits now run small ecommerce businesses, either as a side hustle or full-time, but many are making a critical error, according to accountant Harvey Dhillon, founder and CEO of UK-wide accountants Zmartly. The mistake is obsessing over sales volume rather than actual profit.
The Vanity of Turnover
“There’s a well-known saying in the business world: ‘turnover is vanity, profit is sanity, but cash is king,’” Dhillon said. “As a company that works with hundreds of ecommerce sellers, we regularly see too many people focused on turnover rather than profit — and that needs to change.” He described turnover as the most misleading number in small business, particularly for newcomers and home-based sellers.
Dhillon explained that a seller generating £100,000 annually on Amazon or eBay may boast a six-figure business, but after platform fees, advertising, shipping, returns, payment processing, stock costs, and taxes, the actual income can be shockingly low. “We regularly see sellers turning over six figures who are effectively working full-time for less than they would earn stacking shelves and they have no idea until someone shows them the real maths,” he added.
Focus on Margin, Not Sales
Dhillon urged sellers to stop watching sales and instead monitor the margin on each product. “Looking at the products that generate the best margins, or profit, is second nature to more experienced business owners, but for people starting out or who haven’t run a business before, it’s not the case. They’re too often focused on the vanity side, but it’s the sanity side that pays the bills,” he said.
He advised dropping product lines that appear busy but lose money, and concentrating efforts on the few products that actually generate profit. “Yes, making fewer sales can feel counter-intuitive and is far less exciting than a big sales graph, but understanding that it can mean a better and more profitable business is the difference between a hobby that drains you and a business that pays you. The number that matters is not what you sold. It is what you kept,” Dhillon concluded.
