Why Revenue Grows but Profit Doesn’t

Inside a $20M E-Commerce Turnaround

The first time we opened their books and I joined the team meeting, something felt off.
Revenue was strong. Sales channels were buzzing. Social proof was everywhere.

But beneath the surface, the business was bleeding.

Margins were shrinking. Stock was piling up in the wrong warehouses. Six-figure invoices sat uncollected, all layered on top of an underlying lack of clear accountability and ownership.

A classic case of growth masking operational debt.

This is the story of what happened next, and how six months of operational rewiring transformed a brand that was scaling publicly while quietly suffocating internally.

The Invisible Problem: When Cash Tightens Before Anyone Notices

By the time I stepped in, the warning signs were subtle but everywhere:

• Gross margin eroded quarter after quarter, despite rising top-line revenue.

• Accounts receivable ballooned to nearly $1M, stretching cashflow thin.

• Stockouts and excess stock existed simultaneously, a red flag in any supply chain.

• Launches were rushed and chaotic, with no single owner across the product journey.

• Finance remained reactive, late reconciliations, inaccurate reports, and zero visibility on channel-level profitability.

From the outside, the brand looked like a rocket ship. Inside, it was being held together by goodwill, heroics, and spreadsheets.

The Breaking Point

The business wasn’t failing. But it was fraying.

Margins were slipping due to duty pressure, inefficient 3PL setups, and weak forecasting.
Cash was stuck in overdue invoices.
Launch timelines moved daily because no one owned the journey end-to-end.
And the founder was stepping into every fire instead of focusing on strategic growth.

It’s the moment many brands hit without saying it out loud: You can’t scale chaos. You can only scale what’s built.

The Turnaround: 6 Months, One Playbook

Here’s what we did, systematically, calmly, and with data front and centre.

1. Recovered $1M in Accounts Receivable

We rebuilt the finance workflow from the ground up:

• Cleared years of overdue retail invoices

• Standardised B2B processes and credit control

• Implemented Xero automation

• Introduced bi-weekly payment runs

• Created clear ownership between accounting and sales

The result? Cash in the bank increased 4× in a single quarter.

2. Increased Gross Margin by +5 Points

This lift came from two levers:

a. Supply Chain Fixes

• Better forecasting → fewer expensive air shipments

• Container optimisation → lower landed cost

• 3PL restructure → ~20% YoY cost reduction

• MOQ discipline and a cleaner catalogue

b. Inventory-Led Merchandising

Not “scarcity for the sake of it,” but strategic demand building based on real stock reality.

To correct stock imbalance, we temporarily shifted from marketing-first planning to an inventory-led approach:

• Waitlist and back-in-stock triggers

• “Back soon” messaging to build demand instead of forcing discounts

• Real-time stock communication across teams

• Controlled inventory drops to increase conversion without over-promotion

This rebuilt demand, increased sell-through, reduced discount dependency, and lifted gross margin.

3. Clear Ownership (the most underrated operational lever)

One of the biggest drains wasn’t cost. It was confusion.

When people don’t know who owns the project, let alone each step, no one actually does.

Nowhere was this more visible than in product launches:

• Timelines slipping silently

• Stock arriving before creative was ready

• Ten people touching the same SKU

• Missed handovers because “I thought someone else had it”

So we implemented a proper RACI, locked an end-to-end sequence, and ran weekly 15-minute check-ins to build the habit.

The impact was immediate:

• No more last-minute campaign panic

• No more mismatches between stock arrival and marketing readiness

• No more silent delays

• No more ambiguity

Accountability is one of the most powerful, and most underused, operational levers.

4. Strengthened Finance Data & P&L Accuracy

This changed everything.

• Monthly stock reconciliation reached 95% accuracy

• Channel profitability analysis finally surfaced clear winners and laggards

• Budgets per department created ownership instead of free-floating spend

• Reporting cadence stabilised

• EBITDA turned into a steerable number, not a retrospective surprise

EBITDA increased by +180%

What This Means for Founders

Revenue hides sins. Ops reveals them.

In operations, the main margin killers are clear:

• Leaking COGS

• Bad forecasting

• Poor cash discipline

• Broken launch processes

• No ownership

• Misaligned 3PL setups

• Slow finance close

• Uncollected invoices

You’re not failing. You’re just paying an operational tax you didn’t know you had.

But it doesn’t stop there. A lack of product strategy, weak accountability across teams, and uncontrolled or reactive marketing budgets can bleed margin just as fast, often without anyone noticing until it’s too late.

This brand wasn’t broken. It simply needed someone to slow the chaos, diagnose the leaks, and rebuild the backbone.

The Takeaway

If your brand is growing but cash isn’t, you’re not alone. Margin erosion, stock chaos, and rising operational costs don’t mean you’re off track, they mean your systems need to catch up.

The good news?

Once you fix the engine, the business moves faster, smoother, and far more profitably.

This six-month engagement proved it:

• +$1M recovered in cash

• +5 margin points

• +180% EBITDA YoY

• Supply chain stabilised

• Launch process redesigned

• Finance reporting rebuilt

• Clear accountability within the team.

Ops isn’t the back office. Ops is the multiplier.

Looking Ahead

For fast-growing brands, the lesson is simple: top-line growth means nothing if the engine underneath is leaking.

Profit over hyper-growth.
Clarity over speed.
Structure over confusion.

At The Engine Room, we unpack what operational excellence really looks like behind breakout brands, because growth isn’t magic, it’s method.