How to know if your shop is profitable: a 5-minute diagnostic.

If you opened nouz today wondering whether your shop is actually profitable, here's the short answer: tally today's gross revenue, subtract VAT, subtract card-processor fees on the card portion, subtract the cost of what you actually sold (COGS), subtract today's small variable spend, then subtract your monthly fixed costs divided by 30.4375. The number left is today's EBIT. If that number stays positive across a 7-day rolling average, your shop is profitable. If it doesn't, it isn't — and the gap between revenue and EBIT is where the leak lives. The rest of this post is the literal step-by-step, with a worked café example, plus the owner-salary test most owners quietly fail.

TL;DR

Most owners can run this with a calculator in five minutes once. The harder part is running it every day without it eating an hour — that's what our free daily profit calculator exists for, and what nouz automates if you'd rather not retype the same numbers each evening.

Why this question is harder than it looks

Every owner-operator we talk to can tell us last Saturday's gross sales to the euro. Almost none can tell us last Saturday's profit. That gap isn't laziness — it's structural. Sales are visible at the moment they happen. Profit only becomes visible after six other numbers are layered on top, and most of those numbers aren't surfaced until the accountant assembles them two weeks after month-end.

So when an owner asks is my shop profitable?, they're usually trying to fuse three different signals: the till feels busy, the bank balance feels tight, and the monthly P&L from the accountant arrived two weeks late and was opaque. None of those three signals answers the question. Busy days don't equal profitable days. A healthy bank balance can hide an unprofitable business (you're just spending savings). And a monthly P&L is too coarse — by the time you see July's numbers in mid-August, August is already half over.

The fix isn't more information. It's the right information, computed daily, with a clear yes-or-no answer. That number is EBIT — operating profit — and it can be computed in five minutes per day with a calculator. Our EBIT explainer walks through the formula in three minutes; the diagnostic below is the same formula, structured as a literal step-by-step you can follow tonight.

The 5-minute diagnostic (7 steps)

Pick a representative day — not your worst Tuesday, not a holiday Saturday. A normal trading day. Get a calculator. We'll run it alongside a worked example: a small café in Vienna with €1,247 of gross sales, 66% on card, VAT 20%, card processor 1.4%.

1. What did you sell today? Note today's gross revenue — total money taken across cash and card. Then split: how much was cash, how much was card? You'll need the split for step 3 because card fees apply only to card sales, never to cash. Worked example: gross revenue €1,247. Cash €427, card €820.
2. What's the VAT bite? VAT was never your money — it's collected on behalf of the tax office. To extract it from a gross figure: VAT = gross × VAT-rate ÷ (1 + VAT-rate). At 20% that's gross × 0.20 ÷ 1.20 = gross × 0.1667. Worked example: €1,247 × 0.1667 = €207.83 of VAT. That's not yours.
3. What's the card-fee bite? Multiply your card revenue (not total) by your processor rate. Typical European rates: SumUp 1.49%, Stripe 1.4% + €0.25, Mollie 1.8%, Adyen 1.1-1.6% depending on volume, Square 1.75%. Worked example: €820 card × 1.4% = €11.48 in card fees. Subtotal so far — net revenue = gross − VAT − card fees = €1,247 − €207.83 − €11.48 = €1,027.69 of net revenue.
4. What did you spend on inventory today? This is COGS — cost of goods sold, not cost of goods purchased. The distinction matters: a €600 supplier delivery on Monday isn't €600 of Monday COGS — it's €600 of inventory that gets consumed across the week. COGS for a day is the cost of what you actually sold that day. For café: milk, beans, pastries, syrups consumed. For retail: the wholesale cost of the items sold (not the items restocked). For salon: colour, foils, shampoo used. For e-commerce: product COGS + per-order packaging + outbound shipping. Worked example: €287.75 of milk, beans and pastry costs against today's sales.
5. What other variable spend today? Everything that wasn't inventory but scales with the day: takeaway cups, cleaning supplies, the plumber who fixed the sink, parcel insurance, paper bags, the petty-cash run for napkins. Total today's miscellaneous spend. This line is invisible in most shops because nobody enters it daily — it gets buried under "other" at month-end. Worked example: €42 (cleaning supplies + cup order top-up).
6. What's today's slice of fixed? Add up monthly fixed costs: rent, salaries (gross — employer cost), software subscriptions, accounting fees, insurance, utilities, loan payments. Divide by 30.4375 (average days per month). That's today's fixed slice — the amount of fixed cost that has to be earned every day, including slow Tuesdays, before any other profit accrues. Worked example: rent €3,000 + salaries €8,000 + insurance/software/accounting €1,082 = €12,082 monthly fixed. ÷ 30.4375 = €397.00 daily slice.
7. Subtract everything. The result is today's EBIT. Take gross revenue minus all six subtractions above. The number remaining is today's operating profit. Worked example: €1,247 − €207.83 − €11.48 − €287.75 − €42 − €397 = €300.94 EBIT. The café made €300.94 of real operating profit on this Tuesday — about 24% of gross, but only after the seven steps were applied.

That's the diagnostic. Five minutes with a calculator, seven numbers, one bottom line. The number at the bottom is the only profit number that means anything for daily decisions — every other figure (gross sales, gross margin per item, monthly net income) either flatters you or arrives too late.

What "profitable" actually means

One day's EBIT doesn't make a shop profitable. One day's negative EBIT doesn't make it unprofitable. The real signal is the rolling average — typically 7 days for weekly seasonality (every shop has a slow Tuesday and a busy Saturday), 28 days for a fuller picture that washes out one bad week.

The cleanest definition we use across nouz dashboards: a shop is profitable when its 7-day rolling EBIT average is positive, week after week, with the trend not deteriorating. One bad day during a heatwave doesn't matter. Four consecutive negative weeks does.

The reason the rolling average matters: a single bad day is normal noise. A trend is signal. Looking at one Tuesday and panicking is as misleading as looking at one Saturday and celebrating. Why same-day P&L matters explains why daily granularity is still essential even when you read the trend over 7 days — without the daily entries, you can't build the rolling average at all.

The owner-salary test (the one most owners avoid)

Now the harder question. The diagnostic above gives you EBIT before owner salary. If you work 50-60 hours a week in the shop and pay yourself nothing — or only what's left at the end of the month — then your EBIT is overstated by the value of your unpaid labour. The shop looks profitable, but only because it's quietly consuming your time at below-market rates.

The honest test: what would you have to pay someone else to do the work you currently do unpaid? For a 50-60-hour-week owner-operator covering opening, shifts, ordering, payroll, banking, customer service, and the books, market rate in most of Western Europe sits at €2,800-€4,800/month gross. Add that as a line on your fixed costs. Recompute EBIT.

If the shop still has positive EBIT after the owner salary is included — that's a real business. If EBIT goes negative once you add a market-rate owner salary, the shop isn't actually profitable; it's a job that pays you less than you'd earn working for someone else, plus you're carrying the risk of ownership. That's a meaningful thing to discover. It doesn't necessarily mean closing — it means changing pricing, hours, or product mix until the math clears.

Use our effective hourly wage calculator to back into the same answer from a different angle — divide annual EBIT-before-owner-salary by your annual hours, and you get your real hourly rate from the shop. Most owners are confronted by that number. It's often somewhere between €6 and €14 an hour for a busy café owner working 55-hour weeks — below what they'd earn managing someone else's shop.

How to run this every day without a spreadsheet

Running the diagnostic once is straightforward. Running it every evening for 90 days — long enough to see a real rolling average and trend — is where almost every spreadsheet-based system fails. The owner runs it for a week, falls behind one Tuesday, then never catches up. Two months later they're back where they started: revenue visible, profit invisible.

There are two routes that survive the 90-day test.

Route 1: a one-page paper sheet. Print 30 copies of the table above. Each evening, fill in seven numbers (the boxes in the right column). Total the day's EBIT in your head. Tape it inside the till drawer. Old-school, ugly, and works — provided you actually do it every day. Costs nothing.

Route 2: log it once, let software do the math. The same seven numbers, entered into a tool that holds the formulas. Enter cash and card sales. Enter today's COGS (or let the software compute it from menu items sold, if you set up the recipes once). Enter the variable spend. The software already knows your monthly fixed total, your VAT rate, your card processor rate — it computes the EBIT and writes today's number into the rolling 7-day chart automatically.

That's exactly what nouz is: a tool that holds the formula, holds your VAT and card rates, holds your monthly fixed cost, and asks you for the three or four numbers that change daily. The first close-out takes about seven minutes. From day two onward it takes 90 seconds. Try the live demo first if you want to see what a 30-day rolling EBIT chart looks like before signing up.

What to do if the answer is "no"

Suppose you ran the diagnostic for a week, the 7-day rolling EBIT is negative, and the owner-salary test confirms the shop isn't paying you. What now? Don't panic and don't close — most unprofitable small shops are fixable inside a quarter, provided you can see which line is the problem.

Look at the seven lines from the diagnostic. Whichever line is the largest as a percentage of net revenue is almost always where the leak is. Specifically:

• COGS too high. If COGS is >40% of net for café, >55% for retail, >55% for e-commerce, >25% for salon, the problem is product cost. Update menu costs against current supplier prices (most are stale by 3-12 months), check for spoilage and shrinkage, renegotiate with top 3 suppliers.
• Variable costs creeping. If variable costs are >5% of net revenue, something specific is bleeding — usually packaging or supplies that doubled in price without anyone noticing. Look at the last three months of small spend, find the biggest category, renegotiate or switch supplier.
• Fixed slice too high relative to revenue. If your daily fixed slice is more than 35-40% of average daily net revenue, fixed costs are too heavy for current trade. Either revenue has to grow (pricing, hours, product mix) or fixed has to shrink (renegotiate rent at next break, reduce headcount, drop subscriptions).
• Card fees too high. If card fees are >2.0% of card revenue, you're on a default rate. Most processors will negotiate below 1.5% above €5k/month volume. Five-minute conversation, sometimes hundreds of euros a month.
• Owner salary unpaid. If EBIT is fine but you're not paid, the diagnostic just told you the business needs a 10-20% price increase across the board, or a structural rethink. Pricing review is almost always the right first move — most small shops underprice by 8-15% and don't lose volume when they fix it.

A practical sequence: spend the first two weeks measuring with the diagnostic, the next two weeks fixing the largest leak, then remeasure. Don't try to fix everything at once. Pick the one line that's most out of band and attack it. Repeat next quarter on the next-largest leak. The seven hidden leaks post walks through each of the common leaks in more depth, with the fix for each.

Use the small-business break-even calculator to find the daily revenue floor below which a day actually loses money. Use the daily profit calculator to run today's diagnostic in a browser. Use nouz if you want the same numbers tracked automatically every evening rather than typed into a calculator nightly.

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