The next Willy Wonka?
In high school, I thought I’d cracked the code to easy money. I started buying popular candy bars in bulk and selling them at a markup to my classmates. Sales were strong, the margins looked ok, and I felt like a young entrepreneur on the rise.
But there was one problem—I loved those candy bars too much. After making a few sales, I’d reward myself by eating one… then two… because, hey, I deserved it. I was working hard, right?
Soon enough, my profits were gone, my inventory vanished, and the business collapsed. I wasn’t running a candy empire—I was literally eating my own profit.
Decades later, I see eCommerce sellers making the exact same mistake. Not with chocolate—but with poor cash flow habits that even a great ecommerce accountant could warn you about.
From Candy Bars to Capital Burns: The Modern Version of This Mistake
You might be hitting $100K, $500K, even $1M in revenue. Your gross profit margin might look good on paper. But if you’re pulling too much money out of the business to fund your lifestyle—luxury purchases, inflated salaries, or even just poor cash discipline—you’re eating your own profits. Just like I did.
It’s deceptively easy to do.
eCommerce businesses are cash-hungry. Between inventory deposits, ad spend, freight bills, and platform fees, the money you see in your bank account isn’t all yours to spend. And if you treat it like it is, you will starve the business of what it needs to survive: working capital.
What to Watch Below the Gross Profit Line
You might think: “My gross profit margin is strong, so I’m fine.” But your P&L (Profit & Loss statement) has a second act—below the gross profit line—where profit vanishes fast if you’re not careful. This is where a skilled ecommerce accountant can help you stay ahead of hidden risks.
1. Overpaying Yourself Too Soon
Drawing a large salary before your business can support it is a common early-stage mistake. Just because revenue is flowing doesn’t mean profit is.
2. Bloated Subscriptions & Overhead
A new app here, a new tool there—it adds up. Many sellers forget to regularly audit their tech stack and recurring expenses.
3. Ad Spend With No Profit Backing It
Ad platforms will take every dollar you feed them. But if you’re scaling ads on slim margins, you’re spending future profits you don’t yet have.
4. Big Inventory Orders Without the Margin to Support It
If your margins are too slim and you’re paying yourself out of the business, there may not be enough cash left for the next PO (purchase order). This is how businesses stall.
How to Set Realistic Financial Goals That Don’t Kill the Business
Setting smart financial goals isn’t about spreadsheets—it’s about survival. Many sellers get this wrong, but inventory accounting reveals the truth about how long your margins can fund your growth.
- Pay Yourself a “Survival Salary”—Not a Vanity One
- Know Your “Cash-Lock Window”
- Budget for Operating Expenses Before You Pay Yourself
- Build a 90-Day Cash Buffer
Your Gross Profit Is Not Your Paycheck
Gross Profit Margin is your business’s heartbeat—but it’s not your personal bank account. Respect the distinction.
If you’re unsure how much of your gross profit is actually available to withdraw, it might be time to rebuild your books on an accrual accounting foundation.
This allows you to match inventory costs with revenue properly, spot margin gaps, and avoid the illusion of profitability.
The CronosNow ecommerce accountant Takeaway
My candy bar hustle did not fail because of sales —but because I didn’t respect the margin. I let my personal cravings sabotage a profitable idea. Don’t make the same mistake with your business.
Your job isn’t to take everything the business earns.
It’s to make sure the business earns enough to thrive—and then pay you sustainably.
Feeling unsure if your business can support your salary—or if you’re just “eating your profit”? We help eCommerce sellers build clean books, forecast smartly, and pay themselves without sabotaging growth.