I stood in front of a room of business owners and asked a simple question:

"What's your breakeven point?"

Out of 43 people, only three knew the answer.

The rest were running businesses without knowing how much revenue they needed to survive.

This fundamental gap explains why so many companies with solid sales still struggle with financial performance.

Understanding your breakeven point requires knowing three of the Vital 5 numbers: Sales, Gross Profit Percentage, and Net Profit.

Here's the simple math: Fixed Costs ÷ Gross Profit Percentage = Breakeven Revenue

For a business with $50,000 in monthly fixed costs and a 40% gross margin, that's $125,000 in monthly revenue just to break even.

Yet I regularly meet owners who have no idea if next month's projected revenue will cover their costs.

This knowledge gap creates several problems:

• Ineffective pricing strategies
• Misaligned sales targets
• Poor resource allocation
• Unnecessary stress and uncertainty

One manufacturing client was consistently hitting $280,000 in monthly sales—well above what he thought was his breakeven point.

But after calculating his actual numbers, we discovered his breakeven was $315,000 due to a lower-than-assumed gross profit percentage.

Every month, he was losing money while thinking he was profitable.

We implemented targeted cost reduction and margin improvement initiatives, lowering his breakeven to $260,000.

Suddenly, those same sales produced $20,000 in monthly bottom line growth.

The lesson is clear: You can't improve what you don't measure, and you can't survive what you don't understand.

Know your numbers. Start with the Vital 5.

Your business depends on it.