As both a CFO and business strategist, I've seen countless businesses fail not because of market conditions or competition, but because they didn't know their numbers. Specifically, what I call the "Vital 5":

1. Sales

2. Gross Profit

3. Gross Profit Percentage

4. Net Profit

5. Cash Balance

Let me share a stark example: A construction company was generating $3M in annual revenue and thought they were doing well until we analyzed their Vital 5. Here's what we found:

- Sales were up 20%

- Gross profit was down 15%

- Gross profit percentage dropped from 35% to 25%

- Net profit was negative

- Cash was depleting rapidly

They were actually losing money on every new project they took on. They were growing themselves out of business.

The Fix:

We implemented daily monitoring of the Vital 5, which revealed:

- Three project types were unprofitable

- Two project managers were consistently underestimating costs

- Material costs had increased 12% without price adjustments

- Payment terms needed restructuring

Results after 90 days:

- Gross profit margin improved by 8%

- Cash flow increased by $150,000

- Net profit turned positive

- Owner stress levels decreased dramatically

Remember: Revenue is vanity, profit is sanity, but cash is reality.