Your P&L statement shows a healthy net profit.

But your gut says something's wrong.

Trust your gut.

The fourth vital number—net profit—deserves deeper scrutiny than most business owners give it.

It's not enough to know if you're profitable. You need to know why and whether it's sustainable.

I worked with a retail client showing steady bottom line growth for years.

On paper, everything looked fantastic.

Dig deeper, and we discovered a ticking time bomb.

Their net profit came almost entirely from one product line that was about to face significant competition. The rest of their business operated at break-even or worse.

This false sense of security prevented them from making necessary changes to their business efficiency.

Net profit can mask serious problems:

• Profitable divisions hiding struggling ones
• One-time gains creating illusion of sustainable earnings
• Deferred expenses making temporary profitability look permanent
• Owner undercompensation artificially inflating results

True business optimization means understanding the components of your net profit:

• Which products/services drive profitability?
• Which customers are most valuable?
• Which activities drain resources without adequate return?
• Is your compensation structure sustainable?

For my retail client, we diversified revenue streams, optimized pricing on under-performing products, and created a contingency plan.

Within six months, their profit structure completely transformed—more balanced, more resilient.

The lesson?

Don't just know your net profit number. Understand what's behind it. Question whether it reflects reality. And never let today's profit blind you to tomorrow's challenges.