Eight tools for the numbers that decide whether a business works.
Most small businesses fail with a full order book, not an empty one — profitability and cash flow are different problems and a business can die of the second while succeeding at the first. The tools below separate them deliberately.
If you're running a business rather than modelling one, the two numbers to watch weekly are operating cash flow and your LTV-to-CAC ratio. Margin tells you whether the model works; cash flow tells you whether you survive long enough to find out.
Gross margin measures the product, operating margin measures the operation, and net margin measures everything including financing and tax. A business can have a healthy gross margin and a negative net one.
Profit is an accounting opinion; cash is a fact. Free cash flow is what's left after the capital spending needed to keep operating.
An LTV-to-CAC ratio below 3:1 usually means acquisition is too expensive to scale. Employee cost typically runs 25–40% above base salary once payroll tax, benefits, and overhead are included.
For assessing a business as an investment, whether you're buying, selling, or deciding where to put the next dollar of capital.
Short answers to what people ask most before picking a tool.
