The business is running. There are customers and there is revenue. Yet at the end of the year, it is not always clear how profitable the business really is—or exactly what drove the profit (or loss).
A business owner must generate profit over time in order to survive, and then to grow and thrive—even if the main goal is simply to do good in the world rather than accumulate millions in a personal bank account.
To make a profit, the business owner prepares a plan each year and works hard to implement it.
According to data from Israel’s Central Bureau of Statistics and CofaceBDI, between 40,000 and 60,000 businesses—including startups that are already selling—close in Israel every year. That is close to 8% of all active businesses. The numbers are higher during periods of war or pandemic, and they do not include businesses that are still surviving with low profitability but have not yet closed.
According to the Israel Small and Medium Business Agency (SBA), the main reason businesses close is that they do not make enough profit—or even operate at a loss.
The underlying reason: poor business management.
And yet, the knowledge required to manage a business is widely available—online, through AI tools, in books, in colleges, and from consultants and other experts.
What is often overlooked is that reliable information about profitability is usually not readily accessible to small and medium-sized business owners.
Where the Fog Begins
At the planning stage, the business owner needs to know what profitability looked like in the past and which factors contributed to profit or held it back.
During implementation, the owner needs an estimate of expected profit by year-end and needs to know what is actually happening with those profit drivers and constraints after changes have been made.
What the Reports Show—and What They Don’t
The tools available to small and medium-sized business owners are very limited when it comes to answering these questions:
- The profit and loss statement from the accountant often arrives months after year-end and presents an overall picture of profitability, assuming it was prepared on an accrual basis. It does not break profitability down by customer, product, or project. It tells you what happened—not why it happened, and certainly not what is likely to happen next.
- CRM reports contain data about customers, leads, and sometimes closed deals.
- ERP reports contain data about operations, projects, and inventory.
- Bookkeeping reports contain data about invoices and receipts.
- Cash-flow systems and bank reports show the movement of money.
Each of these reports, on its own, does not provide a clear picture of business profitability.
Example: Which Marketing Channel Is Actually Profitable?
- CRM reports show the number of leads and closed deals generated by each marketing channel.
- Bookkeeping reports show invoices and the revenue generated by those deals.
- ERP reports or Excel files show the costs of the products or services involved in those deals.
- Combining and summarizing the data from these reports—this is where the real challenge lies—makes it possible to create a report showing the profit generated by each marketing channel, as well as which products or services generate more profit.
- Based on that report, you can decide which channels deserve more investment and which products are more worthwhile to promote.
- Without this analysis, it is easy to be tempted to promote marketing channels based only on the number of leads, the number of closed deals, or the value of those deals—not necessarily the most profitable choice.
This example shows that integrating and analyzing data from different reports can provide an excellent estimate of profitability, along with the factors that drive or constrain it. This is exactly what analyst teams do in large companies.
Why This Usually Doesn’t Happen in Small and Medium-Sized Businesses
The problem is that business owners often do not have the time, tools, or team required for this kind of analysis. Business consultants bring experience and business perspective, but they usually do not work directly with the data itself. Data analysts know how to perform the analysis, but small and medium-sized business owners often find it difficult to manage such work and to justify its cost.
At the same time, businesses are collecting more and more data across different systems, while markets are changing faster than ever. As a result, the need for data analysis is actually increasing significantly.
Two Possible Solutions
One possible solution is to implement a single system that integrates and analyzes the data—for example, Priority ERP. The problem is that the system must be specified and configured correctly, and both the design and implementation process, including iterations, can be expensive and take considerable time.
A faster and relatively less expensive solution is to work with a business consultant who can also analyze the data. The problem is that there are still very few consultants who combine both capabilities (as of 2026).
I can personally help with the second solution.
If you are also struggling to understand how profitable your business really is—or, worse, you are seriously concerned that it may not be profitable—get in touch.