Here's a sentence that confuses every new owner until it bites them: a business can be profitable and still run out of cash. Profit is a number on a report. Cash is what's actually in the bank when wages are due. They are not the same thing, and the gap between them has killed more healthy-looking businesses than any recession.
It happens most often when you're growing. You win bigger jobs, so you buy more stock and hire more people — all of which you pay for now — while the customer pays you in sixty days. On paper you're winning. In the bank account, you're drowning. Growth, paradoxically, is one of the most cash-hungry things a business can do.
The skill is managing the timing of money, not just the amount: getting paid faster, paying smartly, keeping a buffer, and knowing your cash position before it surprises you. Boring? Maybe. But cash-flow management is the difference between a business that survives its own success and one that doesn't.
Know your numbers before they know you.
Mastering the difference between profit and cash — and managing both — is foundational across Start and Grow.
Or find your stage with the free Business Stage Assessment.
Annie
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