Why Cash Flow is More Important Than Profit
A lot of business owners are laser-focused on their sales and their profit. Which is good, those numbers matter! But if there’s one thing we wish more business owners understood, it’s this:
Profit doesn’t pay the bills. Cash does.
Your business can be profitable on paper and still not have enough cash in the bank to cover payroll, rent, or your own paycheck. And that’s where things start to get stressful.
Profit is a Number. Cash Flow is Reality.
Here’s a simple way to think about it:
Profit is what your income statement tells you at the end of the month or year – after everything is recorded and calculated.
Cash Flow is whether there’s actually money in the bank today to pay your bills, your team, or yourself.
You need real cash, and a clear understanding (and plan) for how it's moving in and out of your business.
A Quick Example
Let’s say you run a service business that just landed a big contract. It’s worth $50,000. That’s great news, right? But here’s the catch: You won’t get paid until the job is complete - and it’ll take three months.
In the meantime, you need to cover labor, supplies, software, and bills. You’re spending money every week, but none is coming in.
You might show a big profit once the job is done and invoiced. But if you don’t manage your cash flow in the meantime? You could end up in the red - stressed, behind on bills, or borrowing money just to stay afloat.
This Is Why Cash Flow Matters More
Cash flow is what keeps your business alive. It’s the fuel in the tank. Without it, you can have:
A strong sales month… and still struggle to make payroll.
A profitable quarter… and still feel broke.
A growing business… and still be losing sleep over money.
So What Can You Do About It?
The first step is understanding what actually drives your cash flow. And here’s where most business owners get stuck. They think if they grow revenue or cut costs, everything will fix itself. But it’s not that simple.
There are 16 different areas of your business that impact how much cash your business keeps and when. Some are tied to sales, others to expenses, and some are just about timing - when you pay, when you get paid, how much you keep on hand, etc.
The drivers can be broken down into three categories:
Drivers of Revenue
Drivers of Profit
Drivers of Cash Flow
Bottom Line?
Sales and profit are part of the picture, but if you’re not tracking and planning for cash flow, you’re flying blind.
If you’ve ever looked at your income statement from your accountant and thought, “So … why doesn’t it feel like I have more money?” - that’s your cash flow waving a red flag.
If you want a clearer picture of what those 16 drivers of cashflow are - and where you might be leaking cash without even realizing it - we’ve put together a simple resource to walk you through them so you can better understand where to focus first. Because at the end of the day, profit looks good on paper – but cash is king!
FREE Download: Cash Flow Before Profit
Learn the 16 critical drivers every business owner needs to know to strengthen cash flow and grow with confidence.