Running Out of Cash? Here’s What You’re Overlooking... 💸
Let’s be real for a second. You can have a business that’s bringing in tons of revenue, but if your cash flow is out of whack, you're skating on thin ice. Cash flow is the lifeblood of any business. 💸 You can’t run a company on just numbers in a spreadsheet—it’s about what’s actually in the bank at the end of the day. Because once your cash dries up, it’s game over.
Look, it’s easy to get caught up in “profit.” We all want to talk about making big money, right? But here’s the cold, hard truth—if you don’t manage your cash flow, all that "profit" can disappear faster than it came in.
The Pain of Ignoring Cash Flow
Imagine this: You close a huge deal, clients are rolling in, and you’re feeling on top of the world. But when it’s time to pay your team, suppliers, or even just cover the day-to-day bills, you realize you’re short on cash. That’s a gut punch, isn’t it?
You might be making six or seven figures on paper, but if those dollars aren't flowing through your business in the right way, you’ll feel like you're drowning. Trust me, I’ve seen businesses with massive revenue fold simply because they didn’t keep an eye on the cash.
A lot of people fall into this trap—they think as long as the revenue is growing, everything’s fine. Wrong! If you’re not paying attention to how and when the cash moves in and out of your business, you’re setting yourself up for a major wake-up call.
Cash Flow vs. Profit: Know the Difference
Here's the thing: Profit is what’s left over after all your expenses, but cash flow is about timing. You could be profitable and still be broke because the money isn’t coming in fast enough to cover your outgoing expenses. Think of it like this—profit is the destination, but cash flow is the gas that keeps you moving forward.
So many entrepreneurs focus on profit and forget that cash is what keeps the lights on. You can’t pay bills or employees with “potential profits.” You need cash in hand, and that’s why managing the flow is key.
Why Managing Cash Flow is Everything
If you want to grow your business, you’ve got to get serious about keeping your cash flow tight. This doesn’t just mean making more money; it means managing what you’ve got coming in and going out.
So, how do you keep that lifeblood flowing? It’s all about:
Monitoring Your Inflows and Outflows – Know when money is coming in and when it’s going out. Set up systems to track this, so you’re never caught off guard. Use tools like QuickBooks or FreshBooks to keep everything organized. You want to avoid surprises, and the only way to do that is to have a solid grip on the numbers.
Getting Paid Faster – One of the biggest cash flow killers is waiting too long to get paid. If you’re doing work for clients and letting them take their sweet time paying you, you’re setting yourself up for trouble. Set clear payment terms and follow up consistently. Don’t be afraid to send reminders or enforce penalties for late payments—your business depends on it.
Cutting Costs Where It Counts – Just because you’ve got a good chunk of cash coming in doesn’t mean you should be throwing it around carelessly. Look for areas where you can trim the fat. Are there subscriptions you don’t need? Can you negotiate better terms with suppliers? Every little bit adds up.
Building a Buffer – One of the best things you can do for your business is to build a cash cushion. This isn’t just for emergencies (though that’s part of it); it’s also so you can capitalize on opportunities when they come up. You don’t want to be the business that misses out on a great investment because you didn’t have enough cash on hand.
Running Out of Cash
If you’ve ever run out of cash—or even come close—you know the panic that sets in. The stress of wondering how you’ll cover payroll or keep up with expenses is crippling. And here’s the deal: profit won’t save you from that stress, but good cash flow management will.
If your cash flow isn’t steady, you can end up relying on loans or credit just to keep the doors open. And that’s when things really start to spiral. You’re no longer in control—you’re just reacting to the situation. That’s the fastest way to lose focus and eventually lose your business.
How to Take Control
So, what can you do to avoid cash flow nightmares? Start by keeping a close eye on the following:
Invoice Faster, Get Paid Faster: Don’t wait to send out invoices. The quicker you send them, the quicker the money starts coming in.
Negotiate Payment Terms with Suppliers: Ask for longer payment terms with your vendors. This way, you can stretch out your payments and keep more cash in the business.
Forecast Your Cash Flow: Don’t just look at your current bank balance—plan ahead. What’s coming in next week? Next month? Predict cash flow highs and lows, so you’re always ready for the next move.
Create Multiple Revenue Streams: Don’t rely on just one source of income. Diversify so that if one stream dries up temporarily, others can keep you afloat.
Final Thoughts
At the end of the day, your business lives or dies by its cash flow. 💸 It’s not about how much you make on paper—it’s about what’s flowing through your accounts right now. So, stop focusing solely on revenue or profit and start locking down that cash flow. Keep it tight, keep it flowing, and watch your business thrive.
- Mark Evans DM