Cash is king.
This phrase is tossed around in business often, but I wonder how many entrepreneurs really understand what it means.
Why is cash flow so important?
The reason why is because profit can be deceiving and sales growth can diminish cash. Really? Yes, it’s complicated, but not all growth is good.
You need to be able to determine how to build profits and ensure you know what is happening with the cash in the business. To do this, you can build up some reserves, take more money home with you to build wealth or strategically invest the cash for defined purposes.
Cash flow is critical for at least eight components of business.
- Cash flow removes uncertainty and doubt about the viability of the business
- Cash flow prevents you from missing opportunities
- Cash flow prevents employee frustration and burnout (because you can reward)
- Cash flow prevents your burnout because you can take a break
- Cash flow gives you freedom to overdeliver on service because you have some margin
- Cash flow gives freedom to invest in talent when you see it
- Cash flow gives freedom to keep you focused on the big picture, not the minutiae
- Cash flow allows you, the entrepreneur, to take money out of the business for your own personal life
Cash is king.
Many businesses think the goal is to just continue to grow. But many times, growth creates more expense, more headache and no more cash is available for all the things listed above.
So what can you do?
Well, the surprising thing we’ve seen at Kahuna Accounting in working with 250+ entrepreneurs to get their financials under control, is that a majority of entrepreneurs don’t have a great understanding of what their financials are saying.
And almost nobody understands how cash flow works in their business.
When you do understand it, you can take control of it. Cash flow is not something passive that just happens to you. It can be strategically guided to grow.
But first you have to understand the key drivers of cash in your business.
To help you get started, we’ve partnered with Philip Campbell, an experienced CFO, CPA and published author to provide this free guide on how to understand what’s happening with the cash in your business.Get the Free Resource Here!
Once you get a handle on what is happening with the cash, you can take the steps to making sure your business is a cash producing machine!