I am regularly asked, “What are the things I should be looking at to ensure I have no cash flow problems?”
There are numerous answers depending on your business type and industry but what is often overlooked is the foundation for positive cash flow. The foundation for positive cash flow is “PROFIT.” You see, unless you want more debt or the burdens of an investor, you MUST operate at a profit to sustain a positive cash flow.
Do you know if you are generating a net profit from your operations? Do you have visibility of your current and future cash needs? Are you getting this data on a weekly basis? If not start here. You first have to get the truth about your profit and cash flow. Then develop a consistent review/reporting rhythm, then begin to work on your profitability.
In our coaching practice we have many client success stories around getting to a better place in terms of cash flow but it starts with understanding the relationship between profit and cash.
The profit a company generates drives liquidity. And it is liquidity that drives growth.
Profit = Liquidity = Cash flow = Your Runway for Growth.