Businesses fail because of lack of cash not lack of profit. Its not a profit until the cash is in the bank. Obviously it’s important for your business to be profitable and you should focus your attention on making your business profitable.
However, if you focus on profit and neglect to focus on cash flow this may be causing your business solvency problems. Poor cash flow will affect all areas of your business and may affect your personal life.
Cash flow and profit are both important for a healthy business. Understanding the difference between the two and how they affect each other will help you manage your business effectively.
What is the difference between the two? Check out my next blog post…