The distinction between “profit” and “cash flow”

Mike Gifford on Flickr https://flic.kr/p/HhZe15 Used under Creative Commons

Just got off a coaching call… Of course, a necessary condition for business success is that “money coming in” is greater than “money going out”. But DON’T call this “profit”. #Profit is revenue minus expenses, and is used to calculate tax owed at the end of an accounting period. What is more important, especially in the initial stages of #scaling, is #cashflow: the cash on hand at a given moment. You can sign a potentially profitable contract, but be hung out to dry because you don’t have the cash flow in hand to deliver.

#scaling, is #cashflow: the cash on hand at a given moment. You can sign a potentially profitable contract, but be hung out to dry because you don’t have the cash flow in hand to deliver.

Present positive cashflow is more important than future potential profits.

(And don’t get me started on #EBITDA )

originally posted on LinkedIn here: https://www.linkedin.com/feed/update/urn:li:activity:6509458656839421953/

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