Cash flow vs Profit

Cashflow positive means: More ‘actual’ cash money is coming in than is going out. It does not mean revenue exceeds expenditure. It means physical cash or bank desposts – not promises to pay.

So in order to break it down for the startup crew out there, here it is in simple language we can all understand, whether we are techies, designers, craftspeople or retailers.

Cash vs Profit:

It’s impossible to go broke while your business is cash flow positive.

It’s possible to broke while your business is making a profit.

This is why cashflow is King.

It’s also possible to be making a legal loss, while we are dripping in cash. So startups out there only need to focus on one thing. Are we collecting more cash than we are spending?. Do this, and it’s impossible to go out of business.

Leave a Reply