Profit on Paper ≠ Cash; Forecast to Stay Afloat
You can have your best year ever, revenues up 500%. ...yet STILL run out of money. 💀 Cash and profit are not the same thing. Your P&L says you made $250K in paper profits. But that cash isn't sitting in your bank account. It got absorbed by inventory for next year's growth. By deposits on new purchase orders. By cash outflows that don't show up on your P&L. Meanwhile, the IRS wants their cut of your $250K paper profit. You owe $75K in taxes and your bank account is empty. Think of cash like fuel in an airplane. You can have the nicest jet in the sky. Perfect flight plan. Beautiful trajectory. Run out of fuel and you're going down. Doesn't matter how good everything else looks. This is why a cash flow forecast matters more than your P&L. The P&L tells you what happened with profits on paper. A 13-week rolling cash flow forecast alerts you to existential cash shortages - so you can avoid the crash. Profit is a theoretical construct on paper. Cash is a cold, hard fact. Don't confuse them. Looking for a customizable cash flow model + tutorial on how to use it? Let me know and I'll hook you up with one I built. This is from my series on Financial Mastery for eCom Store Owners. Catch the full episode on the recent @ecomfuel podcast or follow me for more on building financial mastery as an entrepreneur. ---------------------------------------------------------------------------------------
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