THE BLOG

One of the most disorienting things that can happen as a business owner is to have success.

Not to fail. To succeed. The marketing campaign takes off. The product is a hit. The launch is a win. We love it — we celebrate it, we screenshot the numbers, we tell the team.

And then two weeks later, cash feels tight.

Nothing specifically went wrong. You can’t point to a mistake. And yet it doesn’t feel fine. If that’s a familiar feeling, I want you to know two things: you’re not imagining it, and you’re not bad at business. You’re running into a cash flow timing problem, and it’s a completely different animal than the profitability conversation we’ve been having in the last two episodes.

Profitability and cash flow are not the same thing

Here’s the cleanest way I know to say it. Profitability asks: are you making money over time? Cash flow asks: do we have money right now?

Those are two different questions with two different answers, and a business can absolutely say yes to the first one and no to the second.

You’ve heard the second question before, even if you never called it cash flow. Do we have the money to make payroll? Do we have the money to cover our operating expenses this month? Those are cash flow questions — and you can be asking them in a year where the P&L says you’re profitable.

You can be profitable on paper and still feel the squeeze. And honestly? That squeeze can be equally as stressful as not being profitable at all. Maybe more so, because it doesn’t make sense to you yet.

Growth is usually what creates the strain

Here’s the part that surprises people: cash strain shows up most in growing companies.

Because when you’re growing, the investments come before you see the cash. You’re hiring. You’re building the product. You’re funding the marketing campaign. All of that money goes out first, and the return comes later. That’s not a flaw in your plan — that’s just how growth works.

But it means the money has to come from somewhere in the meantime, and that somewhere is your cash flow.

Growth is an amazing thing. I’m not trying to talk you out of it. But we’ve got to watch how it’s happening and the timing of it as it moves through the business — so it doesn’t create stress and a challenge, and so you can actually enjoy the growth and enjoy serving your clients without feeling like you’re in a pinch behind the scenes.

What this looks like in real life

Let me give you a couple of examples of how this may be showing up in your business right now.

Payment plans. Let’s say you sold something at a $20,000 investment. Wonderful. But the client is paying over time — a couple thousand dollars a month across the year. If you have to make an investment up front to deliver that product or service, you now have money going out fast and money coming in slowly. That’s a gap.

Cost of acquisition. Maybe you invested $5,000 in marketing to land that client. You won’t see the return on that until the third month in. Between now and then, that $5,000 is just… gone from your account, doing its work quietly.

Ad spend. You might be investing in ads, but you’re not going to see the return until that campaign is complete — or until it starts working for you, if you’re still in a testing phase.

None of those are mistakes. Every one of them is a reasonable business decision. They just all create timing gaps, and timing gaps are what a cash squeeze is made of.

The simple spreadsheet that fixes the blindness

Here’s what I want you to do, and I promise it’s not complicated.

Build a simple spreadsheet. Two things go in it.

One: what’s committed to come in each month. These are sales you’ve already generated but haven’t yet received as cash. Forecast out three to six months — this cash is coming, on these dates.

Two: what’s going out each month. Your expenses, your payroll, your investments.

Then look at them side by side. Month to month, you’re going to see very quickly whether you’re up or whether you’re down.

That’s it. That’s the exercise. And the value of it isn’t the spreadsheet — it’s that a month that would have blindsided you in November is now something you can see coming in July.

Build the cushion before you need it

If you’re down in any given month, that’s pointing you straight at a place where you want a cash cushion.

Now, I know it can be hard to build up a cash cushion when you’re in growth mode. Every dollar has somewhere it wants to go. So I encourage all of us as business owners to be thinking about this in advance — what can I set aside now to build up a three to six-month cushion, enough to cover operating expenses if a cash flow challenge shows up?

And if you haven’t had cash flow challenges to date, I want to commend you. I also still want to encourage you to put a system in place to monitor it and plan ahead. The best time to build this is when you don’t need it.

What changes once you can see it

Unpredictable cash flow is truly one of the most stressful things you’ll come across in running a business. It feels completely invisible — until it isn’t, and then it feels like it came out of nowhere.

But once you understand how it works and you start watching it, it stops being a shock to the system and starts being something you manage. That’s a genuinely different way to live inside your business.

And the awareness tends to ripple outward. It might change how you structure payment plans. How you write contracts. How you space out your marketing campaigns across the year, or how you time your product orders. All of that gets smarter once you can see the timing clearly.

Your next step

If you haven’t taken a peek at your cash flow lately, now is a perfect time. Map out the next three to six months: cash coming in, expenses going out, and what’s left at the end of each month.

It’s a simple exercise, and I also know it can feel overwhelming to sit down with your numbers. So pour yourself a cup of coffee or tea, turn on some good music, and give yourself a beautiful environment while you dig in.

You are 100% right on time to take a look at these numbers.

EPISODE TRANSCRIPT

 One of the most disorienting things that can happen as a business owner is to have success. That marketing campaign ticks off. That product is a hit. That launch is a win. We love it. Then two weeks later, cash feels tight. Nothing specifically went wrong, and yet it doesn’t feel fine. This is a cash flow timing problem, and it’s a little bit different than the profitability challenges we were talking about in the last two episodes.

Even profitable businesses can have cash flow challenges. This is all about timing. Profitable businesses can have cash flow struggles, and they’re not the same thing. Profitability looks at are you making money over time? Cash flow addresses do we have money right now? You’ve heard these challenges before.

Do we have money to pay payroll? Do we have money to pay our bills, our operating expenses? That’s a cash flow challenge, even if throughout the year, yes, we are showing up profitable. Yes So you can be profitable on paper but still feel the squeeze, and honestly, that squeeze can be equally as stressful as not being profitable.

But of course, if you keep an eye on this and you have awareness of how cash flow moves throughout your company, you’re going to be able to better plan for it and way reduce the stress levels. So if to date you haven’t had cash flow challenges, I want to commend you, and I still want to encourage you to put a system in place to monitor cash flow in your business and plan ahead.

In a growing company, cash strain can emerge. Because when you’re growing, investments often come before you see the cash. You’re hiring, you’re investing in building that product, you’re investing in that marketing campaign, and you’re going to see the return on that investment after. But first you’ve got to make the investments, and where does that come from?

The cash flow in your business. So that growth is an amazing thing, but we’ve got to watch how it’s happening and the timing of it as it flows through our business so it doesn’t create stress and a challenge, and you can actually enjoy the growth and enjoy serving your clients and customers without feeling like you’re in a pinch behind the scenes.

So let me give you a few more examples of how this may impact you in your business. Number one, payment plans. Let’s say you sold something that is a $20,000 investment from your client. However, they’re going to be paying over time, a couple thousand dollars a month throughout the year. This could create cash flow challenges if you have to make an investment up front to deliver that product or service, or if you already made an investment in the marketing campaign but you’re not going to see the return on that until the end of the year.

For example, maybe you invested $5,000 to get that client with the marketing that you did for that, but you’re not seeing the return on that until the third month in. Another one that I already mentioned is ad spend. You might be investing in ads, but you’re not going to see the return until that marketing campaign is complete or until it starts to work for you if you’re in a testing phase.

So to start to give yourself ease around what is coming and what your investments are and what’s going, I want to invite you to just build a simple spreadsheet. Don’t worry, this is not going to be complex. And what you need to know is what is committed to be coming in each month. These are your sales that you have generated, but you haven’t yet received that cash as revenue yet.

So you want to forecast out, “In the next three to six months, I have this cash that will be coming in.” Now, against that, you’re going to identify what expenses you also have going out. When you look at the cash expected to come in against the expenses expected to be paid out, you’re going to see month to month if you are up or if you are down.

If you are down in any given month, this is going to point to an area where you may want to leave yourself a cash cushion. Now, I know sometimes it’s hard to build up a cash cushion when you are in growth mode. So I encourage all of us as business owners to be thinking about this in advance so we can start to think, “What can I set aside now to help me build up a three to six-month cash cushion so I can cover my operating expenses for the next three to six months should there be any cash flow challenges?”

Unpredictable cash flow is truly one of the most stressful things that you will come across in running a business. It feels like it’s completely invisible until it isn’t when it comes out of nowhere. But once you understand how this works and you start to watch it in your business, it’s not going to feel like such a shock to the system, and you’re going to be able to actually manage it.

Once you have awareness of all of this, it’s going to give you a lot of peace of mind and confidence in how you manage your company. It might even impact how you structure payment plans or how you structure contracts. It might impact the marketing campaign schedule that you have throughout the year and how you invest in your product orders.

So with that, if you are not taking a peek at your cash flow from time to time, now is a perfect time to take the first look at this and map out what the next three to six months look like for your incoming cash, your outgoing expenses, and therefore the cash that you have left at the end of each month and what that looks like over time.

It’s a simple exercise, but I know it can sometimes feel overwhelming. So pour yourself a cup of coffee or tea and then turn on some good music and allow yourself a beautiful environment while you dig into these numbers. You are 100% right on time to take a look at these numbers