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251: The Importance of Cash Flow

By Sean McCabe and Ben Toalson

Do you know what revenue looks like for next month? What about the month after that? A cash flow forecast is incredibly important. Cash is survival. If your business doesn't have cash, you're done! You can be profitable on paper, but without cash in the bank, you can't pay your bills, cover expenses, or make payroll. A lesson I've learned this past year is you have to earn the right to think long term. By default, I tend to make long-term investments. This is great if you're around in several years to see the returns, but if you don't survive until then, it doesn't matter! You have to focus on short-term cash flow and making it predicable. That's what we talk about in today's show. In doing research on this topic before recording the show, I saw a lot of advice saying to borrow money, talk to banks about getting a loan, or run an extreme sale when you're in a tough spot. These make sense logically, but they conflict with my no-debt mentality and my decision against discounting and devaluing my products. What this forces me to do is think creatively. If I'm in survival mode and I can't borrow money and I can't discount my products and run an extreme sale, how can I generate cash flow? That's where you truly get creative. Learn how to produce a cash flow forecast even if you don't have recurring revenue coming in.

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