It simply never occurs to many small business owners that there is a difference between profit and cash flow. Many owners subconsciously think of them as the same. They just assume that if they make a large profit, then they will have lots of cash in the bank. Sadly, this is often not true. In fact, this is one of the most common misconceptions by business owners that I’ve seen in my career. I’m sure you’ve seen that with your clients, too, and you’ve done your best to educate them on the differen... [continue reading]

I share a lot of stories from my experiences of companies that do not understand their numbers and the price they pay for that in terms of poor decision making or missed opportunities. Well, today I get to share an example of the opposite: A company that is adamant about understanding their numbers! Manufacturing Costs I have a manufacturing client that prepares quotes for prospects that might want to have them manufacture a part for them. To prepare a quote, my client wants to include all of t... [continue reading]

I talked recently with an entrepreneur who said that he feels like he understands the Balance Sheet and the Income Statement. I said, that’s great, but what about the Cash Flow Statement? He looked at me with a completely blank expression and asked, what’s that? He said he’s not familiar with the Cash Flow Statement and never runs it as a part of his month end financial review. Profit is not the same as cash! The Cash Flow Statement is the most important of the financial statements, but it’s also... [continue reading]

You don’t want to be an accountant, and you don’t have to be one to run your own small business. You’ve got a bookkeeper to take care of your accounting, and you have a CPA to do your taxes. But in order to talk intelligently to your banker, your managers, or other small business owners, there are a few finance terms that you simply must understand. Don’t worry; these concepts are easy to understand when they are explained simply. In fact, you probably already understand them just from your experience... [continue reading]

This blog is part 2 of the most common financial mistakes that I’ve seen small business make in my 30 years of small business experience. In part 1 I discussed not understanding your numbers of your business and thinking that profit is the same thing as cash flow. Today I have two more for you. Avoid these big ones and you’ll miss some potentially huge setbacks. Mistake #3: Markup is not the same as Margin I have seen this mistake many, many times. People use the terms Markup and Margin interchan... [continue reading]


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