Entrepreneurship · 8 min
Cash Flow vs Profit
Profitable businesses close every year for one reason: timing.
Profit is what remains after costs over a period. Cash flow is when money actually arrives and leaves. A business can be profitable on paper and still fail to make payroll.
Track a simple weekly cash position: opening balance, expected inflows, committed outflows, closing balance. Four weeks of visibility prevents most emergencies.
Margins tell you whether the model works. Cash flow tells you whether it survives the month.
Key takeaways
- Profit is a period. Cash flow is a calendar.
- Keep four weeks of cash visibility.
- Margin proves the model; cash keeps it open.
Knowledge check
A profitable business can still fail because of what?
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