Let’s talk about something that every business owner deals with, keeping your business financially balanced.

Let’s start with a simple truth as a business owner, your financial health is not just about how much money you make. If profit is the heart of your business, then cash flow is the blood pumping through it. Both are critical, but deciding which matters more depends on the pulse of your business.

So, what’s the difference? 

Think of profit as the big moment of what’s left after you’ve deducted all expenses from your revenue. It’s what tells you whether your business is doing well financially. On the other hand, cash flow is the daily reality check. It’s the movement of actual money in and out of your business.

Here’s the thing, profit can be deceiving. Imagine you’ve just landed a massive contract with a client which translates to profit but wait, the client doesn’t pay for another three months. Meanwhile, your bills, rent, and employee salaries are due now. That’s where cash flow comes in if you manage it well.

A business can show a hefty profit on paper and still go under because it runs out of cash. Why? Because while profit shows you’re on the right path long-term, cash flow ensures you can keep the lights on tomorrow.

Which one matters more?

This is like asking if fuel or an engine is more important in a car. You need both. Here’s a little cheat sheet:

• If you’re a new or growing business, focus on cash flow. It’s your lifeline.
• If you’re established and cash flow is steady, profit becomes your guiding star.

Remember, cash flow is king, but profit is the kingdom you’re building. Balance the two, and your business will succeed.

Need help increasing your cash flow? That’s what we’re here for at Grow Sign up now to get started.