If you were to characterize cash flow problems into a few simple buckets, they would mostly consist of:
Timing issues – think of this as “crossing a river” of one week, month, quarter, year in cash outflows. Seasonality and timing can be a big culprit here.
Growth issues – fast growing companies are rapidly accumulating assets, which suck cash out of the business. If you’re profitable, this can be a good thing and create immense business value, so long as you know how to manage the cash flow.
Lack of profitability – it’s hard to have a sustainable cash flowing business without profitability. Yes, they’re separate drivers but still closely related to each other.
Capital allocation decisions — it’s possible (and common) to have healthy operating cash flow with most or all of that money getting consumed by equipment, debt, or owner distributions.
The first step in managing cash is to identify which bucket is your biggest problem (it could be more than one).
The second step is making sure you have enough resources (liquidity) to manage whichever bucket(s) you’re in.
“Liquidity” is a concept rarely taught to operators and most of us think about it as plain old cash on hand; but there are lots of different sources of liquidity we can pull from to manage cash…
11/02/26 — Business lessons from the World Series
10/24/26 — Financial Operating Cycle (flow of money)
10/17/26 — How to conduct a Monthly Financial Review (MFR) ($)
10/10/26 — The 4 business owner archetypes ($)
