Profit Mastery

Monday gut check. If the phone stopped ringing today and no new sales came in, how many days could you keep the lights on?

That number is your runway, and most owners have never worked it out. Take the cash you have on hand, add what you could pull from a line of credit, then divide by what the business burns in a normal month. The answer is how long you would last.

Knowing it changes how you act. Plenty of runway means you can be methodical. A short runway means you move now, while you still have choices.

The number isn't there to scare you. It puts a date on the calendar so nothing sneaks up.

Do you know your runway in days right now, or is it a guess? Tell me below.

Friday Forecast. There's one number that tells you how many days your cash sits trapped inside the business. The cash conversion cycle.

It counts the days your money is tied up waiting on customers and sitting in inventory, then subtracts the days you get to hold your suppliers' money before paying them. What's left is how long each dollar is stuck before it comes back to you ready to work again.

The shorter that cycle, the less cash you need to run the very same business. Colin treats it as the one number to rule them all for working capital, because days translate straight into dollars. Trim the cycle and you free up cash you already earned.

Before you log off, pick one lever: collect a few days faster, or carry a little less inventory.

How many days is your cash trapped right now? Give me your ballpark below.

You can grow 40% in a year and run yourself right out of cash. I've watched it happen to good businesses.

The math is quiet. Every new customer you land costs you money before it pays you. The materials and the labor go out first. You deliver the work. The customer pays weeks later. Multiply that across a fast-growing order book and your working capital gets swallowed while the P&L is throwing a party.

The fix isn't to stop growing. It's to plan for the cash your growth is about to eat. Forecast it, then line up the funding before you need it, not the week you come up short.

This week's Profit Move walks through the growth trap and how to grow without going broke. Link below.

Ever had your best growth year turn out to be the most stressful one on cash?

Myth: more revenue means more cash. Truth: fast growth can drain your account quicker than a slow month ever would.

Here's why. When you grow, you buy inventory and staff up, then deliver the work long before the customer pays. The costs leave now. The cash comes back later. The faster you grow, the wider that gap gets, and the gap gets funded straight out of your bank balance.

Colin calls it the treadmill of pay now, collect later. A booming order book sitting next to an empty account is a real place businesses land, and it catches them off guard every time because the P&L looks great.

Growth isn't the enemy here. Ungoverned growth with no cash plan is.

Have you ever watched a great sales month tighten your cash instead of loosening it?

The financial statement most owners never open is the one that tells you where the money actually went. The cash flow statement. Swipe for the plain-English version.

It has three sections, and each answers one question. Operating: did running the business make cash or burn it? Investing: what went out for equipment, property, the long-term stuff? Financing: what moved through loans, owner draws, and money you put in?

Read it top to bottom and you get the story your P&L hides. A business can post a healthy profit and still show cash draining out through debt payments or a big equipment buy.

You don't have to build this by hand. Your accounting software already has it. The skill is reading it.

Which of the three sections do you actually look at today?

Monday gut check. Last month looked profitable on the P&L. Did it actually put cash in the bank?

Those are two different questions, and plenty of owners only ask the first one. Profit is what your income statement records the moment a sale is booked. Cash is what shows up once customers pay and the bills clear. The two rarely move in lockstep.

Operating cash flow is the number that settles it. It strips out the accounting and tells you whether the core business generated money or quietly consumed it. A profitable month with negative operating cash flow is a warning, not a win.

Pull last month's operating cash flow, then set it next to net profit and read the gap.

When was the last time a "good" month left your account flatter than you expected?

Friday Forecast. Before you log off, spend fifteen minutes looking thirteen weeks ahead.

Not the bank balance. Not last week's sales. The thirteen weeks in front of you. Most owners can't name which week next quarter will be the tightest, and that week is the whole point.

Find the lowest projected balance. Read why it's low: a payroll Friday stacked on a vendor payment, a seasonal dip, a receivable that lands late. Then move one number to lift it.

Fifteen minutes now beats a scramble later.

What's your tightest cash week this quarter? Drop the week below.

You can hand off the bookkeeping. You can't hand off understanding your numbers.

I tell every owner I work with: hire the bookkeeper, lean on our bookkeeping partner, get the data entry off your plate. Do it. But the day you stop understanding what those numbers mean is the day you lose the wheel of your own business.

Understanding isn't doing every task. It's looking at your statements and knowing the story: did we make cash, where did margin go, what do we do Monday.

That part you keep. Always.

This week's Profit Move breaks down the three numbers to keep in front of you. Link below.

One extra day of getting paid can quietly cost you three thousand dollars. On a million-dollar business, that's what a single day of DSO is worth.

DSO is days sales outstanding, the average time it takes a customer to actually pay you. Every day an invoice sits unpaid is cash trapped on your balance sheet instead of sitting in your account.

Here's the math. A $1M business carrying $100K in receivables collects in about 36 days. Shave one day off that and roughly three thousand dollars lands back in the bank. Let it drift the wrong way and the same three thousand goes missing every day it slips, without ever showing up on your P&L.

Most owners never track this. They chase next month's sales while last month's sales sit uncollected.

Pull your DSO this week, then hold it against the terms you actually set. That gap is your money. Where's yours landing?

The tool that shows you a cash crunch six weeks before it lands: a 13-week cash forecast. Swipe for how to build one in fifteen minutes.

You don't need software. A spreadsheet or a legal pad works. Three columns, one row per week: cash in, cash out, running balance.

The magic isn't the sheet. It's that you finally see the low week coming while you can still do something about it. Push a payment. Pull an invoice. Move a hire by a pay period.

Owners who run this stop getting surprised at 9 a.m. on a Tuesday.

Do you forecast cash weekly, monthly, or not yet? Tell me where you're at.