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Knowing Your Money: Why Cash Flow is the Key To Entrepreneurial Success
Keeping track of your cash flow is an essential part of a successful business strategy, but it’s also one that is often neglected. Many entrepreneurs will watch their sales and take note of their revenue while avoiding any analysis of their cash flow.
Revenue is certainly important because it indicates how much money your business is bringing in from sales. However, it isn’t the whole story.
You need to know what your profits are too.
After you’ve paid all of your expenses, what are you left with? Cash flow gives insight into this because it looks beyond just sales to offer a full picture of the money that is both coming into your business and going out of it, and when. It shows you how liquid your finances are, which revenue cannot tell you.
If you don’t look at your cash flow, then you may find that your finances aren’t making sense. You can have numbers in the revenue and profit columns that look great, but still catch yourself wondering where your money is. In order to get a sense of where your money is going and to know how much is available to you at any given moment, you’ll need to study your cash flow.
