The whole category in one page.
PROFIT AND CASH ARE DIFFERENT, AND CASH IS WHAT KEEPS YOU OPEN
Loan capital, equipment, stock, drawings and tax are payments that are not costs. A profitable, growing business can run out of money entirely — that is overtrading, and it kills otherwise successful businesses.
A CASH FORECAST IS THE ONLY TOOL THAT WARNS YOU BEFORE YOU RUN OUT
Look for the period where the balance goes negative and act weeks ahead, because options exist then and disappear on the day.
PLAN COSTS AGAINST CONSERVATIVE REVENUE, BECAUSE COSTS COMMIT IMMEDIATELY AND REVENUE DOES NOT
Build a second version on substantially lower revenue and find out which costs you could actually reduce, and how quickly.
IF EACH SALE LOSES MONEY, MORE SALES MAKE IT WORSE
Know your margin by product and by customer. Businesses routinely sell some things at a loss without knowing, usually by omitting their own time.
MONEY YOU COLLECT OR DEDUCT AS TAX IS NOT YOURS
Move it to a separate account as it arrives. Spending it creates a liability you cannot avoid and personal exposure you cannot escape.
PRICE IS THE MOST POWERFUL LEVER, BECAUSE A PRICE CHANGE FLOWS ENTIRELY TO PROFIT
Before any discount, calculate how much extra volume is needed just to stand still — the number is usually startling.
MEASURE WHAT PROPORTION OF REVENUE COMES FROM YOUR LARGEST CUSTOMERS, BECAUSE CONCENTRATION IS THE RISK MOST OWNERS IGNORE
REVIEW MONTHLY, NOT ANNUALLY, SINCE ANNUAL STATEMENTS REPORT HISTORY YOU CAN NO LONGER ACT ON
