Let’s be honest, the purpose of a business is to make money. That means knowing the difference between profit and cash flow.

Net profit is what you have left after you deduct all your business expenses from all your revenue. You can only improve net profit by changing the things that affect your revenue and expenses.

For example, if:  

• You renegotiate with your suppliers, you may get stock cheaper, or carry less inventory.
• Your staff engage with customers better, you can learn more about what they do and don’t like – and get more business accordingly.

You can look at your utility bills, you may be able to run your business more efficiently.

Interestingly, a profitable business does not always have good cash flow, and a business with good cash flow is not always profitable. For example, you can have good cash flow, and loss-making expenses.

It’s also important to remember that just because the money is in your bank, it doesn’t mean it is yours! Mr VAT Man is always looking for his 20%.

To work out how fast you can grow your business, look at your projected cash flow. We can advise you on this.