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Khalil and Martin
The Cashflow Contractor Podcast
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"How come I can make a profit but don't have any cash?" It's a frequent dilemma for many business owners. It’s a common dilemma for a lot of business owners. If you're one of them, pay attention as Martin outlines the 4 reasons why you make money but don’t have any!
Time Stamps
- 00:19 - Episode Intro
- 00:48 - The Profit Problem
- 02:32 - 4 Reasons You Make Money But Don't Have Any
- 03:07 - You Haven't Been Paid Yet
- 04:09 - You Spent the Money Repaying Debt
- 04:44 - You Spent the Money Buying Assets
- 05:27 - You Took the Money as Draws
- 07:22 - Addressing the Problem
- 08:58 - Why Do I Have Excess Cash?
- 11:34 - Episode Takeaways
Quotable Moments from Martin
- “If you're losing money, it will definitely affect your cash ultimately, and you need to do something about that.”
- “When you sell something to a customer on credit, you're in effect lending them money.”
- “Repayment of debt is not an expense, so it doesn't reduce your profitability. But, it does consume cash.”
- “What you bought with borrowed funds may or may not be an expense, but paying back debt is never an expense.”
- “The salary you earn as wages is an expense and reduces profit. The money you take out as draws is a distribution of profit. It doesn't reduce profit. It is a distribution of profit.”
- “If you don't know why you have excess cash, then you're likely, or at least prone, to misspend it.”
- “There are times when cash will exceed your expectations. And when that happens, we need to understand why it happened. So that we don't misspend the money and come to regret it when we need it later on.”
Resources
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What is The Cash Flow Contractor?
If you’re like most contractors we know, then you started your business because you’re passionate about and great at your craft. You also wanted to be your own boss. Owning a business has a lot of advantages, but also a lot of challenges.
We started this podcast to talk about things that matter to you as an owner, like business fundamentals, sales processes, marketing, leadership, and much more. Armed with knowledge, you’ll be able to reach your goals, whether that’s growth, getting your shop to run without you, or anything in between.