In the last article, I broke down how cash moves.
- Profit
- Timing
- Decisions
The first two happening constantly, the third in chunks.
On their own, each of them makes sense. Together, they don’t always behave the way you expect. This is where things start to break. (See how this unfolds in Preview Co.)
I have been through this experience a number of times growing a business. It doesn’t happen in a crisis or when something goes wrong. It happens in the more ordinary moments.
The business is working, sales are coming in, profit looks okay, cash isn’t perfect but it’s not alarming either.
The focus remains on growing the business and the next decision is in front of you. It might be a new hire, more marketing spend, a larger client, or a commitment you haven’t made before.
You don’t sit down with perfect information and you can’t wait for complete clarity.
You look at:
- how things have been going
- what the bank balance looks like
- how it feels
The decision gets made. Nothing high risk, just the next logical step. In that moment, everything seems to line up. I’ve sat in that moment more than once, confident enough to move. Underneath that decision though, something else is happening.
The cash impact of that decision hasn’t fully shown up yet.
The profit you’re looking at might not be cash yet. The timing movements are still playing out, still settling, their full effect not yet visible.
This is what that looks like.
So what you’re seeing in that moment is incomplete. It is not wrong, just incomplete and it causes the break.
By the time cash does reflect the full picture, you have already made your decision and are implementing it.
A few weeks later, you check the bank account as you usually do and cash is tighter.
Suddenly you are not deciding, you are reacting. You delay, adjust and try and catch up.
Not because the decision was wrong, but because it was made on a signal that arrived too late. You saw the outcome later than the decision.
