- Owned and Operated
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What’s up everyone,
It’s time to take a deep dive into what cash flow actually means (hint: it’s not EBITDA or net profit). Why?
Because failure to understand the true definition almost tanked my company early on.
Before we talk cash flow, here are some other financial-related resources to review:
Leaving finance to build a legacy in HVAC (YouTube)
The many reasons why you need home service business software
The OAO “Breaking $5 Million” workshop is a month away (with a few spots remaining)
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The Cash Flow Lie That Almost Breaks Every Business
Spend less than you make. Make more money. Automatically transfer and lock it away. It’s personal finance 101.
That might sound like advice from a budgeting app, but it’s also what separates stable businesses from cash-strapped chaos.
Here’s the lie many operators believe:
“If I’m profitable on paper, the business is healthy.”
But that simply isn’t true. Your EBITDA doesn’t pay the bills. Your net income doesn’t fund your truck fleet. The P&L can tell a nice story, but if you’re not watching actual cash, you’re guessing.
In one example, we showed a solid $187K in EBITDA but we lost $13K in cash that same month. Why?
$80K went to new vehicles (CapEx—not on the P&L)
$27K went to principal debt payments (also not on the P&L)
Another $50K+ was tied up in other debt and capital leases
Total cash out the door: $200K+.
Cash left in the bank: basically zero.
Our leadership team was confused. The P&L said we were winning. But I had to walk them through the real math because even in an open-book company, if you don’t teach cash flow, you can’t expect people to manage it.
What we changed:
Auto-transfers to savings: Every day, $8,100 moves into what we call a capital account. That’s our emergency fund, CapEx reserve, and acquisition fund all rolled into one.
Locking cash in CDs: When the capital account gets too fat, we move $200K into a short-term CD. It earns 4–5% and removes the temptation to impulse-spend.
13-week cash forecasting: We now track every expected outflow, match it to projected revenue, and model worst-case scenarios in advance.
Why This Matters Now
The bigger we get, the riskier bad cash flow decisions become. A $20K shortfall can be covered. A $2M hole from mistimed CapEx or debt payments? That’s a fire sale waiting to happen.
We now talk about cash weekly. We include debt payments when discussing breakeven. We map cash outlay against hiring, fleet, marketing, and expansion plans—not just P&L targets.
We’ve moved beyond “are we profitable?”
Now we ask:
Can we actually afford this decision?
Will we have the cash when the bill hits?
And if not, where does that leave us?
The Takeaway
If your growth strategy doesn’t include a cash strategy, it’s just a guess.
So here’s your move for this week:
Start an auto-transfer to a business savings account—even if it’s $1,000 a week.
Set a trigger to lock up excess cash in a CD when the balance hits a certain threshold.
Build a simple cash-out sheet for the next 30 days. Who gets paid, when, and how much?
Because cash flow is a game of preparation, not reaction. And if you wait until you feel it, it’s already too late.
Still Running Your Ops From a Whiteboard and a Prayer?
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Run your business your way. Just way better.
Cash flow is a good thing…but only if you know exactly what it means and how to manage it. Now, you do.
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👊 John
Disclosure: This newsletter includes sponsored content. However, all opinions expressed are entirely my own.
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