How do I know if I have a cash problem?
Most of the ecommerce sellers I work with don't realize they have a cash problem until it's already a crisis.
Their P&L looks fine.
Revenue is growing.
On paper, the business looks healthy.
But the bank accounts tell a different story, and by the time they realize they need help, they're already scrambling.
Here are the three signs I tell every seller to watch for.
Your bank accounts are getting smaller month over month, even though revenue is going up.
If sales are up but cash is down, something is off. Either money is going somewhere you're not tracking, or your P&L is hiding the full picture.
An inventory order is coming up and you don't know where the down payment is going to come from.
If the answer is "I'll figure it out" or "I'll put it on the card," you're not running a cash strategy. You're reacting.
You're using credit cards or lines of credit as an oxygen mask.
There's a difference between using credit strategically and using it to keep the business breathing. One is a tool. The other is a warning sign.
If any of those three sound familiar, you have a cash problem, even if your P&L is showing a profit.
The P&L can be misleading, and here's why.
That bottom line profit has to fund your inventory orders, pay back any loans, and cover your owner's draw.
All of those hide on the balance sheet which, as I like to say, is where accountants bury the dead bodies.
Because no one looks there.
The P&L tells you what happened on paper.
The cash in your bank account tells you the truth.
If you're seeing one of these signs in your business right now,schedule a call and we'll take a look together.
You can also take ourEcommerce Business Performance Assessmentddewew to pinpoint where the gaps are.
The earlier you catch a cash problem, the more options you have to fix it.
Cyndi
