Crafting a Clear Value Proposition: Your Base for Business Success
December 23, 2025
You’re Ready for a SWOT Analysis
December 23, 2025Crafting a Clear Value Proposition: Your Base for Business Success
December 23, 2025You’re Ready for a SWOT Analysis
December 23, 2025December 23, 2025
What to Do When You’re Making a Profit But Short on Cash
By Ted LeBow, Founder & Co-CEO
There’s nothing more frustrating than seeing a profit on your income statement while your bank account tells a different story. On paper, your business is performing well. But when it comes time to cover payroll, pay vendors, or invest in your next project, the cash just isn’t there.
This is one of the most common pain points we help solve for farmers and food entrepreneurs. Understanding where your cash is going—and how to keep more of it in your pocket—is essential to building a business that lasts.
We recently walked a client through a process that freed up nearly $70,000 in one month. No, it didn't come from new funding or major changes. It came from smart decisions based on clear financial insights. Here's how we did it, and how you can apply the same approach.
Step One: Review Your Income Statement
Start with your Profit & Loss statement. Even if you think it’s accurate, take a closer look. Errors, misclassifications, and inconsistencies are more common than most people realize. Review your income and expenses for trends, red flags, or anything that looks out of place.
Make sure your sales data matches what’s actually happening on the ground. Check that inventory purchases are being recorded properly. Confirm that your cost of goods sold makes sense given your production volume. Cleaning up this report will give you a clear understanding of whether your business is actually profitable—or if the numbers are just telling a partial story.
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Step Two: Use Your Balance Sheet to Understand Cash Flow
Once your income statement is solid, it’s time to turn to your balance sheet. This report tells you where your cash is tied up and gives you insight into how to improve liquidity without cutting corners or sacrificing growth. Here's what to focus on:
Inventory
If you’re overstocked on certain products, your cash is sitting on the shelf. Conduct regular inventory counts and compare them against your sales history. Consider running promotions on products that are not moving. Reducing excess inventory can quickly free up cash and streamline operations.
Assets
Avoid making large purchases or launching capital projects unless you’ve mapped out the return on investment and have a realistic plan to fund them. Prioritize based on what will improve profitability and timing based on when you’ll actually have the cash to support the investment.
Accounts Receivable
Cash doesn’t count until it’s in your bank account. Make sure invoices are going out as soon as a sale is made and follow up regularly with customers who are behind. If cash flow is especially tight, you might offer a small discount for early payment to encourage faster turnaround.
Accounts Payable
Delaying vendor payments can damage relationships, but so can going silent. Be proactive and transparent. Let vendors know what to expect and when. Many will work with you on payment plans or extended terms if you communicate openly.
Debt
If you’re considering new equipment or facility improvements, don’t dip into your working capital to get started. Identify appropriate funding sources early and secure financing before the project begins. Having a plan in place prevents surprises and keeps your cash reserves protected.
The Results: More Cash, Less Stress, Stronger Foundations
By working through this exact process, one of our clients improved their cash position by nearly $70,000 in just one month. This wasn’t the result of a windfall or sudden spike in sales. It came from clarity, strategic decision-making, and a willingness to look at the whole picture with a fresh perspective.
If you’re profitable but still feeling the pressure of low cash flow, you’re not alone. Many of the farms and food businesses we work with have been in your shoes. What they needed was a trusted partner to help them see the big picture, untangle the numbers, and create a plan for steady, confident growth. If this sounds familiar, reach out and let’s see if we can help you improve your cash flow.
