Bonus: Why Profit Isn’t Cash

A business can look profitable on paper and still have a serious cash problem. In this episode of Grow Your Business & Grow Your Wealth, guest host Sandra “Sandy” Bempah sits down with Brooke Horvath, CPA and Founder of Salt Creek Consulting & CPA, for a practical conversation about the financial numbers every business owner needs to understand. Brooke explains why profit and cash flow are not the same thing, why business owners should pay attention to more than their P&L, and how the balance sheet and statement of cash flows can reveal what is really happening inside a company. They also dig into year-round tax planning, why waiting until tax season can limit your options, and the importance of having your CPA, financial advisor, and other professionals working together instead of operating in separate silos. For entrepreneurs who hope to eventually sell their companies, Brooke shares an especially important warning: preparing for a successful exit often needs to begin years before the sale. Clean financial statements, accurate tax returns, profitability, and smart planning can all influence how a business is valued and whether a buyer can secure financing. And for newer business owners trying to save money by doing everything themselves, Brooke explains why DIY accounting can sometimes end up costing far more than bringing in qualified help early. KEY TAKEAWAYS Profit does not equal cash flow. A company can show a profit and still struggle to have enough cash available for taxes, debt payments, inventory, or operations. Tax planning should happen throughout the year. For business owners and people with more complex income, tax strategy should not begin in March or April. Your balance sheet tells an important part of the story. Brooke says many business owners focus only on their profit and loss statement, while the balance sheet can provide a clearer picture of the company's overall financial health. Your financial professionals should communicate. CPAs, financial advisors, and other professionals may be looking at different pieces of the same financial picture. Collaboration can help avoid missed opportunities and misunderstandings. Start succession planning before you are ready to leave. If you plan to sell your business, Brooke recommends looking at your financials years ahead of the anticipated sale because buyers, lenders, and valuation professionals will examine that history. Sometimes outsourcing saves money. Business owners can spend countless hours trying to learn bookkeeping and accounting themselves, only to pay someone later to correct the mistakes. Know where your cash is going. If your business is profitable but you do not feel like you are building wealth, Brooke recommends looking closely at the statement of cash flows to understand where the money is actually going. Most importantly, Brooke reminds entrepreneurs that business ownership does not have to be a solo journey. Having trusted people around you who understand your business can lead to better decisions and fewer expensive mistakes. CONNECT WITH BROOKE Brooke Horvath, CPA Founder, Salt Creek Consulting & CPA www.saltcreekcpa.com Learn more about Guest Host: https://sandyfinancialsolutions.com/ Disclaimer: This episode is for educational and informational purposes only and does not constitute tax, legal, accounting, investment, or financial advice. Consult qualified professionals regarding your individual circumstances.