I said this to another business owner at an Entrepreneurly event a couple weeks ago: you can be profitable on paper and still not make payroll this month. That’s the part nobody tells you when you’re starting out.
Early on, I made it a priority to actually understand my financials instead of just glancing at a bank balance and hoping for the best. I got into QuickBooks. I took courses. I looked for education wherever I could find it.
Where it clicked
The moment it truly clicked was in 2017, in a Small Business Administration program. We sat in a room going through cash flow statements, balance sheets, and P&L statements side by side. That’s when I understood how the three connect, and why you can’t look at just one of them in isolation.
The P&L tells you what you’ve earned. The balance sheet tells you what you own and owe. But the cash flow statement tells you whether you can actually operate tomorrow.
That’s the gap that catches people off guard. A business can look great on the P&L and still be short on cash the day payroll is due, because the money hasn’t landed yet.
What I built because of it
Once you see that gap, you build around it. In any business I run that has full-time employees, I set up a dedicated payroll account from day one. Payroll doesn’t wait, so I don’t want its funding tangled up with everything else moving through the business. Keeping that account separate means I always know exactly what’s available for that obligation, no matter what else is happening.
What I’d tell you to actually do
Take the time to understand your finances for real. Not a summary. The real thing.
Know what a chart of accounts is, and know what yours should look like. Know how money is coming in and going out. Know how fast your invoices are getting paid, and how fast your own bills are due.
And understand this: what you see when you log into your bank account today might not be what’s there tomorrow.
The business owners who stay out of financial crisis are the ones who project forward. Not the ones who just look back.
Stacy Derrick │ Founder, Stacy Derrick Creative, LLC │ stacyderrickcreative.com
If this was helpful and you want to support the work, you can buy me a coffee at buymeacoffee.com/stacyderrick.
You may be wondering — did AI help write this? Yes, and I want to be upfront about that. The process, the client work, and the thinking behind every step are mine, and they were worth reading before AI touched a word. AI just helped me pull it together more cleanly. That is a system working the way it should.
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