OPERATORS E138: Why Winners Go Broke
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Nov 5, 2025 Cash flow reigns supreme in business, overshadowing profits and revenue numbers. The hosts share harrowing cash crunch tales, revealing how even profitable ventures can go belly-up. They discuss the paradox of rapid growth draining cash and the value of slowing down. Tactical tips for protecting cash reveal the importance of negotiating supplier terms and understanding your balance sheet. The conversation also dives into the cost of equity financing and the necessity of a strong finance team well before making any major business moves.
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Profit Doesn't Guarantee Liquidity
- Profitable or EBITDA-positive companies can still run out of cash and fail despite looking healthy on the P&L.
- Cash management and balance sheet control, not just profitability, determine survival and bargaining power.
Pushing Payroll During A Big Win
- Mike pushed payroll a week because a Sam's Club receivable couldn't be factored and he didn't tell the team.
- The P&L looked great from a large order, but cash was missing when payroll was due.
Choosing Taxes Over Inventory
- Sean described a $10M EBITDA business that recently had no money for payroll and once had to choose between buying inventory and paying taxes.
- He personally covered inventory later with personal funds to keep operations running.