I don’t know which is more
important, cash or profit, for my early stage business. I know I need to reduce
stock levels and this will increase cash flow, but it will also have a negative
impact on my margins. I know I need new computers, but this will increase cash
outflow and the depreciation will negatively impact my earnings.
I talked with a serial
entrepreneur and she said that the only reality in business is cash, that accounting
and profit are an art form. She told me you need cash to pay bills and salaries
and that profit and cash were not the same thing. She said not to worry about
depreciation, it was a non-cash item. She said get what you really need and can
afford and don’t worry about depreciation.