Many small business owners believe that profit equals cash. They see a positive number on their profit and loss statement and assume that money is sitting in the bank, ready to spend. Unfortunately, this is one of the most dangerous misunderstandings in small business finance.

The Myth “If my business is profitable, I won’t have cash flow problems.” Many small business owners believe profit automatically translates into cash in the bank. On paper, the logic seems simple: if sales exceed expenses, you should have money left over. But in practice, this belief can be dangerous.