MY CASH FLOW STORY

It was February 14, 1988; I had left a cushy VP Finance job at the second largest floral wire service & gift container company in the world and took the position of CFO for an entrepreneurial start-up/turnaround. Why? For the thrill and experience of taking a struggling natural foods snack bar manufacturer from the health food industry into the mass market.

 

I had only been on the job for one week when I got the phone call late Sunday afternoon. Valentine's Day. The Controller had been working the weekend, crunching numbers. "We can't make payroll next Friday," he said. Three hundred employees. No cash. No credit line left.

 

Talk about a punch to the gut. In my prior life, I had worked for Fortune 500 companies (Mobil Oil, Mattel, PepsiCo) in financial roles and had never experienced cash flow problems. At Taco Bell (PepsiCo subsidiary, at the time), I was the cash manager handling $250+ million in annual cash! Never a problem.

 

I did my best to enjoy Valentine's Day with my wife and family, then got into work extra early Monday morning to execute my game plan. I thought about my predicament for about 15 minutes while mentally flashing back to my undergraduate and graduate business school finance classes. What came to mind was a classic textbook response: reduce outflows and increase inflows.

 

So I put a strategic halt to vendor payments and then went through our Accounts Receivable, identifying all major accounts with late or significant outstanding balances. I proceeded to dial for dollars, offering sizeable, one-time discounts if they paid their outstanding balance that week. Then I went to each office and collected the checks myself. We made payroll and I learned an invaluable lesson: Cash is King, and nothing ages an executive like being short of cash!

 

I immediately implemented a daily cash report as well as weekly, monthly, and quarterly cash flow projection reports and ensured cash flow was discussed at each week's operations meeting. We also implemented many cash flow management strategies and KPI's for tracking results.

 

I wish I could say we never had any more cash flow problems but, when you grow a business by ten-fold in six years, you're going to have challenges. The difference is, I always knew where we stood from a cash position.

 

Despite showing a decent quarter from a profit standpoint, everything that looked solid on paper meant nothing. That moment taught me a fundamental truth that most business owners never discover: profit and cash flow are not the same thing. And focusing primarily on profit can create constraints that limit everything you're trying to build.

 

From there, I went on to be involved in several bootstrapped SMB start-ups as well as taking on the turnarounds of four different struggling business units of larger firms. Cash flow was always top of mind, and I never forgot the lessons learned at my first entrepreneurial company.

 

Final comments...

That experience shaped the rest of my career.

 

Growth and expansion are the natural ambitions of every business owner who wants to build something meaningful and enduring. Nearly every large company we admire today started as a small business. Growth is possible—but it is rarely linear, and it is never easy.

 

What I learned early—and then relearned repeatedly across startups, turnarounds, and growing businesses—is that cash flow is the constraint that determines what is possible. You can have a compelling vision, strong demand, capable people, and respectable profits on paper—and still find yourself boxed in by cash.

 

That is why so many businesses struggle or fail, especially during periods of growth. It is not a lack of effort or ambition. It is the absence of a disciplined cash flow operating process.

 

From that first moment as a CFO facing payroll risk, through decades of leadership roles and entrepreneurial work, one truth remained constant:
when you understand and manage cash flow deliberately, you gain control.

 

When you don’t, the business controls you.

 

Whether you adopt a formal system or develop your own approach, the principle is the same.

 

Cash flow must be visible, discussed, forecasted, and embedded into everyday decisions—not reviewed after the fact.

 

For your own clarity, for your team’s confidence, and for the long-term success of your business, build a cash flow discipline into how you operate. It changes how you grow, how you decide, and how you lead.

 

I learned that lesson the hard way.

 

My hope is that you don’t have to.

 

May your business be strong,
your decisions deliberate,
and your cash flow always visible.

 

Regards,

Robert Livingston