Over the long term, profitability is essential to a business. But in the short term, cash flow is the metric you need to watch because if you run out of cash, your business will likely end up dead.
If the river represents cash flow to your business, what is a dam?
Simply put, the dam – and the reservoir it creates - represents cash in the bank, also known as retained earnings.
I frequently cross the Potomac River north of Washington DC. Recently, as I sat directly above the Potomac waiting for traffic to start moving, it occurred to me that just as the river feeds the Chesapeake Bay with water, a river of money to keep your business fed.