Profit vs. Cashflow: Why Shops Go Broke While Making Money [E188]

Thanks to our partners Promotive and Wicked FileWhat happens when a shop owner calls to say they’re going broke—only to discover they’re actually profitable on paper? The truth is, profit doesn’t always equal cash flow. And without cash, even the healthiest shops can collapse.In this episode of Business by the Numbers, Hunt Demarest, CPA of Paar Melis & Associates, tackles one of the most dangerous misconceptions in business: why shops fail even when they’re making money. From bootstrapping vs. borrowing to the hidden dangers of credit card advance loans, Hunt unpacks real-world lessons from a client whose debt service was drowning out his profits—and the lifeline that helped him turn it around.If you’ve ever wondered why your bank account doesn’t match your P&L, this episode could be the wake-up call you need.What You’ll Learn in This Episode(00:00) Why profit doesn’t always mean cash—and why cash doesn’t always mean profit(02:12) The #1 killer of small businesses: lack of cashflow(06:44) Debt service vs. total debt: what really matters for survival(08:59) Bootstrapping vs. borrowing: how to pick your strategy and stick to it(11:19) Why cash reserves are more important than paying off all your debt(13:59) When profit isn’t enough: how debt service can sink a shop(15:56) The dangers of credit card advance loans—and why they trap so many shops(18:12) How refinancing debt saved one shop owner from burning $3,000 every monthThanks to our partner PromotiveIt’s time to hire a superstar for your business; what a grind you have in front of you. Introducing Promotive, a full-service staffing solution for your shop. Promotive has over 40 years of recruiting and automotive experience. If you need qualified technicians and service advisors and want to offload the heavy lifting, visit https://gopromotive.com/Thanks to our Partner WickedFileTurn chaos into clarity with WickedFile, the AI for auto repair shops. Transform invoices into insights, protect cash flow, and stop losing parts, cores, or credits to maximize your bottom line. visit https://info.wickedfile.com/Paar Melis and Associates – Accountants Specializing in Automotive RepairVisit us Online: www.paarmelis.comEmail Hunt: [email protected] Paar Melis @ 301-307-5413Download a Copy of My Books Here:Wrenches to Write-OffsYour Perfect Shop Aftermarket Radio NetworkRemarkable Results Radio Podcast with Carm Capriotto: Advancing the Aftermarket by Facilitating Wisdom Through Story Telling and Open DiscussionDiagnosing the Aftermarket A to Z with Matt Fanslow: From Diagnostics to Metallica and Mental Health, Matt Fanslow is Lifting the Hood on Life.The Weekly Blitz with Chris Cotton: Weekly Inspiration with Business Coach Chris Cotton from AutoFix - Auto Shop Coaching.Speak Up! Effective Communication with Craig O'Neill: Develop Interpersonal and Professional Communication Skills when Speaking to Audiences of Any Size.Business by the Numbers with Hunt Demarest: Understand the Numbers of Your Business with CPA Hunt Demarest.The Auto Repair Marketing Podcast with Kim and Brian Walker: Marketing Experts Brian & Kim Walker Work with Shop Owners to Take it to the Next Level.