Cash management is the number-one risk to your business and the key to managing it safely through inflationary times. You need to have a clear picture at all times of where cash is coming from and where it is going to, with a view of how those flows will change in the coming quarters.
You should be seeking ways to reduce costs and lower the break-even point, but the important shift is to focus on the balance sheet, not just the P&L. Orient yourself to think in terms of cash profits, not paper profits or percentages.
For example, if you have contracts to sell at fixed prices with no such assurances on the cost side, you are headed for trouble. If you have variable-rate loans or need to borrow money going forward but don’t have a plan to cover higher cash payments, you could likewise be in trouble.