One of the more dangerous misunderstandings in running a business is the assumption that being profitable means having money. They sound like the same thing and they are not, and the difference has sunk businesses that were, on paper, doing well. Profit is what is left when you subtract what you spent from what you earned over a period. Cash is what is actually in the bank on a given day. A business can be genuinely profitable - selling more than it costs to produce - and still run out of cash, because profit is earned on paper at the moment of a sale, while cash arrives only when the customer actually pays, and those two moments can be far apart.
The gap between them is timing, and timing is where the trouble hides. A business often has to pay its own costs - for materials, for staff, for stock, for rent - before it receives the money from the sales those costs enabled. It buys and pays for stock now, sells it over the following weeks, and collects payment from customers weeks after that, especially where customers are invoiced and given time to pay. During that interval the business has spent real money and not yet received the money it is owed, and it is in that interval, not on the profit-and-loss statement, that it can find itself unable to pay a bill that is due - profitable, growing, and out of cash all at once.
Growth makes this worse rather than better, which is the part that catches people out. A business that is expanding is buying more stock, taking on more staff, fulfilling more orders - spending more, sooner - to serve sales whose cash will not arrive until later. The faster it grows, the larger the gap between money going out and money coming in, and the more cash it needs simply to bridge the timing, even as its profitability improves. This is how a successful, growing business can strangle itself: not because it is unprofitable, but because growth consumes cash up front and the profit only catches up later. The healthy figure on the profit statement conceals a cash squeeze that is entirely real.
The practical lesson is to manage and watch cash as a distinct thing from profit, not as a byproduct of it. That means understanding the timing of the business - how long between paying for something and being paid for it - and keeping enough cash, or access to it, to cover that gap; being deliberate about the terms on which customers pay and how promptly they are chased, because slow-paying customers are effectively lending themselves the business's cash; and, especially when growing, planning for the cash that growth will consume before the profit arrives. A business that tracks its cash position, and not only its profitability, sees the squeeze coming and can manage it. One that watches only profit can be blindsided by a shortage of money in the middle of a good year, and a shortage of money, unlike a bad month of profit, can end the business outright.