Leo pointed to her P&L. "You sold $50,000 of lemonade. But you recorded that as 'revenue' the moment you shipped it to the grocery stores, right?"
"Excuse me?"
Elena had always made incredible lemonade. Her secret? A pinch of cayenne and lavender syrup from her grandmother’s recipe. When she opened "Lavender & Fire" at the local farmer’s market, the line stretched for twenty minutes. Leo pointed to her P&L
Three months later, her bank balance was $18,000. Her profit was only $12,000 (down from $15,000), but she didn't care.
Leo drew a box on a napkin. (What you own: Lemons, jars, the secret recipe, cash) Liabilities (What you owe: Bank loan, unpaid lavender bill) Equity (What’s left for you) "Most entrepreneurs only watch the P&L—the video of the game," Leo said. "But the balance sheet is a photograph of your company’s health right now . You took out a loan to buy a fancy commercial juicer. You celebrated the new asset. But you forgot the liability. Now you owe $500 a month." Her secret
She wasn’t broke anymore. She was in control.
She stopped celebrating her P&L profit. She started a on a whiteboard in her kitchen. Three months later, her bank balance was $18,000
She was broke. And terrified.