Apple’s Secret Sauce: How Liquidity Saved the Tech Titan from Bankruptcy

Business success is not about profits, it’s all about liquidity💰

A world-renowned tech giant, was just three months away from bankruptcy. Despite having a repertoire of revolutionary products, the company found itself in hot water. In 1997, their cash outflow was like a leaking faucet that was impossible to tighten. They were bleeding money and couldn’t keep up with the financial demands of running the business. And who was that company? Apple. Yes Apple🍏

The return of Steve Jobs as CEO that year brought a lifeline in the form of a $150 million investment from an unlikely source – Microsoft. But more importantly, he brought a shift in the financial strategy of the company💡Apple started to focus less on profit and more on its cash position. They religiously managed their debt collection, closely tracking their accounts receivable, and, most notably, began to place a significant emphasis on forecasting their cash flow⚖️

In a nutshell, they began prioritizing their liquidity. This approach, as counter-intuitive as it may have seemed to many, was precisely what allowed Apple to stay afloat, recover, and eventually become the trillion-dollar empire we know today. In the face of looming bankruptcy, they put into practice the axiom “cash is king” and emerged victorious🙂

Apple’s turn-around story isn’t just a tale of resilience and revival, it’s a testament to the significance of understanding your business’s cash dynamics. Like Apple, many small businesses struggle to balance their books while trying to grow, sometimes overlooking the critical aspects of cash management. However, what Apple’s journey teaches us is that one of the key ingredients to staying afloat, let alone thriving, is a laser-like focus on managing your cash👈

So, let’s talk about this in a bit more detail. We’re not saying profits don’t matter, but your company’s survival and prosperity depend on something more crucial – liquidity. Cash, after all, is the lifeblood that keeps the gears of your business well-oiled and running smoothly 👈

How do you ensure that you’re cash positive? Well, the recipe has two essential ingredients. Firstly, managing your debt collection – make sure your accounts receivable processes are efficient and persistent. Don’t let your hard-earned revenue get stuck in the limbo of late payments and unfulfilled invoices.

The second ingredient is cash forecasting. Just like a sailor navigating treacherous seas, you need a reliable compass – and for your business, that’s a cash flow forecast. This helps you predict potential cash shortfalls and prepare for them. Remember, being forewarned is being forearmed.


Disclaimer: Paul Stankiewicz is the owner and principal at Paul Marks & Co Chartered Accountants which is the trading name of Paul Marks Ltd a Limited Company registered in England and Wales (registered number 4487645).This article is designed for the information of readers only and is the opinion of the author only. Readers should not act on any of the information contained in this article without seeking professional advice. Nothing in this article constitutes advice, nor does the transmission, downloading or sending of any information or the Material create any contractual relationship. Links to third party websites are provided as a convenience to the reader, Paul Marks Ltd does not control and is not responsible for any of those websites or their content. Paul Stankiewicz and Paul Marks Ltd accepts no liability or responsibility whatsoever for any loss or damage suffered by any user of the information contained on or accessed through this article or the Material downloaded.