What Is the Most Important Number in Business?

In this post, we’re answering a question every business owner has asked: What’s the most important number in business? Is it revenue? Profit? Customer count? While those are all critical, the number that matters most—especially if you want to build a company that lasts—is free cash flow.

Free cash flow (FCF) is what’s left after you’ve covered your operating expenses and reinvested in your business. It’s not the money you hope will show up—it’s the money that’s actually there. The money that allows you to grow, hire, invest, protect, and sleep at night.

Key Takeaways

• Free cash flow shows how much money your business truly generates

• It’s the number investors, buyers, and operators all care about

• You can be profitable and still run out of cash—FCF keeps that from happening

Why Free Cash Flow Beats Revenue and Profit

Revenue is exciting. Profit is necessary. But free cash flow is freedom. It tells you how much real money you’re creating—not just what’s on your P&L. While profit is a paper number (often influenced by accounting methods, timing, or accruals), free cash flow is what you can use.

A company can show a healthy net profit and still be tight on cash. Why? Because receivables are slow, inventory is bloated, or expenses are front-loaded. That’s why free cash flow is a better lens. It reflects the full operating reality—not just theoretical profitability.

If you want to buy equipment, expand your team, pay down debt, or invest in a new opportunity, you’ll use cash—not net income. And the more cash you consistently generate, the more resilient and valuable your company becomes.

How to Calculate Free Cash Flow

You don’t need a finance degree to track FCF—you just need to understand how it fits into your financial flow.

Start with your operating cash flow (found on your statement of cash flows), then subtract any capital expenditures (CapEx)—things like equipment, vehicles, or infrastructure investments.

This formula reveals how much excess cash your business is producing after you fund day-to-day operations and essential reinvestments. If this number is strong—and trending upward—you’re in a healthy position.

What Free Cash Flow Tells You

Free cash flow isn’t just a financial metric. It’s a strategic signal. Here’s what strong FCF means:

• You have control over your business. You’re not relying on short-term debt or last-minute cash injections

• You can fund your own growth. You don’t have to chase outside capital to expand or evolve

• You’re attractive to investors or buyers. FCF is one of the top metrics private equity, acquirers, and bankers look at when valuing your business

• You can weather downturns. With more cash on hand, you’re better positioned to ride out seasonal dips or market changes

This number helps you make better decisions. Instead of guessing whether you can afford a big move, your FCF gives you the green (or red) light—based on facts, not feelings.

Why Most Founders Overlook It

Many business owners obsess over revenue because it’s easy to see and fun to celebrate. Others focus on net income because it’s what your accountant or tax advisor talks about. But cash is what pays the bills—and often, no one’s tracking it closely until there’s a problem.

Free cash flow requires you to look at all three financial statements, not just your P&L. That can feel overwhelming without a system. But once you build that rhythm, FCF becomes your most honest business partner. It never lies, and it always tells you where you stand.

How to Improve Free Cash Flow

Once you start tracking FCF, the next step is to optimize it. You can improve it in three ways:

• Increase operating cash flow: Collect faster, reduce unnecessary costs, and improve pricing or margin discipline

• Reduce capital expenditures: Delay or rethink large investments unless they directly improve ROI

• Improve working capital efficiency: Shorten your cash conversion cycle—speed up receivables and negotiate better terms on payables

You don’t need to overhaul everything. Small improvements across the board can compound quickly—turning a cash-strapped company into a cash-rich one.

Final Word: Free Cash Flow Is the Number That Buys You Time, Options, and Peace of Mind

Whether you want to grow, exit, or simply run your business with more confidence, free cash flow is the number to watch. It’s the most honest, useful, and strategic financial signal you have. It gives you flexibility. It gives you leverage. And most importantly, it gives you control.

At Coltivar, we help founders measure and improve free cash flow so they can scale their companies on their own terms—and build businesses that don’t just look good on paper, but perform in real life.

Want to know your free cash flow and how to improve it?
Take the Value Gap Quiz to see what’s draining your cash and where to focus.