Sublime

You need stocks to create flows, and you need flows to replenish stocks.

You need stocks to create flows, and you need flows to replenish stocks.

Follow a system’s Flows, and you’ll inevitably find places where resources tend to pool together. In this case, a Stock isn’t a certificate of business ownership—it’s a pool or holding tank of resources. A bank account is a good example of a Stock: it’s a pool of money waiting to be used. Inventories, queues of customers, and waiting lists are also

As long as the sum of all inflows exceeds the sum of all outflows, the level of the stock will rise. As long as the sum of all outflows exceeds the sum of all inflows, the level of the stock will fall. If the sum of all outflows equals the sum of all inflows, the stock level will not change; it will be held in dynamic equilibrium at whatever level

Money flows through a business in predictable ways. If you understand how revenue, expenses, receivables, and credit work, you can ensure that you continue to have enough Purchasing Power on hand to continue operation and maximize your available options. The Cash Flow Cycle describes how cash Flows (discussed later) through a business. Think of

Imagine all the revenue of the business sector coming in through one pipe and all its expenses running out through another (figure 1). The “profit meter,” which measures the volume flowing through it much like a water meter, records the net effect of these flows on business net worth, represented by the “net worth tank.” All expenses reduce the net