Is cash or profit more important for my business?

I don’t know which is more important, cash or profit, for my early stage business. I know I need to reduce stock levels and this will increase cash flow, but it will also have a negative impact on my margins. I know I need new computers, but this will increase cash outflow and the depreciation will negatively impact my earnings.

I talked with a serial entrepreneur and she said that the only reality in business is cash, that accounting and profit are an art form. She told me you need cash to pay bills and salaries and that profit and cash were not the same thing. She said not to worry about depreciation, it was a non-cash item. She said get what you really need and can afford and don’t worry about depreciation.

We can't get a good rate from the bank but don't know where else to go for cash

My co-founders and I went to the bank to get a loan. They wanted our accounts, which were not in great shape. We cleaned up the books and went back. The bank said they would loan us $12K, but they wanted personal guarantees. I didn’t know what that meant.

They wanted us to pledge our personal assets (cars, houses, etc) as collateral to cover the loan. One of the other founders did not have any assets the bank would accept, so they want his family to guarantee the loan. They also wanted to charge us 3% over the existing bank rate on a variable basis.

Our accountant told us this was insane and expensive, but we’re running out of cash and aren’t sure where else to get the money. I wonder if we'd be having the same difficulty if our accounts were in order when we first went in.