Founder Lessons

a highly profitable business can still run low on cash

The first in a weekly series of operator notes from building Racketeer — the UK's largest padel club, 90,000 sq ft in West London. I won't always write about padel courts and events; sometimes, like today, I'll write about the unglamorous lessons nobody warns you about.

I started my off-the-field career at Goldman Sachs IB and then spent time in private equity / venture capital. I promise to spare you all from saying that more than once.

Like many people in finance, I was taught to focus on EBITDA. It was the scorecard, the shorthand for performance, and every banker's favorite "proxy for cash flow!!!" (PS — I got that question wrong in my GS interview.)

Then I started Racketeer, and I learned the hard way that EBITDA and cash in the bank can be two very different things. Our early profitability remains strong, but one lesson hit particularly hard:

In the UK, businesses often act as agents of VAT. You pay VAT upfront on construction, capital expenditure, and major projects, then reclaim it later. On paper, that's fine. In reality, timing matters.

At one point HMRC owed us over half a million pounds in VAT reimbursements and empty business rates relief combined. The claim went into review for over four months — apparently standard practice for that amount :))) We had no idea when it was coming back. Daily calls went unanswered. It was a complete black box.

Meanwhile, payroll still had to be paid. Rent still had to be paid. Suppliers still had to be paid. The business still had to operate. Luckily, our suppliers, landlord, and contractors were amazing partners and worked with us to weather the storm. Our P&L looked INCREDIBLE for a new business — but I still wasn't sleeping and felt like I was minutes from going back to benchwarming in the NWSL.

Kidding… but cash was getting squeezed so hard that we were discussing how to survive while waiting for money that was already ours.

It was one of the most important lessons I've lived as an operator:

A profitable business can still run out of cash. Working capital isn't an accounting footnote. It's oxygen.

When I look at businesses now, I'll care about EBITDA at the right time. But now isn't that time for Racketeer. I'm now hyper-focused with my co-founder Patrick on:

• Cash conversion

• VAT and tax positions

• Working capital cycles

• Receivables and payables timing

• Regulatory reimbursement risk

A lesson in UK commercial cash flow timing the spreadsheets never taught me — that can hopefully help someone else.

Come play at Racketeer

Racketeer is open in West London — the UK's largest padel club at 90,000 sq ft. Whether you're new to the game or chasing your next match, you can book a padel court, join a session, or host a corporate or private padel event with us.

👉 Book courts and events at racketeer.club

Racketeer is a 90,000 sq ft padel club in West London offering indoor padel court bookings, coaching, leagues, and corporate padel events. Follow along on LinkedIn for weekly founder notes on building the UK's largest padel club.