Do you get intimidated by the financial elements of your work? From creating budgets to balancing books to assessing tax impacts, most jobs involve managing numbers along with handling staff, customers, and workflow. If the sight of a calculator makes you break out into a sweat, rest assured that you are not alone!

Many business professionals enjoy aspects of their jobs that are seemingly unrelated to math or accounting. Maybe you are a master at sales, or a creative marketer, or an inspiring team leader. But every person has weak spots, and a nervousness around financial topics is one many people share. 

While every successful business person doesn’t have to be a super accountant, you do have to understand the basic business of numbers. And there is no better time than April, when we celebrate Financial Literacy Month, to review some of the key numbers you should always know about your business. 

I talked about exactly this topic, and so much more, on my radio show on Tuesday with Certified Financial Educator Kim Scouller. Kim has so much good information to share, and I am grateful she is willing to share her wisdom with our community. Listen to the episode at my YouTube channel, and subscribe so you are always part of our conversation.

Today, let’s make a promise to ourselves: to not be intimidated by the basic finances of our business. These numbers are key indicators that directly impact our bottom line. They’re the signs that keep us alert to whether we’re gaining momentum or chartering dangerous territory. Learn to understand the power of these numbers and you’ll add tremendous value to your business.

First, identify and track your key numbers consistently.

The first step in understanding the key financial indicators of your business is to determine exactly what those markers are. Identify three to five metrics that are critical to the success of your business; for example, you could look at sales, expenses, new leads, referrals, and complimentary sales calls. 

After you determine your indicators, carefully track these numbers and regularly review them with an eye towards your goals. It is important to know if, for instance, the number of sales you’re closing each month leads to a consistent increase in sales and profits.  

 Next, know your cash flow. 

Cash flow is the amount of net cash generated by a business during a specific period. Because cash is the fuel that ignites a business, many consider cash flow to be a company’s most important financial indicator.  

How do you track your cash flow? Monthly cash flow statements, whether generated by accounting software (i.e. Quickbooks) or by hand, can help provide a clear picture of inflow and outflow. This is hugely important information to consider when determining how to handle your expenses. 

Your business may be profitable in the long run, but you may still run into periods when you do not have enough cash on hand to pay your bills if you are not monitoring cash flow closely. This is especially true for businesses that do a lot of invoicing, since customers can take weeks to remit payment.  

Understand your P&L statements. 

The profit and loss statement is a simplified view of a company’s revenue and expenses for a specific accounting period (month, quarter, or year). It is important that business owners understand how to use their P&L statement to make adjustments to their business operations. I urge my clients to study their statements and draw out trends, inefficiencies, and areas for improvement.   

It’s also fundamentally important to know the difference between the terms GROSS and NET. Many times, you’ll hear someone reference their income or profit, and the amounts sound almost too good to be true. Don’t be misled by folks bragging about their numbers. Ask to clarify whether the quantities are gross (profit before expenses have been subtracted) or net (profit with expenses subtracted). It’s equally important to understand what you’re grossing versus netting in your own business. Only then can you be sure that your business is in good health.  

Build a team of trusted advisors.

As entrepreneurs, we must understand and apply basic business fundamentals on a consistent basis. But we don’t have to undertake this challenge alone! 

Accountants, financial advisors, and business coaches can all provide invaluable support in helping you not only understand business fundamentals, but also harness them for your professional growth. If you already have a solid team in place, do not hesitate to use them! If you haven’t found advisors yet, please reach out to me for some recommendations—I love connecting great people with one another. 

Don’t wait until a moment of panic to ask questions; preparation and knowledge are your friends when it comes to financial literacy. 

At Celeste Giordano Coaching, I teach my clients how to identify the key indicators for their business and get them set for success. If you are ready to learn how your business’s numbers can allow you to “Double Plus” your income this year, all while creating a lifestyle that allows you to spend time doing the things you love with the people you love most, contact me today. 

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Celeste Giordano’s mission is to help business owners develop the skills, knowledge and attitude necessary to “DoublePlus™” their income and become effective and inspirational leaders in their fields. Whether it’s taking your successful business to the next level or starting a new venture, she will teach you the exact skills and strategies you need to enroll more quality prospects, build a rock-solid team, and break through obstacles to achieve real profit and lasting success. Celeste is a professional business growth specialist, a master sales strategist, and dynamic speaker with more than 40 years experience in direct sales and managing high-performing teams.

To learn more about Celeste, click here.

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