As a business mentor, the first thing I do with new clients is dive straight into their financials. It doesn’t matter if they’re turning over millions or just scraping by—those numbers tell the real story. Let me share one particular case that’s stuck with me.
This business was pulling in over $10 million a year. Gross profit was sitting at a healthy 55%, and their net profit hovered around 12%. On the surface, that sounds like a well-run, profitable company, right? But when I walked through the door, the reality hit me—this business was struggling to keep its head above water. Cash flow was tight, operations were a mess, and the owners couldn’t figure out why they were fighting fires every day.
Here’s the thing: the profit and loss statement or balance sheet might look impressive, but if you’re not financially literate as a business owner, you’re blind to what’s really happening in your company.
As I worked with the GM, finance team, and accountants, we had to peel back layer after layer. The problem wasn’t just in operations (that’s another story), it was how things were recorded, how costs were booked, and how profits were calculated. It became clear that, even with all the professionals involved, no one really had a firm grasp on the company’s financial health.
Once we nailed down a clear understanding of the finances and identified the root causes of the issues, implementing fixes became a lot easier. But this didn’t happen because I’m an accountant—I’m not. It happened because I’ve made it a point to understand the basics of financials as a business owner.
Look, I’m not saying you need to be crunching numbers like a CFO, but you need to know enough to be dangerous. You need to know how to ask your accountant the right questions, how to spot red flags in your P&L, and most importantly, how to use those numbers to make smarter decisions. If you don’t, you’re at the mercy of your finance team, and trust me, that’s a risk you don’t want to take.
In my early days, I thought I could just “wing it” when it came to financials. It wasn’t until a major crisis with my own company that I realised flying blind was a recipe for disaster. From then on, I made financial literacy a non-negotiable part of running a business. I met with my accountant regularly, broke down the numbers into manageable chunks, and tracked everything that mattered—from profit margins to cash flow forecasts.
Financial literacy is often the overlooked skill that separates successful business owners from those just trying to survive. If you don’t understand your numbers, you’re just guessing your way through decisions, and guessing is never a good business strategy.
I’ve seen too many businesses that look good on paper but are a financial mess behind the scenes. They’ve got great revenue, decent margins, but no cash flow. They’re stuck in a cycle of debt and constant financial strain. And it all comes down to one thing: a lack of understanding when it comes to managing their numbers.
So here’s the challenge for you: if you want to lead a business, if you want to create something that lasts, you must understand the financial side. It’s not enough to leave it to your accountant or financial advisor. You need to take ownership of your business’s financial health.
At the end of the day, financial literacy is not just about keeping your business afloat—it’s about giving you the control to make the right decisions. When you know your numbers, you can steer the ship through good times and bad. You’ll be able to spot opportunities and navigate challenges before they become crises.
It’s time to stop asking where your money went and start telling your dollars where to go. Financial literacy isn’t a nice-to-have; it’s a must-have for any business owner serious about success.
I discuss this and several other critical principles in the 7 Essentials mastermind event. Choose a date that suits you and come learn how to take the reigns back.
From a quick conversation to transforming the business.
Book a 15 minute chat.
