151: Can You Fake It Till You Make It in Finance?

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Ever felt the panic of being promoted into a leadership role, only to realize you're expected to speak fluently in the language of numbers? You're not alone—and you don't have to wing it.

In this episode of BYFIQ, discover why "faking it till you make it" is a dangerous strategy in finance. Steve shares personal stories, practical insights, and actionable tips to help you decode financial statements, master the four levers of profit, and connect finance with strategy to drive results.

Don’t miss this chance to transform your financial literacy and crush it in your career.

Disclaimer:
BYFIQ, LLC is a wholly owned entity of Coltivar Group, LLC. The views expressed here are those of the individual Coltivar Group, LLC (“Coltivar”) personnel quoted and are not the views of Coltivar or its affiliates. Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, Coltivar has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.

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Episode Transcript

Speaker 1 (00:00):
I don't want you to show up to a meeting not knowing
how to read financialstatements and I don't want you
to try to lead a company if youdon't know how numbers work.
This is BYFIQ.
Wealth and success come fromunderstanding how finance works
in business, and together we'llexplore the most important
topics to 10x your financialresults.
My hope is that we can worktogether soon.

(00:20):
Please share and enjoy.
Imagine this you're managing abusiness, or you're a business
leader of a division or a profitcenter in your company, and
you're just crushing it.
You're doing such a good joband one day your boss comes up
to you and she says, hey, I wantto promote you to this next
position.
And you're like great, you'reso excited, you're going to make

(00:43):
more money.
Now you have more leadershipresponsibilities.
And you're like great, you'reso excited, you're gonna make
more money.
Now you have more leadershipresponsibilities and you finally
have arrived in your career.
And then, all of a sudden,panic sets in because you
realize now you have to be apart of these meetings where
you're reporting on thefinancials of your business or
your division or of your profitcenter, whatever it is and

(01:05):
you're like oh my gosh, what amI going to do Now.
This happens all the time.
I know this because some of youhave reached out to me and
you're like Steve, I need yourhelp, I need your mentorship.
I just got promoted and now Ihave P&L responsibility, right.
So this happens all the timeand this can easily happen to
you.
So if this does, you can't justgo into the meeting and fake it

(01:25):
until you make it.
That is not a good strategy atall, because you're going to be
talking about numbers, or you'regoing to be looking at numbers
and ultimately you're going tosound dumb.
All right, that was me back inthe day when I started my first
company.
I was 16 years old.
I grew it into a multimilliondollar company and I had no clue
how to read financialstatements, so I was just like
winging it.
My accountant would send me thefinancials and I'm like, oh,

(01:45):
yeah, yeah, revenue, profit.
I got this, but I had no cluewhat the financial drivers were
or the levers of profit were.
I was just relying on sheerheroics and grit to make
everything happen, and that's aterrible mistake.
All right, because if you don'tunderstand the four levers of
profit, for example, you're notgoing to understand that pricing
is your biggest lever and forsome companies, pricing can have

(02:08):
a 12% impact on the bottom linefor every 1% increase.
That's just standard across theboard for just a generic
company, based on my research.
So if you just take that 12%,if you lower your price by 1%,
it means you're going todecrease your profit by 12.5% as
well, right?
Or let's just say, for every 1%you grow in volume, it has a 4%

(02:33):
impact on profit.
That means if you lower yourpricing by 1% to get more
customers, you better grow by atleast 3% to stay equal, to
break even.
In other words, otherwiseyou're going to lose money.
So understanding these levers,understanding the financial
statements especially how toread a balance sheet and a
statement of cash flows is goingto be so critical, especially

(02:57):
if you want to join theconversation of other leaders in
your business.
Now here's the deal Somebusinesses that I work with, the
CEO makes his way or her way upthe ranks of the business and
eventually they land in thechief executive role, and that's
great.
But I can't tell you how manyCEOs lack financial literacy.

(03:19):
Now you don't have to be likethis whiz-bang accountant nerd
person who's doing debits andcredits and knows all the
accounting code and gap right.
Instead, it's justunderstanding the fundamentals
of finance, understanding thestory behind the numbers, but
then, more importantly, usingthat story and using the
financials to change behavior.

(03:42):
If you're looking at keyperformance indicators in your
business right, as a manager, asa leader, as a CEO, as a
founder and you don't understandthe corresponding behavior to
that metric, that's a problem.
Let's just say, for example,your net revenue retention is
going down.
Let's say, the year before is115%, now it's 107.

(04:05):
Well, you could look at thatgraph and be like, oh no, that's
terrible, hopefully it improves, and you could just close your
eyes, or you go out there anddrive behavior to improve it.
And that's what it's all about,right.
So if you're looking at netrevenue retention, nrr and if
you know there are four ways toimprove it you can upsell, you
can cross sell, you can downsellor you could change your

(04:26):
pricing Then you'll know thelevers to pull in order to
influence that.
So that's what finance andstrategy is all about and that's
the connection between the twoto drive better operations.
You're looking at numbers,you're making hypotheses of how
to fix that.
You go change your behavior oryou go pursue certain actions
and then you come back andmeasure to see if the needle

(04:48):
moved and if you get really goodat that, you build a competency
doing that.
Your skills are going to be sovaluable and the more value you
drive in business, the moremoney you're going to make right
.
And the more money you make,the more financial security
you're going to have.
And the more financial securityyou have, the more financial
freedom you're going to feel.
And it's just this reinforcingcycle.

(05:08):
I was there once before fakingit until I made it.
But I can tell you that's aterrible, terrible strategy and
as a CFO like if somebody comesto me, I will know immediately
if they're full of crap, right.
If they're just trying to wingit like you don't know what
you're talking about, it justmakes you look terrible.
So just stop.
So there's a solution to allthis.

(05:29):
I announced this a while backthat I'm making all my courses
free.
So the financial pro programthere's six levels.
It's super easy.
You can get it on your phonethrough our app boosting your
financial IQ.
You can get it on an iPad.
You could do it on your device.
You can learn on the go, likesome of you are.
Like Steve, I love your podcast.
I love your courses.
I listen to them when I'mworking out.

(05:51):
I'm like, okay, that's a littlenerdy, I would totally do that,
but that's great.
So there's no excuse.
I'm doing this because I wantyou to be successful, right?
That's all I care about.
It's no marketing gimmick.
It's not like I'm going toupsell you later on.
It's like totally free.
Over a hundred video lessons,all for free, because I don't
want you to look dumb in frontof the CFO.
I don't want you to show up toa meeting not knowing how to

(06:13):
read financial statements and Idon't want you to try to lead a
company if you don't know hownumbers work.
Right, that's one of thequickest ways you can destroy a
business and create a tremendousamount of value destructions.
Don't go down that path.
Anyways, that's what's on myheart.
That's what I wanted to sharewith you, as always.
If you got value out of this,please share, so we can get the

(06:34):
word out there.
And until next time, take careof yourself.
Cheers.