May 5, 2025 • 50 mins
We reveal why most business owners struggle with financial management. You'll discover how to transform your relationship with financial data. Learn the "Vital 5" financial metrics every business owner must monitor, how to use financial intelligence to make better strategic decisions, and practical techniques for mastering your numbers without becoming an accountant. Whether you're intimidated by financial statements or looking to sharpen your financial acumen, this episode provides the roadmap.
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Powerful Business Strategies is broadcast live Mondays at 12 Noon ET Music on W4CY Radio (www.w4cy.com) part of Talk 4 Radio (www.talk4radio.com) on the Talk 4 Media Network (www.talk4media.com). Powerful Business Strategies is viewed on Talk 4 TV (www.talk4tv.com).
Powerful Business Strategies Podcast is also available on Talk 4 Media (www.talk4media.com), Talk 4 Podcasting (www.talk4podcasting.com), iHeartRadio, Amazon Music, Pandora, Spotify, Audible, and over 100 other podcast outlets.
Become a supporter of this podcast: https://www.spreaker.com/podcast/powerful-business-strategies--6198916/support.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The topics and opinions expressed in the following show are
solely those of the hosts and their guests and not
those of W FOURCY Radio. It's employees are affiliates. We
make no recommendations or endorsements for radio show programs, services,
or products mentioned on air or on our web. No
liability explicitor implies shall be extended to W FOURCY Radio
or its employees are affiliates. Any questions or comments should
be directed to those show hosts. Thank you for choosing
(00:21):
W FOURCY Radio.
Speaker 2 (00:27):
Welcome to Powerful Business Strategies, where you will find out
that everything you have ever learned about growing your business
is wrong. Finally, a show where you'll learn the right
way to grow your business by learning business and financial
strategies that your competition isn't doing. And now here is
your host. President of Next Step CFO Michael Barbarita and
(00:51):
joining Michael for today's show as an executive moderator is
chooky obia.
Speaker 3 (01:01):
Yes, this is cheek in I believe that gratitude is
undefeated and growth is about the next step. It is
an honor for me to moderate today's discussion with my
good friend Michael. Michael, how are you good.
Speaker 4 (01:13):
How are you two?
Speaker 5 (01:14):
Key doom Wall And as Tricky said, my name is
Michael barbera president of Next Step CFO, and next Step
CFO is a fractional CFO and strategic implementation firm. Business
owners hire us to double and triple their profit using
business and financial strategies that their competition isn't doing. And
our vision is to ensure that overwhelmed business owners achieve
(01:38):
consistent profits that lead to the time, freedom to build
a legacy and the life they desire. And our mission
is dedicated guiding small business owners to leveraging their time,
exploding their profits, and building that meaningful legacy. This show,
Powerful Business Strategies in our book of the same name,
(01:58):
is a step toward accomplished that vision and mission. So
with that, I'd like to hand it back to my
co author and moderator for the show, Chicky Obio.
Speaker 3 (02:07):
Absolutely so, Michael, Look, I'm particularly energized by today's episode.
I actually have my calculator out just so you know.
By the way, so episode is financial intelligence for non
financial business owners, making numbers your secret weapons. So really enthused.
Quick disclaimer, folks, Look, Michael and I are both affiliated
(02:28):
with a number of different organizations, and I currently serve
as the managing director of business development for Better Price,
a global business focused law firm. In addition to that,
it's truly an honor to collaborate with Michael to moderate
business roundtables really Coast to Coast to document insights from
those roundtables as part of our book, Powerful Business Strategies.
(02:51):
But please note that the views expressed on this show
are personal views based on those successful experiences, and my
mission is a fearless moderates to ask the right questions
to help you, the listener, learn the best strategies that
the competition isn't doing.
Speaker 4 (03:07):
Michael, thank you, Thank you. Chicky.
Speaker 5 (03:10):
So, business owners, I've seen a pattern. It might sound familiar.
You started your business because you're passionate about what you do.
Maybe maybe it's creating beautiful designs, or building quality homes,
or delivering exceptional service or even developing innovative products. You
didn't start your business because you love staring at spreadsheets
(03:33):
or analyzing financial statements. Yeah, here's what I know to
be true. The most successful business owners aren't necessarily financial experts.
They're probably not, but they've mastered what I call financial intelligence,
the ability to understand and use their numbers to make
better decisions.
Speaker 4 (03:53):
And today I want you to I want to.
Speaker 5 (03:55):
I want to show you that financial mastery isn't about
becoming an countant. It's about taking numbers from something you
avoid into a secret weapon that guides your business towards
greater profits, greater stability, and growth. The gap between where
you are and where you want to be financially isn't
(04:18):
about working harder. It's about understanding the story that your
financial numbers are telling you. So let's decode that story
together and unleash the financial hidden, the financial power that's
hidden in your business right now. So let me start
with a confession. I met a successful CEO of a
(04:41):
multimillion dollar company who actually break into a cold sweat
when presented with a balance sheet. I've worked with brilliant
entrepreneurs who can innovate game changing products but struggle to
explain the difference between cash flow and.
Speaker 4 (05:01):
Well.
Speaker 5 (05:01):
If you've ever been embarrassed or overwhelmed by financial matters
in your business, I want you to know two things. First,
you're clearly not alone. Second, this isn't about some inherent deficiency.
It's just about a skills upgrade a skills gap that
could be bridged more easily than you think.
Speaker 4 (05:20):
And I believe that these.
Speaker 5 (05:21):
There are three myths that keep business owners from developing
that financial intelligence, and I want to dispel those three
myths right away, right up front. The first myth is
that you need to be good with numbers to understand
business finances. Well, that's simply not the case. Financial intelligence
is it more. Is it about complex calculations. It's about
(05:43):
understanding relationships between numbers and what they tell you about
your business. And if you can understand that spending more
than you earn creates problems, then you already have the
foundational thinking required for financial intelligence. And the second myth
is that financial management is primarily about cutting costs. Too
(06:07):
many business owners view financial oversight as the equivalent of
a strict diet, all restriction, no enjoyment, and in reality,
strong financial intelligence often reveals opportunities for strategic investment and growth.
Speaker 4 (06:23):
That wouldn't be apparent otherwise.
Speaker 5 (06:26):
And the third and most damaging myth is that you
can delegate financial understanding entirely to others like your bookkeeper,
your accountant, or even your CFO. While these professionals are invaluable.
Outsourcing your financial knowledge one hundred percent creates vulnerability. I've
(06:46):
seen too many business owners blindsided by cash crunches or
missed opportunities because they relied entirely on others for financial side.
I'm just looking for a basis of understanding here. So
when I learned to read these signals myself, I discovered
problems and opportunities months before they would have become obvious otherwise,
(07:11):
And this experience improved how I approach business. I realized
that financial intelligence is a specialized skill for accountants, although
I am one. It's a fundamental leadership capacity that every
business owner needs to develop, regardless of their background or
natural inclinations. So today I'm going to share the approach
(07:33):
I've developed working with hundreds of businesses across dozens of industries,
and I call it the financial Intelligence Framework. Will help
you improve your relationship with your business numbers from of
the one of confusion or avoidance to clarity and confidence.
And this framework has three components. Number one is understanding
(07:58):
the vital five metas that tell you the most of
what you need to know. Second, mastering the financial narrative,
the story your numbers are telling you. About your business. Third,
developing financial force. This is using financial intelligence to anticipate
and prepare for the future. So throughout today's show, we'll
(08:23):
explore each component and provide practical steps to implement them
in your business, regardless regardless of your current level of
financial comfort. One lesson I learned is that you need
to monitor both profit and cash flow simultaneously. So profit
tells you whether your business model is viable in the
long term, while cash flow tells you whether you'll survive.
Speaker 4 (08:45):
In the short term.
Speaker 5 (08:47):
But many business owners focus exclusively on profit until a
cash crisis forces them to learn this distinction the hard way.
Understanding this relationlationship between profit and cash is one of
the cornerstones of financial intelligence, and it's not about complex
accounting rules, but rather about developing a practical understanding of
(09:11):
how money actually moves through your business. So let's dive
deeper into the first component of the financial intelligence framework,
and that's understanding the vital five metrics. In my experience
working with hundreds of business owners, I found that most
financial overwhelmed comes from trying to track too many numbers
(09:32):
without understanding which ones truly matter for decision making.
Speaker 4 (09:36):
And the truth is While a comprehensive.
Speaker 5 (09:39):
Financial analysis might involve dozens of metrics, most business owners
can dramatically improve their financial outcomes by focusing on just
five five, five critical numbers. I call these the vital
five and these are the financial equivalent of vital science
in healthcare. Just as a doctor checks you palls blood
(10:01):
pressure and temperature to quickly assession for overall health, these
five metrics give you a rapid assessment of your business's
financial condition.
Speaker 4 (10:13):
Now, the first vital sign is sales or revenue.
Speaker 5 (10:16):
This seems obvious, but I'm always surprised by how many
business owners don't know their exact sales figures on a daily, weekly,
or even monthly basis.
Speaker 4 (10:25):
Revenue isn't just a vanity metric.
Speaker 5 (10:27):
It's the fundamental input that drives all the other financial outcomes.
So you should not you should know not only your
total revenue, but also how it's trending up, down, sideways,
how it's distributed across products to services as well, and
how it compares to.
Speaker 4 (10:45):
Your projections if you have them, which you should.
Speaker 5 (10:48):
A landscaping company, for example, implemented a simple daily sales
tracking system and discovered that eighty percent of the revenue
came from just two services, while that was spending most
of their marketing budget promoting over performing offerings. This basic
revenue insight led to a thirty five percent increase of
profit within three months. So the second vital sign is
(11:10):
gross profit dollars. This is this is the money remaining
after subtracting the direct costs of delivering your products or services.
That direct clasts include things like materials, direct labor, subcontracted labor,
and any other expense is freight that increased directly with
sales volume. And gross profit matters because it tells you
(11:32):
how much money you have available to cover your fixed
costs and generate a net profit. See Many businesses focus
on sales growth without realizing that gross profit is that's
sufficient to sustain their operations. You've got to understand the
gross profit component. So a retail store owner was excited
(11:53):
about growing sales until she realized or analyzed her gross
profit and discovered that her newest that's this growing product
line actually had the lowest gross profit. So by reallocating
her focus to higher margin products, she increased her overall
grows profit by twenty two percent, even though total sales
(12:14):
remain relatively stable. That's about profit. That's about understanding your
profit versus just the top line. The third vital sign
is gross profit percentage. This is really really important. This
is your gross profit divided by your revenue, expressed as
a percentage. So while gross profit dollars help you tell
(12:37):
you the absolute amount available to cover your fixed costs,
gross profit percent tells you how efficiently you're generating that profit.
Industry benchmarks for gross profit, by the way, they very,
They really do, they very They're all over the place,
you know, from as low as ten to fifteen percent
(12:58):
in some retail category to seventy to eighty percent in
certain professional services. But what matters most is not comparing
yourself to an abstract standard, but tracking your own trends
and understanding what drives changes in your gross profit margin.
So a restaurant owner notices gross profit percentage declining despite
(13:22):
stable food costs. Investigation revealed that staff was over proportioning
certain high cost ingredients. So a simple portion control system
restored as margins without changing menu prices or quality. And
the fourth vital sign is net profit. This is what
remains after all expenses, both direct and overhead, are subtracted
(13:48):
from revenue, so it's essentially your bottom line, and it
represents the return all your effort and investment. Net profit
matters not just for current income, but for business sustainability
and growth, because without adequate net profit, you can't weather
the downturns, or invest in opportunities, or build a business
(14:12):
value for eventual exit with secession. So a manufacturing company
who had focused exclusively on revenue growth was shocked to
discover that is net profit had been declining for three
consecutive years despite sales increases. So by analyzing which products
and which customers were most profitable, he restructured his offering
(14:34):
to emphasize higher margin business, doubling his debt profit within
eighteen months. And the fifth byte sign is cash position.
Simply how much money you have available right now includes
cash in all of your bank accounts. While the other
metrics tell you about business performance, cash position tells you
(14:56):
about business survival capacity. You see, many profitable businesses failed
because they write out of cash. Your cash position isn't
just about current balances, but about the relationship between cash
inflows and outflows over time. This is why cash flow
forecasting is so critical, and we've had a couple of
(15:17):
shows on that because it helps you anticipate and prepare
for periods when outflows might exceed inflows, and our service
business owner maintained that may tell you what she thought
was a healthy cash reserve of two months operating expenses,
but by implementing a proper cash flow forecast, she realized
(15:38):
that seasonal variations and client payment patterns created a three
month gap between service delivery and payment collection. She adjusted
her cash reserves accordingly, avoiding what would have been a
severe crunch during her growth phase. Now might be wondering
(15:59):
how do I act these vital five How do I
drag these vital five metrics effectively? And the key is
creating a dashboard that gives you visibility without overwhelming you
with details you know for most business. For most businesses,
I usually recommend a single page dashboard that shows each
metric and three time frames period that's this week or month,
(16:24):
the trend comparing to previous periods, and the target comparing
to your goals. And this provides context that makes the
numbers more meaningful for decision making, and the dashboard should
be updated at least weekly daily. For businesses with high
transaction volumes or type cash positions. The process of reviewing
(16:45):
these numbers regularly builds your financial intelligence more than any
course or book could so because you're and the reason
is is you're actually seeing how real business decisions affect
real financial outcomes. So a contractor who had previously avoided
financial reviews created a simple dashboard and excel at his bookkeeper,
(17:09):
updated weekly, and within three months, he not only understood
his numbers, but he had developed intuitive financial judgment to
help them make better pricing decisions, better staffing decisions, and
better overall investment decisions. The power of the Vital five
is that it makes financial management accessible and understandable. You
(17:30):
don't need an accounting degree to understand these metrics, but
mastering them gives you the insight to make decisions that
dramatically improve your business outcome.
Speaker 3 (17:40):
Michael look very inspired by the insights so far. I've
got to ask a question. Note, So, these Vital five metrics,
I mean, make a lot of sense, right, but I'm
a bit curious to like, how frequently should business owners
be reviewing each of these metrics? And then does that
vary based on industry or business side?
Speaker 5 (18:01):
Well, that's excellent, that's an excellent question schooky because the
right frequency of financial review can make the difference between
proactive management and just reactive in handling, you know, some catastrophe.
So while there's no one size fits all answer, I
found that different metrics require different review frequencies based on
(18:21):
how quickly they change and how immediately actionable they are.
And at the very top of the pyramid is cash position,
which should be reviewed daily by virtually every business owner,
regardless of size or industry. Cash changes daily through sales, payments, expenses,
and problems can develop. I used to check my cash
(18:42):
position and still do for my business today at the
beginning of the day and the end of the day twice.
Next is sales and revenue, which most businesses should monitor
daily or at a minimum weekly. Sales trends provide immediate
feedback on marketing efforts, seasonal shifts, competitive changes, economic conditions.
(19:06):
A retail company who implemented daily sales tracking immediately noticed
a thirty percent drop on Tuesdays and Wednesdays, leading to
targeted promotions that balanced weekly revenue. Gross profit metrics typically
need weekly review for businesses with variable costs or pricing
in it, at a minimum monthly review for those with
(19:26):
state more stable cost structures. I still am in favor
of weekly for gross profit. A restaurant that tracked food
costs weekly discovered significant variation based on which staff members
were preparing certain dishes, allowing for immediate training interventions, and
then net profit generally requires a monthly analysis for most businesses,
(19:49):
though service businesses with high fixed costs can sometimes extend
this to quarterly if other metrics remain stable, but I
would advise against that.
Speaker 4 (19:59):
It needs to be at least monthly.
Speaker 5 (20:01):
And the key is ensuring that you're not waiting until
year end to discover profitability issues. I can't tell you
how many companies do that. So start with a frequency
that feels manageable for your comfort level, then gradually increase
it as your financial intelligence develops. The goal is building
a sustainable habit, not creating another obligation that gets abandoned
(20:25):
when you're busy.
Speaker 3 (20:27):
Yeah, Michael, as you know, we've got a dynamic group
of listeners. In fact, we've got a question from one
listener here maybe business owners, Michael, I mean they feel
overwhelmed by the prospect of having to learn financial management. Right,
what's your advice for someone who's intimidated, and that's a
really important mindset, intimidated by numbers, but they know that
(20:49):
they've got to develop the skill.
Speaker 4 (20:52):
Yeah, that is really an important question, Choky.
Speaker 5 (20:55):
I commend the listener for asking that, because the emotional
to financial management is often more significant than the intellectual one.
My first piece of advice is to stop with curiosity
rather than master. You know, many business owners avoid financial
management because they believe they need to understand everything at once,
(21:18):
instead approaching financials with specific questions, why did sales increase
last month or which services have the highest gross margin.
These focused inquiries make financial exploration less overwhelming and immediately relevant. Second,
use visual learning to your advantage. Most business owners are
(21:40):
visually oriented, which is why traditional financial statements can be
so intimidating that the text and numbers without any visual context.
So convert your vital five metrics into sepal graphs or
charts that show trends over time. Anytime I can show
a financial dashboard to a client with graphs, it's so
(22:03):
much better for them to understand, easier for them to understand. Third,
connect financial metrics to operational realities you already understand. For example,
if your gross margin percent is forty percent. That means
for every hundred dollars in sales, you have forty dollars
to cover overhead and profit. Thinking in these concrete terms
(22:26):
makes financial concepts more tangible rather than abstract. And then, fourth,
give yourself permission to learn incrementally financial intelligence. It's just
not binary. It's not that you either understand finance you don't.
It's a spectrum, and every step along the spectrum brings value.
(22:51):
A landscape contract is started by simply tracking daily revenue
for a month.
Speaker 4 (22:55):
That's it.
Speaker 5 (22:57):
That single habit created enough insight and compens for him
to gradually expand his financial monitoring to gross profit or
gross profit percent. Finally, remember that financial intelligence is about
decision making, not accounting. Your goal isn't to become a CPA,
a bookkeeper.
Speaker 4 (23:17):
Or CFO.
Speaker 5 (23:18):
It's to extract meaningful insights that help you make better
business decisions. Keep your focus on how financial understanding improves outcomes,
rather than on mastering accounting terminology or procedures. The business
owners who most successfully develop financial intelligence are those who
(23:40):
overcome the initial emotional barrier and discover that with the
right approach, financial management isn't just accessible, It becomes generally
interesting because it tells the story of your business in
a new and powerful way. So before I continue this discuss,
so we're going to take a ninety second break. Hey,
(24:02):
their business owners, let me ask you something. Are you
tied of blending in with your competitors, frustrated with slow
growth and slim margins?
Speaker 4 (24:11):
Well, I've got news for you.
Speaker 5 (24:13):
Everything you've ever learned about growing your business is wrong.
Speaker 4 (24:17):
Don't worry.
Speaker 5 (24:18):
I'm here to let you in on a secret weapon,
your position of market dominance. It's what sets you apart,
makes you irreplaceable, and has customers lining up at your door.
Speaker 4 (24:29):
My name is.
Speaker 5 (24:30):
Michael Barbarrita from Next Step CFO. I know what you're thinking.
Sounds great, Michael, How do I find my position of
market dominance? Well, that's exactly why we've created our game
changing impleitation program called Next Step to Market Dominance.
Speaker 4 (24:45):
In just ninety days, we'll.
Speaker 5 (24:47):
Guide you step by step to a position of market
dominance by uncovering your unique strengths that competitors can't touch,
by crafting a message that resonates deeply with your ideal customer,
by building a strategy that turns you into the go
to expert in your field.
Speaker 4 (25:02):
Now this is in theory.
Speaker 5 (25:03):
These are battle tests and strategies that have helped businesses
like yours double triple and quadruple their revenue. Don't let
another quarter go by struggling the standout. It's time to
dominate your market period. Go to NEXTSTEPCFO dot net forward
slash contact.
Speaker 4 (25:21):
Fill out the form and in the.
Speaker 5 (25:23):
Message section put the word dominate or call us at
seven eight one three two six three A two two.
That's next STEPCFO dot net forward slash contact or call
us at seven eight one three two six three A
two two. Welcome back and remember anything any replay that
(25:43):
you need to catch you can go to Powerful Business
Strategies dot com. So now let's explore the second component
of the financial intelligence framework, and that's mastering the financial narrative.
You know, financial numbers are just figures on a page.
They tell a story about your business. Learning to read
and interpret that this story is is what transforms raw
(26:06):
data into actionable intelligence. Unfortunately, most business owners see financial
reports as historical records that as a powerful communication tool
that reveals both problems and opportunities. See the financial narrative
has three key elements patterns, relationships, and anomalies. When you
(26:28):
learn to recognize these elements, your financial reports become less
like boring spreadsheets and more like a fascinating detective story.
Speaker 4 (26:40):
So let's start with patterns.
Speaker 5 (26:43):
So financial patterns emerge over time as you track metrics consistently.
These patterns might be seasonal fluctuations.
Speaker 4 (26:52):
They might be.
Speaker 5 (26:52):
Growth threads or cyclical behaviors tied to your industry, or
your business model, or even the company. Recognizing these patterns
allows you to distinguish between normal variations and actual problems
or opportunities. For example, a retail store analyzed three years
of sales data and discovered a clear pattern of revenue
(27:14):
spikes two weeks before major holidays, followed by significant drops
the week after, and this insight led them to adjust
inventory purchases and staffing levels to align with these predictable fluctuations,
reducing both stockouts and overstaffing. The second element of the
financial narrative is relationships, the connection between different metrics that
(27:38):
revealed deeper insights. These relationships help you understand cause and
effect in your business finances. One critical relationship is the
relationship between sales growth and cash position. Many business owners
are surprised to discover that rapid sales growth often creates
(28:00):
cash flow problems rather than solving them. This happens because
you typically pay for the cost of fulfillment, whether it's inventory, labor,
and materials, before receiving payment from customers, creating a cash
gap that widens as sales increases. Another important relationship exists
between pricing, volume and profit. Many businesses fall into the
(28:26):
trap of assuming that lower prices will increase volume enough
to improve overall profit, but INTEL analysis often revealed that
that assumption is not true very false. A service business,
for example, that I advised, was considering a ten percent
price reduction to stimulate demand. When we analyze the relationship
(28:47):
between pricing and volume, we discovered they would need a
forty percent increase in volume just to maintain that same
profit level, an unlikely scenario in their market. This analysis
prevents to a pricing decision that could have dramatically damaged.
Speaker 4 (29:03):
Their bottom line.
Speaker 5 (29:05):
The third element of the financial narrative is anomalies, unexpected
variations that just don't fit established patterns or relationships. These
anomalies often reveal either problems that need attention or opportunities
for improvement, So professional services for spotted and anomaly where
(29:26):
certain client projects consistently delivered gross profit margins higher of
fifteen percent higher than their overall average, and by analyzing
these high performance outliers, they identified specific project statistics that
can be prioritized in their sales process, significantly improving their
(29:46):
overall profitability. The power of the financial narrative comes from
bringing these elements together to create a comprehensive understanding of
your business's financial dynamics. This narrative doesn't just explain what
happened in the past, it provides guidance for the future.
Speaker 3 (30:05):
Michael, I want to pick up on that this idea
of guidance for the future. Right, So, question from a listener.
Many business owners struggle with translating financial insights into concrete
action plans for the future. Can you share some strategies
for moving from financial observation to effective execution?
Speaker 4 (30:25):
Right?
Speaker 3 (30:25):
Not actually rhymes, by the way, Michael, that rhymes.
Speaker 4 (30:28):
I noticed that you get an A for pros today.
Speaker 3 (30:33):
I love it.
Speaker 5 (30:35):
So this lift and that did identify one of the
most common stumbling blocks in financial manage. But the gap
between insight and action often prevents business owners from realizing
the full value of their financial intelligence. So I recommend
a framework that I call financial to operational translation, a
(30:57):
little confusing name, but that's what I call it. A
structured approach for converting financial observations into specific actionable steps,
and this framework has four components. First, metric to driver MAPPIC.
For each financial metric showing opportunity or concern, identify the
specific operational driver that influences it. For example, declining gross
(31:22):
margins might be driven by pricing erosion, cost increases, or
product mixshifts or production inefficiencies.
Speaker 4 (31:31):
For example, a.
Speaker 5 (31:32):
Construction company discovered the declining margins weren't from rising material
costs as they had assumed, but from a subtle shift
towards smaller projects, which disproportionally had a higher overhead allocation. Second,
driver prioritization. Once you've identified potential drivers, analyzed which ones
(31:56):
offer the greatest leverage for improvement, So consider both both
impact potential and implementation difficulty. A manufacturing client prioritized production
scheduling improvements over material sourcing changes because analysis shown a
five percent margin improvement opportunity with relatively simple operational adjustments.
(32:20):
Be surprised what you could find operationally to increase margins
or actionable experimentation, developed specific measurable tests to.
Speaker 4 (32:32):
Address priority drivers.
Speaker 5 (32:34):
Start with limited scope experiences before full implementation.
Speaker 4 (32:39):
So a professional services.
Speaker 5 (32:41):
Firm testing a new price structure applied it to just
one service line for ninety days, measuring both client response
and profitability impact before expanding. AH something we always mentioned
the importance of testing things and that professional versus firm
certainly did.
Speaker 4 (33:02):
Fourth systematic follow through.
Speaker 5 (33:04):
So create accountability mechanisms for implementation and regular assessment of results.
Connect financial outcomes directly the operational changes to reinforce.
Speaker 4 (33:14):
The cause and effect relationship. Here's an example.
Speaker 5 (33:17):
A retail business that implement the inventory reduction initiatives created
a weekly dashboard showing both inventory levels and the resulting
impact on cash position and carrying costs. And what makes
this framework powerful is that it creates a continuous loop
financial insights and operational execution. Rather than treating financial review
(33:42):
as separate from business operations, it integrates them into a
cohesive management system. So remember, financial metrics are simply scorecards
that tell you whether your operational decisions are creating the
results you want. Effective financial management isn't about manipulating numbers.
(34:03):
It's about identifying which operational levers will move those numbers
in the right direction, then systematically pulling those levels. So
before I continue this discussion, we're going to have a
ninety second break. Hey there, business owners, let me ask
you something. Are you tied of blending in with your competitors?
(34:26):
Frustrated with slow growth and slim margins?
Speaker 4 (34:29):
Well, I've got news for you.
Speaker 5 (34:31):
Everything you've ever learned about growing your business is wrong.
Speaker 4 (34:36):
Don't worry. I'm here to let you in on.
Speaker 5 (34:38):
A secret weapon, your position of market dominance. It's what
sets you apart, makes you irreplaceable, and has customers lining
up at your door. My name is Michael barber Rita
from Next Step CFO. I know what you're thinking. Sounds great, Michael.
How do I find my position of market dominance? Well,
that's exactly why we've created our game chaining implementation program
(35:01):
called Next Step to Market Dominance.
Speaker 4 (35:04):
In just ninety days, we'll guide you step by step.
Speaker 5 (35:06):
To a position of market dominance by uncovering your unique
strengths that competitors can't touch. By crafting a message that
resonates deeply with your ideal customer, by building a strategy
that turns you into.
Speaker 4 (35:18):
The go to expert in your field. Now this is
in theory.
Speaker 5 (35:22):
These are battle tested strategies that have helped businesses like yours.
Speaker 4 (35:25):
Double, triple, and quadruple their revenue.
Speaker 5 (35:29):
Don't let another quarter go by struggling to standout.
Speaker 4 (35:32):
It's time to dominate your market. Period.
Speaker 5 (35:35):
Go to NEXTSTEPCFO dot net forward slash contact.
Speaker 4 (35:39):
Fill out the form and in.
Speaker 5 (35:41):
The message section put the word dominate or call us
at seven eight one three two six three A two two.
That's next STEPCFO dot net forward slash Contact or call
us at seven eight one three two six three A
two two. Welcome back, and remember once again, if you
miss any part of this podcast, you could go to
(36:05):
Powerful Business Strategies dot com. We have the replay of
every show on that site. So now let's explore the
third component of the financial intelligence framework, and that's developing
financial foresight. While understanding current metrics and narratives is essential,
truly sophisticated financial intelligence extends into the future. Financial foresight
(36:30):
is the ability to anticipate financial outcomes before they happen,
allowing you to make proactive decisions rather than reactive adjustments.
And the cornerstone of financial foresight is effective forecasting.
Speaker 4 (36:43):
And scenario planning.
Speaker 5 (36:45):
Many business owners avoid forecasting because they had negative experiences
with projections that proved wildly inaccurate. But the greatest value
of forecasting isn't perfect prediction, it's better preparation. Think of
financial forecasting like weather forecasting. A meteorologists can't tell you
with certainly whether it will rain exactly twenty seven days
(37:06):
from now, but they can identify patterns and trends that
help you prepare appropriately. Similarly, financial forecasts help you identify
likely outcomes and potential risks so that you can position
your business accordingly. Effective financial forecasting has three key elements.
(37:27):
Rolling timelines, multiple scenarios that's multiple what if scenarios, by
the way, and regular updates. First, rolling timelines provide both
immediate clarity and long term perspective. I recommend a dual
forecasting approach. That's a thirteen week forecast for immediate management
and then the higher level twelve to twenty four month
(37:50):
forecast for strategic planning. The thirteen week forecast shows exactly
when cash flow will flow in and out on a
weekly basis, while the annual forecast helps identify the seasonal
patterns and longer term trends. Manufacturing company implemented this dual
approach and discovered that while their overall annual projection looked healthy,
(38:13):
they faced a significant cash shortfall in months seven through
nine due to inventory build up for their very busy season.
This advance knowledge allowed them to arrange financing before the crunch,
avoiding what would have been a serious cash crisis. Second,
multiple scenarios prevent false confidence that comes from single point forecasts.
(38:38):
At minimum, I recommend creating three scenarios. A base case
or a baseline case what you generally expect to happen,
a stress case what happens if things go wrong, and
an opportunity case what happens if things go better than expected.
A retail company created three scenarios before a major expansion.
(38:58):
The baseline case showed healthy but manageable growth. The stress
case revealed that if sales grew fifteen percent slower than expected,
they would deplete their cash reserves within six months. This
insight led them to secure a larger line of credit
as insurance against this downside scenario, which proved invaluable when
a construction delayed tem temporarily reduced foot traffic third, regular
(39:25):
updates transform forecasting from a static prediction to a dynamic
learning tool. The most effective approach is what I call
rolling forecasting, where you update your projections monthly, incorporating actual
results and adjusting a future expectations based on new information.
(39:45):
We always do rolling business and cash flow forecasts, and
as you gain experience with forecasting, you'll develop what I
call financial intuition, the ability to sense when projections are
realistic or they need adjustment.
Speaker 4 (40:00):
This intuition is it mythical or mystical.
Speaker 5 (40:04):
Its patterned recognition built through consistent financial management. So a
service business owner who initially resisted forecasting became one of
its strongest advocates after six months of rolling forecasts. She
discovered that the process helped to identify subtle shifts in
client behavior and market conditions long before.
Speaker 4 (40:28):
They would have been obvious in historical reporting.
Speaker 5 (40:32):
And beyond forecasting, financial foresight also includes strategic financial planning,
which is aligning financial resources with business objectives. This is
where you move from tracking and projecting finances to actually
shaping them. Strategic financial planning begins with defining clear financial
objectives that support your broader business goals, and these might
(40:55):
include revenue targets, profitability improvements, cast reserve pumulation, or debt production.
Once objectives are established, you develop specific financial strategies to
achieve them. These strategies connect operational decisions to financial outcomes,
creating a roadmap for business growth and improvement. A landscape
(41:18):
company that set an objective to increase their net profit
margin from eight percent to fifteen percent within eighteen months,
and their financial strategy included three components, increasing prices on
maintenance contracts by seven percent, implementing fuel efficiency measures to
reduce costs, and consolidating vendors.
Speaker 4 (41:40):
To improve purchasing power.
Speaker 5 (41:42):
Each component had specific targets and implementation guidelines time, I'm sorry, timelines,
and the most important aspect of strategic financial planning is
that it changes vague business aspirations into concrete financial frame works.
So instead of saying we want to grow, you specify
(42:04):
we will increase revenue by twenty percent while maintaining a
forty percent gross monitoring and twelve percent net margin, requiring
fifty thousand dollars in additional working.
Speaker 4 (42:13):
Capital, and this specified.
Speaker 5 (42:15):
This specificity creates clarity that drives better decisions throughout your organization.
When everyone understands the financial parameters, they can make aligned
choices without constant oversight. Another essential element of financial foresight
is capital allocation, determining where to invest your financial resources
(42:37):
for maximum return. This includes everything from day to day
spending decisions to major investments in equipment, technology, or acquisitions.
An effective capital allocation requires understanding the financial return on
various investment options. This doesn't need complex financial modeling. It
(42:58):
can be as simple as asking three questions about any
significant expenditure. And those three questions are, number one, what
specific financial return do we expect from this investment? Two
when do we expect to realize this return? And three
what risk might prevent us from achieving this return? You know,
(43:20):
a manufacturing business was considering two potential investments, upgrading production
equipment or expanding the sales team.
Speaker 4 (43:29):
One of those two.
Speaker 5 (43:30):
By analyzing the expected financial returns, they discovered that while
both were positive, the sales expansion would generate returns within
three to four months, while the equipment upgrade would take
eighteen months to break even. And this insight led them
to prioritize the sales expansion investment, using the resulting revenue
(43:51):
increase to fund the second choice. The operating the equipment
upgrade from cash flow rather than having to refine so
finance that equipment.
Speaker 3 (44:03):
Yeah, it's really interesting that, Michael. And by the way,
you're getting some compliments. Folks are saying it's nice to
listen to a CFO who's very strategic and practical. So
hats off on that question from a listener, Michael, Look,
forecasting sounds powerful but potentially complex. Let's be honest. How
can business owners start to develop forecasting capabilities without getting
(44:26):
overwhelmed by the process.
Speaker 5 (44:28):
Yeah, well, forecasting can indeed seem intimidating, but I found
that starting with a simplified approach makes it both manageable
and immediately valuable. I recommend beginning with what I call
incremental forecasting. This is a step by step process that
builds forecasting muscle gradually, rather than trying to create comprehensive
(44:54):
projections immediately. Once again, you know, the financial understanding is
a step by step process. You start with a basic
four week cash flow forecast. This short time frame reduces
complexity while still providing insight, and the forecast should include
beginning cash balance, expected customer payments based on outstanding invoices,
(45:18):
regular predictable expenses like rent, payroll, loan payments, variable expenses
already committed, upcoming inventory purchases.
Speaker 4 (45:26):
Or planned marketing.
Speaker 5 (45:28):
A service business owner who was intimidated by forecasting started
with just this basic four week structure, and then within
the first month he identified two weeks where expenses would
exceed available cash, a problem he was able to address
by adjusting payment timing rather than scrambling the last minute,
and then, once comfortable with the four week forecast, extend
(45:51):
to the thirteen week arison, gradually adding more details as
his confidence increased. It So the key is starting with
the most certain elements like known receivables and fixed expenses,
before incorporating more variable factors. For the annual forecast. You
(46:13):
can begin with a simple month by month projection of
your vital five metrics and don't worry about getting every
line night of perfect focus on the major revenue streams
and the major expense categories that drive your business. A
retail owner created her first annual forecast with just four
revenue categories and six expense categories, providing sufficient insight for
(46:36):
strategic planning without overwhelming detail, and the most important element
for beginners is consistent review and refinement schedule a weekly
forecast update where you compare actual results to projections and
identify what you got wrong, what you got right or wrong. Chokey,
(46:59):
do we have compliments today?
Speaker 4 (47:03):
We do?
Speaker 3 (47:03):
Absolutely, Yeah, we do.
Speaker 4 (47:05):
Yeah.
Speaker 3 (47:06):
We'll take just a minute or two on that. So
very straightforward, Michael. Look for today's business compliment segment. We're
consuming our series of highlighting business owners and the great
clients that they serve. So really quick one here compliments
to Floyd Black, who provided a business review to Kathleen
Miles of MBA Taxes. Michael, check out what Floyd wrote
(47:29):
about Kathleen. Kathleen's bio supports her highly recommended services and
she is open minded. Whenever I use that term open minded,
I am reminded of an old saying the most expensive
habit is when you have a closed mind. How about
that for a review, Michael, excellent? Back to you. So yeah.
(47:51):
Kathleen provides bookkiping accounting services. You can check her out
on her website NBA Taxes dot com.
Speaker 4 (47:57):
Back to you, Michael, Thank you, Chokey.
Speaker 5 (48:00):
So, as we wrap up today's episode on financial intelligence
for non financial business owners, let me summarize the key
insights that we've covered. We introduce the financial intelligence framework
with its three core components. First understanding the vital five
metrics that provide a comprehensive review of your business's financial health.
That's sales, gross profit dollars, gross profit percent, net profit,
(48:24):
and your current cash position. And we just also discussed
creating a simple dashboard for these metrics that provides the
foundation for more clarity, financial clarity without overwhelming. And then second,
mastering the financial narrative that's learning to read the story
your numbers are telling you through patterns, relationships, and anomalies.
(48:45):
We exploit how financial storytelling sessions transform raw data into
meaningful insights that just drive action and connecting financial incomes
to operational decisions. And Third, developing financial force through forecasting,
strategic planning, capital allocation and contingency planning. We discuss how
(49:06):
to look forward financially positions.
Speaker 4 (49:11):
I'm sorry.
Speaker 5 (49:11):
We discussed how looking forward financially positions your business for
both stability and growth, allowing you to shape circumstances rather
than merely respond to them. And throughout our discussion, we've
emphasized that financial intelligence is about isn't about becoming an
accountant or some type of financial expert. It's about developing
(49:35):
practical financial skills that improve your decision making and business outcomes.
Remember your numbers tell a story. Learning to read that
story might be the most valuable skill you'll ever develop
as a business owner. To get a copy of the
book Powerful Business Strategies, simply go to our website www
(49:57):
dot NEXTSTEPCFO dot net. It's totally complementary and until next
Monday at noon easton time for Chucky Obio. My name
is Michael Barberita, and remember, don't keep doing what your
competition is doing.
Speaker 2 (50:14):
You have been listening to Powerful Business Strategies finding out
that everything you ever learned about growing your business is wrong.
Tune in next week and every week at noon Eastern
time on W four CY Radio with your host Michael
Barbarita of Next Step CFO and moderator chugy O Bio
The topics and opinions expressed in the following show are
solely those of the hosts and their guests and not
those of W FOURCY Radio. It's employees are affiliates. We
make no recommendations or endorsements for radio show programs, services,
or products mentioned on air or on our web. No
liability explicitor implies shall be extended to W FOURCY Radio
or its employees are affiliates. Any questions or comments should
be directed to those show hosts. Thank you for choosing
(00:21):
W FOURCY Radio.
Speaker 2 (00:27):
Welcome to Powerful Business Strategies, where you will find out
that everything you have ever learned about growing your business
is wrong. Finally, a show where you'll learn the right
way to grow your business by learning business and financial
strategies that your competition isn't doing. And now here is
your host. President of Next Step CFO Michael Barbarita and
(00:51):
joining Michael for today's show as an executive moderator is
chooky obia.
Speaker 3 (01:01):
Yes, this is cheek in I believe that gratitude is
undefeated and growth is about the next step. It is
an honor for me to moderate today's discussion with my
good friend Michael. Michael, how are you good.
Speaker 4 (01:13):
How are you two?
Speaker 5 (01:14):
Key doom Wall And as Tricky said, my name is
Michael barbera president of Next Step CFO, and next Step
CFO is a fractional CFO and strategic implementation firm. Business
owners hire us to double and triple their profit using
business and financial strategies that their competition isn't doing. And
our vision is to ensure that overwhelmed business owners achieve
(01:38):
consistent profits that lead to the time, freedom to build
a legacy and the life they desire. And our mission
is dedicated guiding small business owners to leveraging their time,
exploding their profits, and building that meaningful legacy. This show,
Powerful Business Strategies in our book of the same name,
(01:58):
is a step toward accomplished that vision and mission. So
with that, I'd like to hand it back to my
co author and moderator for the show, Chicky Obio.
Speaker 3 (02:07):
Absolutely so, Michael, Look, I'm particularly energized by today's episode.
I actually have my calculator out just so you know.
By the way, so episode is financial intelligence for non
financial business owners, making numbers your secret weapons. So really enthused.
Quick disclaimer, folks, Look, Michael and I are both affiliated
(02:28):
with a number of different organizations, and I currently serve
as the managing director of business development for Better Price,
a global business focused law firm. In addition to that,
it's truly an honor to collaborate with Michael to moderate
business roundtables really Coast to Coast to document insights from
those roundtables as part of our book, Powerful Business Strategies.
(02:51):
But please note that the views expressed on this show
are personal views based on those successful experiences, and my
mission is a fearless moderates to ask the right questions
to help you, the listener, learn the best strategies that
the competition isn't doing.
Speaker 4 (03:07):
Michael, thank you, Thank you. Chicky.
Speaker 5 (03:10):
So, business owners, I've seen a pattern. It might sound familiar.
You started your business because you're passionate about what you do.
Maybe maybe it's creating beautiful designs, or building quality homes,
or delivering exceptional service or even developing innovative products. You
didn't start your business because you love staring at spreadsheets
(03:33):
or analyzing financial statements. Yeah, here's what I know to
be true. The most successful business owners aren't necessarily financial experts.
They're probably not, but they've mastered what I call financial intelligence,
the ability to understand and use their numbers to make
better decisions.
Speaker 4 (03:53):
And today I want you to I want to.
Speaker 5 (03:55):
I want to show you that financial mastery isn't about
becoming an countant. It's about taking numbers from something you
avoid into a secret weapon that guides your business towards
greater profits, greater stability, and growth. The gap between where
you are and where you want to be financially isn't
(04:18):
about working harder. It's about understanding the story that your
financial numbers are telling you. So let's decode that story
together and unleash the financial hidden, the financial power that's
hidden in your business right now. So let me start
with a confession. I met a successful CEO of a
(04:41):
multimillion dollar company who actually break into a cold sweat
when presented with a balance sheet. I've worked with brilliant
entrepreneurs who can innovate game changing products but struggle to
explain the difference between cash flow and.
Speaker 4 (05:01):
Well.
Speaker 5 (05:01):
If you've ever been embarrassed or overwhelmed by financial matters
in your business, I want you to know two things. First,
you're clearly not alone. Second, this isn't about some inherent deficiency.
It's just about a skills upgrade a skills gap that
could be bridged more easily than you think.
Speaker 4 (05:20):
And I believe that these.
Speaker 5 (05:21):
There are three myths that keep business owners from developing
that financial intelligence, and I want to dispel those three
myths right away, right up front. The first myth is
that you need to be good with numbers to understand
business finances. Well, that's simply not the case. Financial intelligence
is it more. Is it about complex calculations. It's about
(05:43):
understanding relationships between numbers and what they tell you about
your business. And if you can understand that spending more
than you earn creates problems, then you already have the
foundational thinking required for financial intelligence. And the second myth
is that financial management is primarily about cutting costs. Too
(06:07):
many business owners view financial oversight as the equivalent of
a strict diet, all restriction, no enjoyment, and in reality,
strong financial intelligence often reveals opportunities for strategic investment and growth.
Speaker 4 (06:23):
That wouldn't be apparent otherwise.
Speaker 5 (06:26):
And the third and most damaging myth is that you
can delegate financial understanding entirely to others like your bookkeeper,
your accountant, or even your CFO. While these professionals are invaluable.
Outsourcing your financial knowledge one hundred percent creates vulnerability. I've
(06:46):
seen too many business owners blindsided by cash crunches or
missed opportunities because they relied entirely on others for financial side.
I'm just looking for a basis of understanding here. So
when I learned to read these signals myself, I discovered
problems and opportunities months before they would have become obvious otherwise,
(07:11):
And this experience improved how I approach business. I realized
that financial intelligence is a specialized skill for accountants, although
I am one. It's a fundamental leadership capacity that every
business owner needs to develop, regardless of their background or
natural inclinations. So today I'm going to share the approach
(07:33):
I've developed working with hundreds of businesses across dozens of industries,
and I call it the financial Intelligence Framework. Will help
you improve your relationship with your business numbers from of
the one of confusion or avoidance to clarity and confidence.
And this framework has three components. Number one is understanding
(07:58):
the vital five metas that tell you the most of
what you need to know. Second, mastering the financial narrative,
the story your numbers are telling you. About your business. Third,
developing financial force. This is using financial intelligence to anticipate
and prepare for the future. So throughout today's show, we'll
(08:23):
explore each component and provide practical steps to implement them
in your business, regardless regardless of your current level of
financial comfort. One lesson I learned is that you need
to monitor both profit and cash flow simultaneously. So profit
tells you whether your business model is viable in the
long term, while cash flow tells you whether you'll survive.
Speaker 4 (08:45):
In the short term.
Speaker 5 (08:47):
But many business owners focus exclusively on profit until a
cash crisis forces them to learn this distinction the hard way.
Understanding this relationlationship between profit and cash is one of
the cornerstones of financial intelligence, and it's not about complex
accounting rules, but rather about developing a practical understanding of
(09:11):
how money actually moves through your business. So let's dive
deeper into the first component of the financial intelligence framework,
and that's understanding the vital five metrics. In my experience
working with hundreds of business owners, I found that most
financial overwhelmed comes from trying to track too many numbers
(09:32):
without understanding which ones truly matter for decision making.
Speaker 4 (09:36):
And the truth is While a comprehensive.
Speaker 5 (09:39):
Financial analysis might involve dozens of metrics, most business owners
can dramatically improve their financial outcomes by focusing on just
five five, five critical numbers. I call these the vital
five and these are the financial equivalent of vital science
in healthcare. Just as a doctor checks you palls blood
(10:01):
pressure and temperature to quickly assession for overall health, these
five metrics give you a rapid assessment of your business's
financial condition.
Speaker 4 (10:13):
Now, the first vital sign is sales or revenue.
Speaker 5 (10:16):
This seems obvious, but I'm always surprised by how many
business owners don't know their exact sales figures on a daily, weekly,
or even monthly basis.
Speaker 4 (10:25):
Revenue isn't just a vanity metric.
Speaker 5 (10:27):
It's the fundamental input that drives all the other financial outcomes.
So you should not you should know not only your
total revenue, but also how it's trending up, down, sideways,
how it's distributed across products to services as well, and
how it compares to.
Speaker 4 (10:45):
Your projections if you have them, which you should.
Speaker 5 (10:48):
A landscaping company, for example, implemented a simple daily sales
tracking system and discovered that eighty percent of the revenue
came from just two services, while that was spending most
of their marketing budget promoting over performing offerings. This basic
revenue insight led to a thirty five percent increase of
profit within three months. So the second vital sign is
(11:10):
gross profit dollars. This is this is the money remaining
after subtracting the direct costs of delivering your products or services.
That direct clasts include things like materials, direct labor, subcontracted labor,
and any other expense is freight that increased directly with
sales volume. And gross profit matters because it tells you
(11:32):
how much money you have available to cover your fixed
costs and generate a net profit. See Many businesses focus
on sales growth without realizing that gross profit is that's
sufficient to sustain their operations. You've got to understand the
gross profit component. So a retail store owner was excited
(11:53):
about growing sales until she realized or analyzed her gross
profit and discovered that her newest that's this growing product
line actually had the lowest gross profit. So by reallocating
her focus to higher margin products, she increased her overall
grows profit by twenty two percent, even though total sales
(12:14):
remain relatively stable. That's about profit. That's about understanding your
profit versus just the top line. The third vital sign
is gross profit percentage. This is really really important. This
is your gross profit divided by your revenue, expressed as
a percentage. So while gross profit dollars help you tell
(12:37):
you the absolute amount available to cover your fixed costs,
gross profit percent tells you how efficiently you're generating that profit.
Industry benchmarks for gross profit, by the way, they very,
They really do, they very They're all over the place,
you know, from as low as ten to fifteen percent
(12:58):
in some retail category to seventy to eighty percent in
certain professional services. But what matters most is not comparing
yourself to an abstract standard, but tracking your own trends
and understanding what drives changes in your gross profit margin.
So a restaurant owner notices gross profit percentage declining despite
(13:22):
stable food costs. Investigation revealed that staff was over proportioning
certain high cost ingredients. So a simple portion control system
restored as margins without changing menu prices or quality. And
the fourth vital sign is net profit. This is what
remains after all expenses, both direct and overhead, are subtracted
(13:48):
from revenue, so it's essentially your bottom line, and it
represents the return all your effort and investment. Net profit
matters not just for current income, but for business sustainability
and growth, because without adequate net profit, you can't weather
the downturns, or invest in opportunities, or build a business
(14:12):
value for eventual exit with secession. So a manufacturing company
who had focused exclusively on revenue growth was shocked to
discover that is net profit had been declining for three
consecutive years despite sales increases. So by analyzing which products
and which customers were most profitable, he restructured his offering
(14:34):
to emphasize higher margin business, doubling his debt profit within
eighteen months. And the fifth byte sign is cash position.
Simply how much money you have available right now includes
cash in all of your bank accounts. While the other
metrics tell you about business performance, cash position tells you
(14:56):
about business survival capacity. You see, many profitable businesses failed
because they write out of cash. Your cash position isn't
just about current balances, but about the relationship between cash
inflows and outflows over time. This is why cash flow
forecasting is so critical, and we've had a couple of
(15:17):
shows on that because it helps you anticipate and prepare
for periods when outflows might exceed inflows, and our service
business owner maintained that may tell you what she thought
was a healthy cash reserve of two months operating expenses,
but by implementing a proper cash flow forecast, she realized
(15:38):
that seasonal variations and client payment patterns created a three
month gap between service delivery and payment collection. She adjusted
her cash reserves accordingly, avoiding what would have been a
severe crunch during her growth phase. Now might be wondering
(15:59):
how do I act these vital five How do I
drag these vital five metrics effectively? And the key is
creating a dashboard that gives you visibility without overwhelming you
with details you know for most business. For most businesses,
I usually recommend a single page dashboard that shows each
metric and three time frames period that's this week or month,
(16:24):
the trend comparing to previous periods, and the target comparing
to your goals. And this provides context that makes the
numbers more meaningful for decision making, and the dashboard should
be updated at least weekly daily. For businesses with high
transaction volumes or type cash positions. The process of reviewing
(16:45):
these numbers regularly builds your financial intelligence more than any
course or book could so because you're and the reason
is is you're actually seeing how real business decisions affect
real financial outcomes. So a contractor who had previously avoided
financial reviews created a simple dashboard and excel at his bookkeeper,
(17:09):
updated weekly, and within three months, he not only understood
his numbers, but he had developed intuitive financial judgment to
help them make better pricing decisions, better staffing decisions, and
better overall investment decisions. The power of the Vital five
is that it makes financial management accessible and understandable. You
(17:30):
don't need an accounting degree to understand these metrics, but
mastering them gives you the insight to make decisions that
dramatically improve your business outcome.
Speaker 3 (17:40):
Michael look very inspired by the insights so far. I've
got to ask a question. Note, So, these Vital five metrics,
I mean, make a lot of sense, right, but I'm
a bit curious to like, how frequently should business owners
be reviewing each of these metrics? And then does that
vary based on industry or business side?
Speaker 5 (18:01):
Well, that's excellent, that's an excellent question schooky because the
right frequency of financial review can make the difference between
proactive management and just reactive in handling, you know, some catastrophe.
So while there's no one size fits all answer, I
found that different metrics require different review frequencies based on
(18:21):
how quickly they change and how immediately actionable they are.
And at the very top of the pyramid is cash position,
which should be reviewed daily by virtually every business owner,
regardless of size or industry. Cash changes daily through sales, payments, expenses,
and problems can develop. I used to check my cash
(18:42):
position and still do for my business today at the
beginning of the day and the end of the day twice.
Next is sales and revenue, which most businesses should monitor
daily or at a minimum weekly. Sales trends provide immediate
feedback on marketing efforts, seasonal shifts, competitive changes, economic conditions.
(19:06):
A retail company who implemented daily sales tracking immediately noticed
a thirty percent drop on Tuesdays and Wednesdays, leading to
targeted promotions that balanced weekly revenue. Gross profit metrics typically
need weekly review for businesses with variable costs or pricing
in it, at a minimum monthly review for those with
(19:26):
state more stable cost structures. I still am in favor
of weekly for gross profit. A restaurant that tracked food
costs weekly discovered significant variation based on which staff members
were preparing certain dishes, allowing for immediate training interventions, and
then net profit generally requires a monthly analysis for most businesses,
(19:49):
though service businesses with high fixed costs can sometimes extend
this to quarterly if other metrics remain stable, but I
would advise against that.
Speaker 4 (19:59):
It needs to be at least monthly.
Speaker 5 (20:01):
And the key is ensuring that you're not waiting until
year end to discover profitability issues. I can't tell you
how many companies do that. So start with a frequency
that feels manageable for your comfort level, then gradually increase
it as your financial intelligence develops. The goal is building
a sustainable habit, not creating another obligation that gets abandoned
(20:25):
when you're busy.
Speaker 3 (20:27):
Yeah, Michael, as you know, we've got a dynamic group
of listeners. In fact, we've got a question from one
listener here maybe business owners, Michael, I mean they feel
overwhelmed by the prospect of having to learn financial management. Right,
what's your advice for someone who's intimidated, and that's a
really important mindset, intimidated by numbers, but they know that
(20:49):
they've got to develop the skill.
Speaker 4 (20:52):
Yeah, that is really an important question, Choky.
Speaker 5 (20:55):
I commend the listener for asking that, because the emotional
to financial management is often more significant than the intellectual one.
My first piece of advice is to stop with curiosity
rather than master. You know, many business owners avoid financial
management because they believe they need to understand everything at once,
(21:18):
instead approaching financials with specific questions, why did sales increase
last month or which services have the highest gross margin.
These focused inquiries make financial exploration less overwhelming and immediately relevant. Second,
use visual learning to your advantage. Most business owners are
(21:40):
visually oriented, which is why traditional financial statements can be
so intimidating that the text and numbers without any visual context.
So convert your vital five metrics into sepal graphs or
charts that show trends over time. Anytime I can show
a financial dashboard to a client with graphs, it's so
(22:03):
much better for them to understand, easier for them to understand. Third,
connect financial metrics to operational realities you already understand. For example,
if your gross margin percent is forty percent. That means
for every hundred dollars in sales, you have forty dollars
to cover overhead and profit. Thinking in these concrete terms
(22:26):
makes financial concepts more tangible rather than abstract. And then, fourth,
give yourself permission to learn incrementally financial intelligence. It's just
not binary. It's not that you either understand finance you don't.
It's a spectrum, and every step along the spectrum brings value.
(22:51):
A landscape contract is started by simply tracking daily revenue
for a month.
Speaker 4 (22:55):
That's it.
Speaker 5 (22:57):
That single habit created enough insight and compens for him
to gradually expand his financial monitoring to gross profit or
gross profit percent. Finally, remember that financial intelligence is about
decision making, not accounting. Your goal isn't to become a CPA,
a bookkeeper.
Speaker 4 (23:17):
Or CFO.
Speaker 5 (23:18):
It's to extract meaningful insights that help you make better
business decisions. Keep your focus on how financial understanding improves outcomes,
rather than on mastering accounting terminology or procedures. The business
owners who most successfully develop financial intelligence are those who
(23:40):
overcome the initial emotional barrier and discover that with the
right approach, financial management isn't just accessible, It becomes generally
interesting because it tells the story of your business in
a new and powerful way. So before I continue this discuss,
so we're going to take a ninety second break. Hey,
(24:02):
their business owners, let me ask you something. Are you
tied of blending in with your competitors, frustrated with slow
growth and slim margins?
Speaker 4 (24:11):
Well, I've got news for you.
Speaker 5 (24:13):
Everything you've ever learned about growing your business is wrong.
Speaker 4 (24:17):
Don't worry.
Speaker 5 (24:18):
I'm here to let you in on a secret weapon,
your position of market dominance. It's what sets you apart,
makes you irreplaceable, and has customers lining up at your door.
Speaker 4 (24:29):
My name is.
Speaker 5 (24:30):
Michael Barbarrita from Next Step CFO. I know what you're thinking.
Sounds great, Michael, How do I find my position of
market dominance? Well, that's exactly why we've created our game
changing impleitation program called Next Step to Market Dominance.
Speaker 4 (24:45):
In just ninety days, we'll.
Speaker 5 (24:47):
Guide you step by step to a position of market
dominance by uncovering your unique strengths that competitors can't touch,
by crafting a message that resonates deeply with your ideal customer,
by building a strategy that turns you into the go
to expert in your field.
Speaker 4 (25:02):
Now this is in theory.
Speaker 5 (25:03):
These are battle tests and strategies that have helped businesses
like yours double triple and quadruple their revenue. Don't let
another quarter go by struggling the standout. It's time to
dominate your market period. Go to NEXTSTEPCFO dot net forward
slash contact.
Speaker 4 (25:21):
Fill out the form and in the.
Speaker 5 (25:23):
Message section put the word dominate or call us at
seven eight one three two six three A two two.
That's next STEPCFO dot net forward slash contact or call
us at seven eight one three two six three A
two two. Welcome back and remember anything any replay that
(25:43):
you need to catch you can go to Powerful Business
Strategies dot com. So now let's explore the second component
of the financial intelligence framework, and that's mastering the financial narrative.
You know, financial numbers are just figures on a page.
They tell a story about your business. Learning to read
and interpret that this story is is what transforms raw
(26:06):
data into actionable intelligence. Unfortunately, most business owners see financial
reports as historical records that as a powerful communication tool
that reveals both problems and opportunities. See the financial narrative
has three key elements patterns, relationships, and anomalies. When you
(26:28):
learn to recognize these elements, your financial reports become less
like boring spreadsheets and more like a fascinating detective story.
Speaker 4 (26:40):
So let's start with patterns.
Speaker 5 (26:43):
So financial patterns emerge over time as you track metrics consistently.
These patterns might be seasonal fluctuations.
Speaker 4 (26:52):
They might be.
Speaker 5 (26:52):
Growth threads or cyclical behaviors tied to your industry, or
your business model, or even the company. Recognizing these patterns
allows you to distinguish between normal variations and actual problems
or opportunities. For example, a retail store analyzed three years
of sales data and discovered a clear pattern of revenue
(27:14):
spikes two weeks before major holidays, followed by significant drops
the week after, and this insight led them to adjust
inventory purchases and staffing levels to align with these predictable fluctuations,
reducing both stockouts and overstaffing. The second element of the
financial narrative is relationships, the connection between different metrics that
(27:38):
revealed deeper insights. These relationships help you understand cause and
effect in your business finances. One critical relationship is the
relationship between sales growth and cash position. Many business owners
are surprised to discover that rapid sales growth often creates
(28:00):
cash flow problems rather than solving them. This happens because
you typically pay for the cost of fulfillment, whether it's inventory, labor,
and materials, before receiving payment from customers, creating a cash
gap that widens as sales increases. Another important relationship exists
between pricing, volume and profit. Many businesses fall into the
(28:26):
trap of assuming that lower prices will increase volume enough
to improve overall profit, but INTEL analysis often revealed that
that assumption is not true very false. A service business,
for example, that I advised, was considering a ten percent
price reduction to stimulate demand. When we analyze the relationship
(28:47):
between pricing and volume, we discovered they would need a
forty percent increase in volume just to maintain that same
profit level, an unlikely scenario in their market. This analysis
prevents to a pricing decision that could have dramatically damaged.
Speaker 4 (29:03):
Their bottom line.
Speaker 5 (29:05):
The third element of the financial narrative is anomalies, unexpected
variations that just don't fit established patterns or relationships. These
anomalies often reveal either problems that need attention or opportunities
for improvement, So professional services for spotted and anomaly where
(29:26):
certain client projects consistently delivered gross profit margins higher of
fifteen percent higher than their overall average, and by analyzing
these high performance outliers, they identified specific project statistics that
can be prioritized in their sales process, significantly improving their
(29:46):
overall profitability. The power of the financial narrative comes from
bringing these elements together to create a comprehensive understanding of
your business's financial dynamics. This narrative doesn't just explain what
happened in the past, it provides guidance for the future.
Speaker 3 (30:05):
Michael, I want to pick up on that this idea
of guidance for the future. Right, So, question from a listener.
Many business owners struggle with translating financial insights into concrete
action plans for the future. Can you share some strategies
for moving from financial observation to effective execution?
Speaker 4 (30:25):
Right?
Speaker 3 (30:25):
Not actually rhymes, by the way, Michael, that rhymes.
Speaker 4 (30:28):
I noticed that you get an A for pros today.
Speaker 3 (30:33):
I love it.
Speaker 5 (30:35):
So this lift and that did identify one of the
most common stumbling blocks in financial manage. But the gap
between insight and action often prevents business owners from realizing
the full value of their financial intelligence. So I recommend
a framework that I call financial to operational translation, a
(30:57):
little confusing name, but that's what I call it. A
structured approach for converting financial observations into specific actionable steps,
and this framework has four components. First, metric to driver MAPPIC.
For each financial metric showing opportunity or concern, identify the
specific operational driver that influences it. For example, declining gross
(31:22):
margins might be driven by pricing erosion, cost increases, or
product mixshifts or production inefficiencies.
Speaker 4 (31:31):
For example, a.
Speaker 5 (31:32):
Construction company discovered the declining margins weren't from rising material
costs as they had assumed, but from a subtle shift
towards smaller projects, which disproportionally had a higher overhead allocation. Second,
driver prioritization. Once you've identified potential drivers, analyzed which ones
(31:56):
offer the greatest leverage for improvement, So consider both both
impact potential and implementation difficulty. A manufacturing client prioritized production
scheduling improvements over material sourcing changes because analysis shown a
five percent margin improvement opportunity with relatively simple operational adjustments.
(32:20):
Be surprised what you could find operationally to increase margins
or actionable experimentation, developed specific measurable tests to.
Speaker 4 (32:32):
Address priority drivers.
Speaker 5 (32:34):
Start with limited scope experiences before full implementation.
Speaker 4 (32:39):
So a professional services.
Speaker 5 (32:41):
Firm testing a new price structure applied it to just
one service line for ninety days, measuring both client response
and profitability impact before expanding. AH something we always mentioned
the importance of testing things and that professional versus firm
certainly did.
Speaker 4 (33:02):
Fourth systematic follow through.
Speaker 5 (33:04):
So create accountability mechanisms for implementation and regular assessment of results.
Connect financial outcomes directly the operational changes to reinforce.
Speaker 4 (33:14):
The cause and effect relationship. Here's an example.
Speaker 5 (33:17):
A retail business that implement the inventory reduction initiatives created
a weekly dashboard showing both inventory levels and the resulting
impact on cash position and carrying costs. And what makes
this framework powerful is that it creates a continuous loop
financial insights and operational execution. Rather than treating financial review
(33:42):
as separate from business operations, it integrates them into a
cohesive management system. So remember, financial metrics are simply scorecards
that tell you whether your operational decisions are creating the
results you want. Effective financial management isn't about manipulating numbers.
(34:03):
It's about identifying which operational levers will move those numbers
in the right direction, then systematically pulling those levels. So
before I continue this discussion, we're going to have a
ninety second break. Hey there, business owners, let me ask
you something. Are you tied of blending in with your competitors?
(34:26):
Frustrated with slow growth and slim margins?
Speaker 4 (34:29):
Well, I've got news for you.
Speaker 5 (34:31):
Everything you've ever learned about growing your business is wrong.
Speaker 4 (34:36):
Don't worry. I'm here to let you in on.
Speaker 5 (34:38):
A secret weapon, your position of market dominance. It's what
sets you apart, makes you irreplaceable, and has customers lining
up at your door. My name is Michael barber Rita
from Next Step CFO. I know what you're thinking. Sounds great, Michael.
How do I find my position of market dominance? Well,
that's exactly why we've created our game chaining implementation program
(35:01):
called Next Step to Market Dominance.
Speaker 4 (35:04):
In just ninety days, we'll guide you step by step.
Speaker 5 (35:06):
To a position of market dominance by uncovering your unique
strengths that competitors can't touch. By crafting a message that
resonates deeply with your ideal customer, by building a strategy
that turns you into.
Speaker 4 (35:18):
The go to expert in your field. Now this is
in theory.
Speaker 5 (35:22):
These are battle tested strategies that have helped businesses like yours.
Speaker 4 (35:25):
Double, triple, and quadruple their revenue.
Speaker 5 (35:29):
Don't let another quarter go by struggling to standout.
Speaker 4 (35:32):
It's time to dominate your market. Period.
Speaker 5 (35:35):
Go to NEXTSTEPCFO dot net forward slash contact.
Speaker 4 (35:39):
Fill out the form and in.
Speaker 5 (35:41):
The message section put the word dominate or call us
at seven eight one three two six three A two two.
That's next STEPCFO dot net forward slash Contact or call
us at seven eight one three two six three A
two two. Welcome back, and remember once again, if you
miss any part of this podcast, you could go to
(36:05):
Powerful Business Strategies dot com. We have the replay of
every show on that site. So now let's explore the
third component of the financial intelligence framework, and that's developing
financial foresight. While understanding current metrics and narratives is essential,
truly sophisticated financial intelligence extends into the future. Financial foresight
(36:30):
is the ability to anticipate financial outcomes before they happen,
allowing you to make proactive decisions rather than reactive adjustments.
And the cornerstone of financial foresight is effective forecasting.
Speaker 4 (36:43):
And scenario planning.
Speaker 5 (36:45):
Many business owners avoid forecasting because they had negative experiences
with projections that proved wildly inaccurate. But the greatest value
of forecasting isn't perfect prediction, it's better preparation. Think of
financial forecasting like weather forecasting. A meteorologists can't tell you
with certainly whether it will rain exactly twenty seven days
(37:06):
from now, but they can identify patterns and trends that
help you prepare appropriately. Similarly, financial forecasts help you identify
likely outcomes and potential risks so that you can position
your business accordingly. Effective financial forecasting has three key elements.
(37:27):
Rolling timelines, multiple scenarios that's multiple what if scenarios, by
the way, and regular updates. First, rolling timelines provide both
immediate clarity and long term perspective. I recommend a dual
forecasting approach. That's a thirteen week forecast for immediate management
and then the higher level twelve to twenty four month
(37:50):
forecast for strategic planning. The thirteen week forecast shows exactly
when cash flow will flow in and out on a
weekly basis, while the annual forecast helps identify the seasonal
patterns and longer term trends. Manufacturing company implemented this dual
approach and discovered that while their overall annual projection looked healthy,
(38:13):
they faced a significant cash shortfall in months seven through
nine due to inventory build up for their very busy season.
This advance knowledge allowed them to arrange financing before the crunch,
avoiding what would have been a serious cash crisis. Second,
multiple scenarios prevent false confidence that comes from single point forecasts.
(38:38):
At minimum, I recommend creating three scenarios. A base case
or a baseline case what you generally expect to happen,
a stress case what happens if things go wrong, and
an opportunity case what happens if things go better than expected.
A retail company created three scenarios before a major expansion.
(38:58):
The baseline case showed healthy but manageable growth. The stress
case revealed that if sales grew fifteen percent slower than expected,
they would deplete their cash reserves within six months. This
insight led them to secure a larger line of credit
as insurance against this downside scenario, which proved invaluable when
a construction delayed tem temporarily reduced foot traffic third, regular
(39:25):
updates transform forecasting from a static prediction to a dynamic
learning tool. The most effective approach is what I call
rolling forecasting, where you update your projections monthly, incorporating actual
results and adjusting a future expectations based on new information.
(39:45):
We always do rolling business and cash flow forecasts, and
as you gain experience with forecasting, you'll develop what I
call financial intuition, the ability to sense when projections are
realistic or they need adjustment.
Speaker 4 (40:00):
This intuition is it mythical or mystical.
Speaker 5 (40:04):
Its patterned recognition built through consistent financial management. So a
service business owner who initially resisted forecasting became one of
its strongest advocates after six months of rolling forecasts. She
discovered that the process helped to identify subtle shifts in
client behavior and market conditions long before.
Speaker 4 (40:28):
They would have been obvious in historical reporting.
Speaker 5 (40:32):
And beyond forecasting, financial foresight also includes strategic financial planning,
which is aligning financial resources with business objectives. This is
where you move from tracking and projecting finances to actually
shaping them. Strategic financial planning begins with defining clear financial
objectives that support your broader business goals, and these might
(40:55):
include revenue targets, profitability improvements, cast reserve pumulation, or debt production.
Once objectives are established, you develop specific financial strategies to
achieve them. These strategies connect operational decisions to financial outcomes,
creating a roadmap for business growth and improvement. A landscape
(41:18):
company that set an objective to increase their net profit
margin from eight percent to fifteen percent within eighteen months,
and their financial strategy included three components, increasing prices on
maintenance contracts by seven percent, implementing fuel efficiency measures to
reduce costs, and consolidating vendors.
Speaker 4 (41:40):
To improve purchasing power.
Speaker 5 (41:42):
Each component had specific targets and implementation guidelines time, I'm sorry, timelines,
and the most important aspect of strategic financial planning is
that it changes vague business aspirations into concrete financial frame works.
So instead of saying we want to grow, you specify
(42:04):
we will increase revenue by twenty percent while maintaining a
forty percent gross monitoring and twelve percent net margin, requiring
fifty thousand dollars in additional working.
Speaker 4 (42:13):
Capital, and this specified.
Speaker 5 (42:15):
This specificity creates clarity that drives better decisions throughout your organization.
When everyone understands the financial parameters, they can make aligned
choices without constant oversight. Another essential element of financial foresight
is capital allocation, determining where to invest your financial resources
(42:37):
for maximum return. This includes everything from day to day
spending decisions to major investments in equipment, technology, or acquisitions.
An effective capital allocation requires understanding the financial return on
various investment options. This doesn't need complex financial modeling. It
(42:58):
can be as simple as asking three questions about any
significant expenditure. And those three questions are, number one, what
specific financial return do we expect from this investment? Two
when do we expect to realize this return? And three
what risk might prevent us from achieving this return? You know,
(43:20):
a manufacturing business was considering two potential investments, upgrading production
equipment or expanding the sales team.
Speaker 4 (43:29):
One of those two.
Speaker 5 (43:30):
By analyzing the expected financial returns, they discovered that while
both were positive, the sales expansion would generate returns within
three to four months, while the equipment upgrade would take
eighteen months to break even. And this insight led them
to prioritize the sales expansion investment, using the resulting revenue
(43:51):
increase to fund the second choice. The operating the equipment
upgrade from cash flow rather than having to refine so
finance that equipment.
Speaker 3 (44:03):
Yeah, it's really interesting that, Michael. And by the way,
you're getting some compliments. Folks are saying it's nice to
listen to a CFO who's very strategic and practical. So
hats off on that question from a listener, Michael, Look,
forecasting sounds powerful but potentially complex. Let's be honest. How
can business owners start to develop forecasting capabilities without getting
(44:26):
overwhelmed by the process.
Speaker 5 (44:28):
Yeah, well, forecasting can indeed seem intimidating, but I found
that starting with a simplified approach makes it both manageable
and immediately valuable. I recommend beginning with what I call
incremental forecasting. This is a step by step process that
builds forecasting muscle gradually, rather than trying to create comprehensive
(44:54):
projections immediately. Once again, you know, the financial understanding is
a step by step process. You start with a basic
four week cash flow forecast. This short time frame reduces
complexity while still providing insight, and the forecast should include
beginning cash balance, expected customer payments based on outstanding invoices,
(45:18):
regular predictable expenses like rent, payroll, loan payments, variable expenses
already committed, upcoming inventory purchases.
Speaker 4 (45:26):
Or planned marketing.
Speaker 5 (45:28):
A service business owner who was intimidated by forecasting started
with just this basic four week structure, and then within
the first month he identified two weeks where expenses would
exceed available cash, a problem he was able to address
by adjusting payment timing rather than scrambling the last minute,
and then, once comfortable with the four week forecast, extend
(45:51):
to the thirteen week arison, gradually adding more details as
his confidence increased. It So the key is starting with
the most certain elements like known receivables and fixed expenses,
before incorporating more variable factors. For the annual forecast. You
(46:13):
can begin with a simple month by month projection of
your vital five metrics and don't worry about getting every
line night of perfect focus on the major revenue streams
and the major expense categories that drive your business. A
retail owner created her first annual forecast with just four
revenue categories and six expense categories, providing sufficient insight for
(46:36):
strategic planning without overwhelming detail, and the most important element
for beginners is consistent review and refinement schedule a weekly
forecast update where you compare actual results to projections and
identify what you got wrong, what you got right or wrong. Chokey,
(46:59):
do we have compliments today?
Speaker 4 (47:03):
We do?
Speaker 3 (47:03):
Absolutely, Yeah, we do.
Speaker 4 (47:05):
Yeah.
Speaker 3 (47:06):
We'll take just a minute or two on that. So
very straightforward, Michael. Look for today's business compliment segment. We're
consuming our series of highlighting business owners and the great
clients that they serve. So really quick one here compliments
to Floyd Black, who provided a business review to Kathleen
Miles of MBA Taxes. Michael, check out what Floyd wrote
(47:29):
about Kathleen. Kathleen's bio supports her highly recommended services and
she is open minded. Whenever I use that term open minded,
I am reminded of an old saying the most expensive
habit is when you have a closed mind. How about
that for a review, Michael, excellent? Back to you. So yeah.
(47:51):
Kathleen provides bookkiping accounting services. You can check her out
on her website NBA Taxes dot com.
Speaker 4 (47:57):
Back to you, Michael, Thank you, Chokey.
Speaker 5 (48:00):
So, as we wrap up today's episode on financial intelligence
for non financial business owners, let me summarize the key
insights that we've covered. We introduce the financial intelligence framework
with its three core components. First understanding the vital five
metrics that provide a comprehensive review of your business's financial health.
That's sales, gross profit dollars, gross profit percent, net profit,
(48:24):
and your current cash position. And we just also discussed
creating a simple dashboard for these metrics that provides the
foundation for more clarity, financial clarity without overwhelming. And then second,
mastering the financial narrative that's learning to read the story
your numbers are telling you through patterns, relationships, and anomalies.
(48:45):
We exploit how financial storytelling sessions transform raw data into
meaningful insights that just drive action and connecting financial incomes
to operational decisions. And Third, developing financial force through forecasting,
strategic planning, capital allocation and contingency planning. We discuss how
(49:06):
to look forward financially positions.
Speaker 4 (49:11):
I'm sorry.
Speaker 5 (49:11):
We discussed how looking forward financially positions your business for
both stability and growth, allowing you to shape circumstances rather
than merely respond to them. And throughout our discussion, we've
emphasized that financial intelligence is about isn't about becoming an
accountant or some type of financial expert. It's about developing
(49:35):
practical financial skills that improve your decision making and business outcomes.
Remember your numbers tell a story. Learning to read that
story might be the most valuable skill you'll ever develop
as a business owner. To get a copy of the
book Powerful Business Strategies, simply go to our website www
(49:57):
dot NEXTSTEPCFO dot net. It's totally complementary and until next
Monday at noon easton time for Chucky Obio. My name
is Michael Barberita, and remember, don't keep doing what your
competition is doing.
Speaker 2 (50:14):
You have been listening to Powerful Business Strategies finding out
that everything you ever learned about growing your business is wrong.
Tune in next week and every week at noon Eastern
time on W four CY Radio with your host Michael
Barbarita of Next Step CFO and moderator chugy O Bio
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