Should I Feel Uneasy for Not Understanding My Business Numbers?
Running a business is no small feat. From managing employees to satisfying customers, the responsibilities can feel overwhelming. Among these tasks, understanding your business finances, particularly your Profit and Loss (P&L) statement, is often a major concern. If you find yourself feeling lost when it comes to your finances, you’re not alone, but should you feel uneasy for it? The answer is a resounding “NO”.
The Complexity of Business Finances
Business finances can be intricate. The P&L statement, which summarizes revenues, costs, and expenses over a specific period, is crucial for assessing profitability. However, it can also be filled with jargon and numbers that seem daunting if you don’t have a financial background. It’s essential to recognize that many successful entrepreneurs and business owners feel the same way.
Common Misconceptions
Finance Is Only for Experts: Many believe that understanding finances is reserved for accountants or financial professionals. While they play a crucial role, anyone can and should learn the basics of financial management. Financial management can be simplified to make it more manageable and help you understand where to focus your attention. Knowing the basic concepts will help you feel in control and find that numbers are no longer scary or complicated.
Feeling Uneasy = Equals Incompetence: Not understanding something doesn’t make you incompetent; it simply means you haven’t learned it yet. Acknowledging that you need help is a sign of strength, not weakness. Just because you are a business owner, doesn’t mean you know everything there is to know about managing a business. Should you be expected to know how to do legal work for your business if you are not a lawyer? No, so don’t set that expectation about managing finances. The next step should be to start reading or learning more about basic business financial management. We have podcast episodes and youtube videos available for you, to help you get better at managing your business finances.
I Should Just Only Rely on My Bookkeeper or Accountant: While your bookkeeper and accountant are invaluable resources, they may not always explain financial concepts in a way that makes sense to you or have the experience and expertise or the time to help you answer more complex questions, especially during busy tax time.
Fractional CFOs are equipped with to deal with uncertainty and look forward to work through financial scenarios and analysis needed to help answer your more complex business questions. Fractional CFOs become support you as a business partner with a finance mindset, helping you mitigate risk and capture new opportunities. The role of the CFO is to grow revenue and profits for the company. CFOs are also task with turning companies around if they are not currently profitable which can be a very stressful time to navigate on your own as business owner.
Hiring a fractional CFO that can translate accountant language and explain numbers in simple terms can be a worthwhile investment. Find that person that helps you feel empowered and can take the time to explain and answer your questions.
Book a call with our fractional CFOs for more support on your business financial journey. We are here to empower you and close the knowledge gap on how to manage your business finances.