Most people aren’t very confident when it comes to finance. I recently hosted a workshop where business owners shared their biggest questions about financial statements. And you know what? The same themes kept coming up - all business owners (yes, including financial professionals!) struggle with their business finances at some point. Running a business is challenging, and there are so many unpredictable events in the life of a company.

"How confident are you with financial statements?"

When I asked this question during the workshop, most people rated themselves around a 5 out of 10. Here's what's interesting - even professionals who work with finances daily admitted they struggle with their own business numbers.

One participant (a financial advisor!) shared: "I feel like I understand the numbers of my business deeply, but I still feel like I'm very much in the data collection part of my business where it's like, too soon to really know what to do."

Hard Truth: It typically takes 3-4 years to have enough data to make solid future predictions. So if you're newer in business, focus on collecting good data now - it'll pay off later!

And if you’re feeling this struggle - know you’re not alone!

Cash vs. Accrual: Let's Make This Simple

When you’re learning how to read financial statements, one thing that trips almost everyone up is understanding the difference between cash and accrual accounting.

Here’s a simple way to think about this:

**Cash Basis:**

- You record transactions when money moves in and out

- Super simple, but can be misleading

- Example: I just paid my business insurance in January - it's going to show up as one big expense this month, even though it covers the whole year

**Accrual Basis:**

- You match revenue and costs to when you actually provide service

- More complex, but gives a clearer picture to your margins month over month

- Example: That same insurance payment would be split over 12 months

Real Talk About Working Capital

One workshop participant shared how she manages seasonal business (summer camps!) and it brought up a great point about working capital. Here's what you need to know:

- Working capital isn't just "money in the bank"

- It's what you need to bridge the gap between getting paid and paying expenses

- For seasonal businesses, this is CRUCIAL and can make or break your business

- Pro tip: Look at your working capital needs quarterly, not just monthly

The "Looking at Your Own Numbers" Challenge

All participants admitted that looking at their own numbers has been or is a challenge. One participant admitted: "I have a financial therapist, and I also have, I'm very into my clients' personal financial details. I am not on my own."

I, a CFO, have had times where I’ve ignored my business finances a little too long. CFO’s need CFO’s too!

Sound familiar? Here's what I recommend:

Set regular dates with your numbers (put it in your calendar- or better yet, become a member of Finance Fight Club and come to our monthly accountability calls)
Start with one key metric that matters to your business

For Example:

One of our 1:1 CFO clients is focused on prepping her business to sell, so we are carefully tracking EBIT (Earnings Before INterest and Taxes - she doesn’t have depreciation or amortization so we can ignore EBITDA)
Another client is tracking total owner compensation to make sure the business is supporting her in the best possible way

Get support (whether that's a CFO, bookkeeper, or accountability partner)

Your Financial Statement Checklist

Getting solid analysis from your financial statements takes work and consistency. You can grab my Free Financial Accountability Checklist here. Below is a sneak peek of what you should be looking at and when:

Monthly:

- Revenue trends

- Gross margin

- Cash position

- Accounts receivable aging

Quarterly:

- Working capital needs

- Profitability patterns

- Major expense categories

- Growth trends

The Tech Tools That Help

Quick side note - several participants asked about tools. Here's what's working:

- For meeting notes: Otter, Firefly, or Phantom

- For financial tracking: QuickBooks, Xero, or Wave

- For analysis: Good old Excel (sometimes the classics are best!)

Next Steps for Building Financial Confidence

Ready to level up your financial confidence? Start here:

1. Know your numbers (even if they're not perfect and yes - even if you have a CFO)

2. Set regular review dates (or become a Finance Fight Club Member)

3. Pick ONE metric to master first

4. Don't go it alone - get support

The Bottom Line

Financial confidence isn't about knowing everything - it's about knowing enough to make good decisions for your business. Even those of us who work in finance sometimes need support with our own numbers (yes, really!).

Want to join our next workshop? We dive into topics like this every other month in Finance Fight Club. Come join us - we make the numbers stuff actually fun (I promise!).

P.S. Still feeling unsure about your financial statements? That's totally normal! Drop me a line, and let's chat about how to build your financial confidence.

The Keys to Unlocking Financial Confidence in Your Business