Hint: it’s dangerous to make assumptions.
Imagine sitting in your next meeting, nodding your head when you have no idea what is going on – only to find out you have agreed to dress up as Santa at the office Christmas party… Worse yet, picture that you are asked to report on the businesses’ latest financials, and offer your suggestions for a path forward, only to find that haven’t got a clue what they mean or where to start… It happens. But no one wants that to keep happening. Numbers are the language of business. So, not having a solid understanding of your business’ financials can hold you back from contributing to the leadership table and may even lead to poorly made decisions.
Numbers can seem daunting at first, but embracing them is key.
The moral of the story is that it’s important to learn how the numbers work to establish yourself as a valued member of the business. You don’t need to be a finance guru, but learning to make friends with them is a relationship worth nurturing. But where do you start? It’s simple.
Start by asking questions
The only silly question is the one you don’t ask. Or as a well-known entrepreneur and author of the 4-Hour self-help book series, Tim Ferris puts it: “Asking dumb questions is a smart move.” This is why we recommend sitting down with a member of your finance team, like a CFO, on a regular basis who can provide financial mentorship on your business as a whole and who can help ensure you make informed business decisions concerning future products, strategic decisions and key customers. Do you lack access to these people internally? Then just ask us! We’re happy to help.
How to work with a finance team advisor
At Dexterous, we recommend working with an advisor to make sure that:
- you know your numbers, and
- more importantly, you know the narrative that your numbers are telling you.
A strong understanding of the business isn’t just about being able to recite certain numbers at a given point in time. Instead, it’s about using these numbers to:
- educate yourself on the state and direction of the business
- being able to draw implications
- and then making educated business decisions
The benefit of collaborating with a CFO for financial advisory is that they are highly adept at this process and can walk you through exactly where your business is heading.
“But I look at the bank accounts all the time…”
Unfortunately, this isn’t enough. Looking at your bank account to see how exactly much cash your business has is outdated and can often be misleading. A much better way to grasp whether or not your business is headed in the right direction is to look at its specific, more advanced numerical metrics instead, such as:
- What are our capital requirements?
- How much do we owe?
- What are the current holding costs for our products?
- What are our most profitable products or services?
This isn’t to say that cash flow isn’t important, but it is only one measure of a business’s health – it’s best to do a comprehensive check-up regularly.
Pro Tip: number transparency and integrity are key
All of the above is fantastic; however, huge problems will arise if your data is inaccurate (a common business problem), or worse, your finance department advisors aren’t being fully transparent. Your business deserves a purpose-driven and agile financial team who can help you completely understand the numbers associated with your business and guide you toward long-term, well-educated business decisions. That’s where Dexterous comes in.
Do you want an expert finance team that operates with transparency and integrity?
At Dexterous, we go far beyond virtual bookkeeping and external accounting services. We provide a turnkey managed finance solution that works for you through a financial, operating and growth lens. This means that we leverage all the latest business tools including Robotic Process Automation (RPA), access global talent and manage your finance department with the local expertise of our Sydney team. We also equip you with a strategic approach and cost-effective function not just to address the challenges of a potentially impending recession today, but to help you thrive and achieve more growth in the future. Reach out to Dexterous and transform your finance department today. For more information, get in touch with us today or connect with us via LinkedIn.
