Knowing Your Financial Numbers

Do you know the importance of knowing your financial numbers in your business? Fact– your numbers are one of the most important things you should know! Yet, so many freelancers and solopreneurs simply don’t know them.  It’s so important that you should be setting aside time regularly to review your numbers so you know what next step you are capable of.  Let’s chat with Tracey Bissett of Bissett’s Financial Fitness to discuss the importance of knowing your financial numbers.

 

Meet Tracey.

As Chief Financial Fitness Trainer of Bissett Financial Fitness Inc., Tracey educates and empowers individuals, notably young adults, and entrepreneurs to take control of and live their financial lives with confidence. As a former executive at TD Bank, one of Canada’s Big 5 Banks, Tracey has worked with and in support of thousands of individuals and entrepreneurs to secure the financing they needed.  This hands-on experience coupled with her formal financial education, Masters of Business Administration and Chartered Financial Analyst designation, position Tracey uniquely to coach about all things money. 

Tracey is a full time professor in the financial services faculty within the Business School at Centennial College. She leads speaking engagements and is the Executive Producer and host of the Young Money podcast all focused on increasing financial fitness. Tracey was named the Silver Award winner for The IFSE Institute Award for Financial Literacy Champion through the Wealth Professional Awards 2020 and Bissett Financial Fitness Inc. a Worldwide Finance Awards 2020 winner.  

 

Where it all started.

Tracey has loved money ever since she was a little kid. She used to do a lot of little side hustles in her neighborhood to make money.  Tracey grew up really appreciating that money didn’t need to be emotional. It was just a means to get things or do things that you wanted. 

 

That’s kind of a unique stance. 

Tracey knows most people don’t feel that way about money. So she thought she’d start her own business.  But she got into banking. The two years she thought she would be there, turned into 16.  It was a great opportunity where she worked with great clients and colleagues. Then a restructuring happened. 

So instead of going back to another role in another bank in Canada, she pulled together all the things she likes to do like helping people learn about money and diving into that part of the business.  She started Bissett Financial Fitness which is coaching, consulting, and education for young people or business owners. She also has a podcast called Young Money which is an advice show for millionaires in the making. 

 

I love that Tracey is focused on helping the next generation.

There’s so many people that want to work with people that already have money and are already established. But the next generation is our future! We need to educate them about money and empower them.  

 

Tracey’s #1 tip- know your numbers!

Tracey works with business owners across different industries, different ages, and sales range from startup up to $2 million. She says the most common reason why people don’t know their numbers is a fear of the numbers or fear that they’re not good at the numbers. 

They think if they just work really hard it’s going to work out okay. So they are basically ignoring them. On the flip side of that are the people who have a bookkeeper and think they don’t need to know the numbers. 

 

Bottom line..you can’t hit your goals unless you know your numbers.

You can’t see if you’re profitable, and you can’t actually implement reasonable marketing strategies if you don’t know what’s going on with your. So it’s important to get clear on your numbers.  It doesn’t need to be hard. Usually when people are worried about their numbers, they’re worrying about these worst case scenarios in their head. Then, when they actually see their numbers, it’s not as bad as they think. 

The other reason to plan and to look at your numbers is to actually be able to move on to problem solving.  So many business owners stay in this dread and overwhelm and don’t know what to do. But when you can quantify the problem, then you can actually get people to help you. You can move on and get going with other things. 

 

What numbers are crucial to know? You know…for the people who hate numbers.

Tracey says you should be looking at your sales and expenses every single month. You should be looking at your bank account balance as well. But you want to be able to track if you are making more money than you are paying out. 

Understanding your cash flow cycle is incredibly important because you could have more sales than you do expenses and be highly profitable. But if you’re in an industry where people pay you after you do the work, you can get into trouble pretty quickly.  She’s seen businesses go under in as quick as 90 days because they didn’t have cash coming into the business. 

So it’s more than just knowing sales and the expenses. It’s about truly understanding them. Even just thinking about it keeps it very simple. When you do business with one customer, when does money actually flow to you?  If you can keep it to the basics and follow that flow of money, then when you add on all the other clients, you start to see a pattern. You can then understand it and actually manage it.

 

Cash flow can be a huge problem for a lot of small business owners. 

I know I see it a lot in Facebook groups and on LinkedIn, especially in the freelance and solopreneur space.  They do the work upfront and then invoice at the end.  Then payments are months late. The next thing you know, you’ve committed to expenses you have to pay out that you have no money for. 

It’s so important to understand when you get paid and when your bills go out. I think a lot of people aren’t focused on that.  They’re only focused on how much money they made this month and how much they have left at the end after spending some of it. 

 

Understanding the sales is one thing, but cash flow is another.  

You need to know how much cash is coming into your bank and how often. Is it one time or recurring income?  Are you constantly in that client acquisition mode where you need to be? Or do you have a recurring state of flow with your cash and different services and offers? 

Then that can feed into what types of clients you want to spend more time pursuing. If you have corporate clients that are paying you a little bit slower because that’s just their process, then you’re going to put more marketing efforts on individual clients where you can get some money up front and then some when it’s finished.  Understanding the cycle gives you power.  Then you’re in control of how you want to drive your business.

 

Knowing your financial numbers is about more than sending an invoice and moving on. 

It’s this cycle of finding a client, sending an invoice, getting paid, and moving on. So you’re just constantly moving on. So many entrepreneurs feel like they can’t invest yet. Maybe they’re at a point where they’re investing too much for how much money they have coming in. Having a basic understanding of your numbers is crucial!   Without it, you will never be able to move on to the next level of your business.

Understanding the baseline of the financial status of your business at any given point is so important. 

The first thing Tracey does when she is working with clients is to help them map it out on paper. She says if they can’t have a simple conversation and map out the high level numbers, they’re making it too complicated. Then, after that, they’ll get into all the details.  

You don’t need to start with the details. You just want to understand how everything is fundamentally working.  So if you can take that first step, that also brings a lot of clarity right away. All of a sudden, it’s not so hard.

 

This is extremely refreshing for Tracey’s clients.

She says she can visibly see the stress lifted off their shoulders. After doing this they’re like, “Oh wow, maybe I can hire someone. Maybe I can get that other piece of equipment.” This is because you can start doing some “what if” scenarios. It’s very empowering.

 

I like that Tracey really talks about empowering you to move your business forward.

It’s about the growth, and not just about understanding your numbers just to say that you’ve made this much money.  But really it’s empowering you to grow your business in the most structured and beneficial way to you, your clients, and everybody else when you have this understanding. 

 

How can you get empowered to know your numbers?

Tracey says it’s important to set a regular time to review your financial results and financial position in the business. At a minimum, it should be monthly. But for somebody who’s getting started, she recommends shorter periods of time. 

This means weekly is the best cadence. You can put 15-30 minutes in your calendar a week to do this. Make sure you’re devoting time to it just like you do all the other areas in your business. The first meeting is just looking at your bank account because you haven’t done that very often. It could be looking at your sales and seeing what’s going on. The purpose is to get into that regular routine.

 

Tracey has a tool to help you so you can get started right away.

You can head over to her website bizmoneycoach.ca and download a Money Meeting Agenda. So your first money meeting, you might just spend looking at the agenda.  Then, you’re going to wait until next week to get started. This is so that we’re not diving in admitting to all these things right off the bat that we kind of forget about in two weeks time. 

You need to make it a regular part of your routine. The more time you spend with your numbers, you’re going to start seeing the things that you’re doing in your business. And your client relationships impact the numbers. It starts to weave a story together.  

 

Set that monthly meeting!

You set meetings all day long with so many people, but you very rarely take the time to set these non-negotiable, CEO style meetings with yourself. And you need to do that! The more you do it, the less time it’s going to take. Make this a non-negotiable in your business! So many people set these meetings. Then, something else comes up and it’s the first thing to go, which shouldn’t happen. You need to be setting these appointments with yourself and treating yourself as the CEO of your business that you are. Keep it a non-negotiable. 

Tracey is giving you a tool that’s telling you exactly how to run this meeting. So you don’t have the excuse that you don’t know what to do. Having this tool is so incredibly helpful for those that really don’t know where to start.

Then, all of a sudden, every time you go to make decisions, you already have in your mind what your financial position is. It takes all of the mystery and anxiety out of the question.  And it truly is a very calming thing. I encourage everybody to get started. 

 

How can you get in touch with Tracey?

She says the best place to find her is on LinkedIn. Tracey would love to hear questions and comments you have. Let her know that you heard her on my podcast. 

Tracey also has upcoming training to help you advance your financial fitness journey. So it’s Entrepreneurial Peace training.  You can get registered at bizpeace.com. She would love to have everybody join her, whether it’s live or on the replay. 

She also has a workbook for the session so it takes some of that note taking requirement out of it so that you can actually focus on what she’s saying and take away some actionable things that you can do that day. She knows from her past trainings that people are leaving empowered, and they’re actually moving things ahead on the financial side of their business. This is creating better business results overall.

 

Tracey’s last thoughts.

Financial literacy is a journey. You’re going to be on it for your whole life.  And you’re going to do it personally as well as in your business. So think about it that way. Think about it like you’re on a long term journey, and you can take one imperfect step every day. That’s going to bring you further along on the journey.

It’s also so important to be kind to yourself because you’re going to make mistakes. You’re going to make missteps, get back on track, and keep going. It’s not going to be the end of the world. You’re not going to notice for a while all of the things that you’re picking up. But you are moving forward on your financial fitness journey. So stay with it! It’s definitely worth it. 

 

Take the emotion out of money.

Money is a tool to get you the main things that you want. It’s not as emotional as we make it, and you need to treat it that way. I think that is a really empowering mindset shift to say that money really isn’t emotional. 

We tend to put so many emotions behind everything that we’re doing when it comes to money. When you can look at it without those emotions attached, it really just becomes something else, just like every other thing that we do on a daily basis. If you’ve gained nothing else, that statement was so powerful. I really encourage you to sit with that one for a minute and really think about that.

 

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