Episode Transcript
[00:00:00] Speaker A: Foreign.
Hey, everyone. Welcome back to the Total Profit podcast. I'm your host, T2, and with me, as always, is my favorite margin maniac, Tommy.
[00:00:17] Speaker B: Hey, Tutu. It's good to be back. And today we're going to be diving into something that separates the hustlers from the real leaders.
Knowing your financials?
[00:00:28] Speaker A: Exactly. Because if you don't know the score, how do you expect to win the game? Today we're going to be talking about how to read your numbers like a leader, not like a bookkeeper.
[00:00:39] Speaker B: Yeah, too many business owners either avoid the numbers or they look at them like a report card. But financials aren't just a record. They're your roadmap.
[00:00:50] Speaker A: And when you understand your numbers, you can stop reacting and you can start leading. Leading from the front. If you follow our podcast, you've heard me say that a few times.
You can forecast, you can course correct.
You can make decisions based on truth and not just gut feelings.
[00:01:08] Speaker B: Yeah. So let's break it down. There's three big financial statements or records that we use.
The first one, your profit and loss statement.
Then there's your balance sheet, and then your cash flow statement.
[00:01:26] Speaker A: But don't zone out on us, okay? This is not an accounting class. We're talking practical leadership tools today. So, Tommy, walk us through that. Those documents from. From a leadership perspective.
[00:01:38] Speaker B: Absolutely. So your profit and loss statement is actually showing you your.
Are you making actual money?
Are your costs spiking? It's kind of your. Your litmus test of where you're at today in your finances.
Your balance sheet is what do we own versus what do we owe? Can you grow without over leveraging?
So that's a real important one and a fun one to watch if you're doing things right. And then there's the cash flow. Are you building a cushion or always catching up?
And you should be able to get pretty predictable with how your cash is coming in as your billing cycles go on and on. So that. That's. These are three core reports that we. We monitor very frequently, and we want.
[00:02:28] Speaker A: You to use your financials to make better calls. All right? Financials let you ask better questions about your business and dive into some critical areas. Like, should we hire?
Can we hire? Should we invest more in marketing? Should we be taking on that big job?
Can we handle those things?
[00:02:47] Speaker B: Exactly. Your numbers help you lead proactively, not emotionally. A lot of contractors wait until they're in a bind to look at their books, and by then, it's too late.
[00:02:59] Speaker A: So there's a few common mistakes to avoid. All right, let's call out a few bad habits.
[00:03:06] Speaker B: Yeah.
Looking at your books every quarter.
Probably want to do that a little more frequently.
Letting the bookkeeper handle it without understanding yourself.
I'm not so sure that's a great idea because that puts a lot of stress on the bookkeeper and you need to be accountable.
And then confusing revenue with profit or cash with cushion.
You know, having that knowing where your cash is accounted for and how you're going to move forward instead of just seeing it in your checkbook and then. And then it's gone and not understanding where it's going.
[00:03:42] Speaker A: Right. How many people just let the bookkeeper handle, you know, handle it and say, turn it over to the CPA or the bookkeeper. They know what they're doing and I trust them and that's what I pay them to do. But again, you're not doing the bookkeeping. You're. Yeah, we started this out, this whole conversation out by saying, we want to, we want you to look at those numbers often like a leader. All right. I know people that look at it every day.
And so let's make financials part of your weekly rhythm. How do we do that?
[00:04:17] Speaker B: Let's review your key reports every week. Block out 30 minutes, just like a coach watches a game to get strategies for the next game. And how are they going to practice? You've got to know what you're working with. Get to the point where you know what the bookkeeper is going to tell you. You're that involved in your numbers.
[00:04:38] Speaker A: So we say this all the time. CEOs, they know their score. And if you want to lead with confidence, it has to be part of your rhythm. It's just one of those non negotiables.
So with that, I want to say thanks to our sponsor, performance margin. This is the system that helps you track your numbers, spot those leak, and run a tighter operation all the way from the bid to the bottom line.
And your action item this week is to set some time on your calendar every week. Set up a recurring appointment and a recurring date with yourself to review your numbers. No excuses. No excuses on this one. And if you need help knowing what to look out for, reach out. All right, we've got your back.
So that's it for today's playbook. Now you know the score. Time for you to go win the game.
[00:05:20] Speaker B: Exactly. And always remember, take her. Cool.
[00:05:23] Speaker A: Don't get too excited. It's all under control.
[00:05:26] Speaker B: It's going to be fine.
