I don't want you to show up to a meeting not knowing how to read financial statements and I don't want you to try to lead a company if you don't know how numbers work. This is BYFIQ. Wealth and success come from understanding how finance works in business, and together we'll explore the most important topics to 10x your financial results. My hope is that we can work together soon. Please share and enjoy.

Imagine this you're managing a business, or you're a business leader of a division or a profit center in your company, and you're just crushing it. You're doing such a good job and one day your boss comes up to you and she says, hey, I want to promote you to this next position. And you're like great, you're so excited, you're going to make more money. Now you have more leadership responsibilities. And you're like great, you're so excited, you're gonna make more money. Now you have more leadership responsibilities and you finally have arrived in your career. And then, all of a sudden, panic sets in because you realize now you have to be a part of these meetings where you're reporting on the financials of your business or your division or of your profit center, whatever it is and you're like oh my gosh, what am I going to do Now. This happens all the time. I know this because some of you have reached out to me and you're like Steve, I need your help, I need your mentorship. I just got promoted and now I have P&L responsibility, right. So this happens all the time and this can easily happen to you. So if this does, you can't just go into the meeting and fake it until you make it. That is not a good strategy at all, because you're going to be talking about numbers, or you're going to be looking at numbers and ultimately you're going to sound dumb.

All right, that was me back in the day when I started my first company. I was 16 years old. I grew it into a multimillion dollar company and I had no clue how to read financial statements, so I was just like winging it. My accountant would send me the financials and I'm like, oh, yeah, yeah, revenue, profit. I got this, but I had no clue what the financial drivers were or the levers of profit were. I was just relying on sheer heroics and grit to make everything happen, and that's a terrible mistake.

All right, because if you don't understand the four levers of profit, for example, you're not going to understand that pricing is your biggest lever and for some companies, pricing can have a 12% impact on the bottom line for every 1% increase. That's just standard across the board for just a generic company, based on my research. So if you just take that 12%, if you lower your price by 1%, it means you're going to decrease your profit by 12.5% as well, right? Or let's just say, for every 1% you grow in volume, it has a 4% impact on profit. That means if you lower your pricing by 1% to get more customers, you better grow by at least 3% to stay equal, to break even. In other words, otherwise you're going to lose money.

So understanding these levers, understanding the financial statements especially how to read a balance sheet and a statement of cash flows is going to be so critical, especially if you want to join the conversation of other leaders in your business. Now here's the deal Some businesses that I work with, the CEO makes his way or her way up the ranks of the business and eventually they land in the chief executive role, and that's great. But I can't tell you how many CEOs lack financial literacy. Now you don't have to be like this whiz-bang accountant nerd person who's doing debits and credits and knows all the accounting code and gap right. Instead, it's just understanding the fundamentals of finance, understanding the story behind the numbers, but then, more importantly, using that story and using the financials to change behavior.

If you're looking at key performance indicators in your business right, as a manager, as a leader, as a CEO, as a founder and you don't understand the corresponding behavior to that metric, that's a problem. Let's just say, for example, your net revenue retention is going down. Let's say, the year before is 115%, now it's 107. Well, you could look at that graph and be like, oh no, that's terrible, hopefully it improves, and you could just close your eyes, or you go out there and drive behavior to improve it. And that's what it's all about, right. So if you're looking at net revenue retention, nrr and if you know there are four ways to improve it you can upsell, you can cross sell, you can downsell or you could change your pricing Then you'll know the levers to pull in order to influence that. So that's what finance and strategy is all about and that's the connection between the two to drive better operations.

You're looking at numbers, you're making hypotheses of how to fix that. You go change your behavior or you go pursue certain actions and then you come back and measure to see if the needle moved and if you get really good at that, you build a competency doing that. Your skills are going to be so valuable and the more value you drive in business, the more money you're going to make right. And the more money you make, the more financial security you're going to have. And the more financial security you have, the more financial freedom you're going to feel. And it's just this reinforcing cycle. I was there once before faking it until I made it. But I can tell you that's a terrible, terrible strategy and as a CFO like if somebody comes to me, I will know immediately if they're full of crap, right. If they're just trying to wing it like you don't know what you're talking about, it just makes you look terrible. So just stop. So there's a solution to all this.

I announced this a while back that I'm making all my courses free. So the financial pro program there's six levels. It's super easy. You can get it on your phone through our app boosting your financial IQ. You can get it on an iPad. You could do it on your device. You can learn on the go, like some of you are.

Like Steve, I love your podcast. I love your courses. I listen to them when I'm working out. I'm like, okay, that's a little nerdy, I would totally do that, but that's great. So there's no excuse. I'm doing this because I want you to be successful, right? That's all I care about. It's no marketing gimmick. It's not like I'm going to upsell you later on. It's like totally free. Over a hundred video lessons, all for free, because I don't want you to look dumb in front of the CFO. I don't want you to show up to a meeting not knowing how to read financial statements and I don't want you to try to lead a company if you don't know how numbers work. Right, that's one of the quickest ways you can destroy a business and create a tremendous amount of value destructions. Don't go down that path. Anyways, that's what's on my heart. That's what I wanted to share with you, as always. If you got value out of this, please share, so we can get the word out there. And until next time, take care of yourself. Cheers.