Finance Tips Entrepreneurs Can’t Afford to Miss
Finance Tips Entrepreneurs Can’t Afford To Miss
Does rapid growth directly translate to more profit?
One common misconception is that rapid growth always leads to exponentially more profit. The truth is, that growth often comes with "leakage." Imagine a boat with a thousand small holes—it won’t take long to start sinking. A million-dollar company owner might be able to manage every leak alone, but as the company grows, it requires the entire organization to maintain discipline. This isn’t something you can achieve overnight.
What are effective ways to align metrics across departments?
One of the first things we do is dive into a company's data. For example, we often work with digital marketing companies, but this applies to any business. It's common to find that sales and marketing speak one language, operations speak another, and finance speaks a third.
In a project-based digital marketing company, the team understands their workload in terms of the number of projects they are handling. However, the sales team may forecast based on leads or potential revenue, which doesn't easily translate to the operations team. Similarly, if the executive team looks at the financials, they might see everything in terms of dollars and cents, not in the number of projects or tasks. This disconnect makes it hard to motivate the operations team with financial results alone.
To address this, we align the metrics across departments. For example, with a company that makes videos, we break it down to the number of videos. How many leads do they have in terms of video projects? How many videos were completed today, this week, or this month? When we align the financials with these operational metrics, the whole team starts speaking the same language. This approach helps everyone pull in the same direction.
How can a business owner effectively communicate the company's progress to their team?
Every business should find a core metric that represents its activity level. This should be one of the first missions for any company. Think about your business: if you spoke to your team tomorrow and didn’t share every number with them, but instead walked in and said, "We are really busy today because we have ___," what would fill that blank? This is the starting point for finding the best common metric.
Why must business owners learn to manage finances as their company grows?
Almost every business owner had to figure out sales or they wouldn't have survived. They also had to figure out delivery and operations to get more business beyond the first wave.
When it comes to finances, many business owners treat it like a "skeleton in the closet." Up to around half a million or even a million dollars in revenue, you can get away with managing based on your bank balance—seeing if you're okay or not and then figuring out how to make a bit more money. But as the business grows, complexity increases. You can't lead if you're not informed about finances. If you're not, someone else will make financial decisions for you, and that doesn’t work.
You don’t need to be a financial expert—most people won't be. But one of the best things about being an entrepreneur is admitting what you don’t know and finding a way to figure it out. You don't have to become Warren Buffett or fall in love with finance; just understand it enough so it's not what causes your business to fail. That's what I recommend to business owners: don't hide from it. It's part of being a professional.
What are common mistakes business owners make when it comes to their pricing?
One of the most common pitfalls for early entrepreneurs, and even those scaling up, is thinking it's easier to sell with low prices. That might be true, but once you sell the work, you have to deliver it. If you don't have premium pricing or know how to justify it, you’re doing it wrong. This applies across all industries and businesses, whether you’re a solopreneur or have a hundred-person team.
Most businesses are not Amazon or Walmart and don't have the scale to be low-cost leaders. Trying to compete with that strategy is a race to the bottom. The money from premium pricing is what you reinvest in your team, in developing a premium product, and in creating profits. This stability allows you to save money and invest in the next phase of growth.
How can a CEO or business owner initiate rapid and effective change in their company?
It directly reflects the will of the CEO or owner and what they are willing to do. It’s that simple. My first business was a turnaround; it was a mess, and that’s where I learned this. The business had a lot of holes, so I quickly shifted from accepting the status quo to realizing that everything needed to change. We had to rethink labor, cost of goods, and every other aspect—nothing was off-limits.
I've seen businesses change direction radically in 90 days or less, but it requires an objective look, candid conversations, and tough decisions. If leaders are willing to do this, the rate of change can be swift. This applies to any area—business, sales, or life. For example, I can provide a top-tier fitness plan, but if you don’t follow it and instead stay on the couch, it won't work.
I push business owners to assess how prepared their mindset is for change. We can have candid conversations and outline exactly what needs to be done, but ultimately, it's their choice. No one can dictate their actions. Their hunger for change will determine their progress.
*This interview has been edited and condensed for clarity.*
