Momentum Podcast: 814
How Knowing Your Numbers Changes You
by Alex Charfen
We've all heard, “you have to know your numbers,” Yet 40 to 60% of the entrepreneurs who come to us don't. I ran a business in my twenties where I did not know my numbers for the first 5 out of 10 years.
I am aware that part of the reason I did not put in the time to understand them was that I didn't have a perspective about why they were important.
I felt like I could figure out most things in my head, and putting the time into truly understanding my numbers wasn't necessary. In this podcast, I share the perspective I've learned through coaching hundreds of companies and running my own. Knowing your numbers changes you as an entrepreneur in ways that aren't clear until you know your numbers.
Full Audio Transcript
This is the Momentum podcast. If you've been an entrepreneur for any period of time, you've probably heard things like, you need to know your numbers and you can't manage what you don't measure, and you need to understand your financials and you need to know what your company is doing. And in my experience, I would say probably 40 to 60% of the people who come to us don't really understand their numbers. And when I talk to entrepreneurs, it's not because they don't want to. It's not because they don't think they're important. It's because they don't really understand what knowing their numbers will do for them. I'd like to share some perspective in this episode.
I'm Alex Charfen and this is the Momentum podcast made for empire builders, game changers, trailblazers, shot takers, record breakers, world makers and creators of all kinds. Those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Should we pay attention to their trules, but only so that we can bend them, break them, then rewrite them around our own will? We don't accept our destiny. We define it. We don't understand defeat. Because you only lose if you stop and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority. The few who are willing to hallucinate there could be a better future. And instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters, clearly the most important people in the world, because entrepreneurs are the only source of consistent, positive human evolution. And we always will be.
So I just got off of recording a podcast with my good friend Gabe Arnold. He was actually a member of our program. He and I went to a few of the same events together. We have a lot in common. We actually become friends and we just recorded a a podcast of his experience in our program, which we will be releasing soon. So keep an eye out for it. It was extraordinary. It's so much wisdom, so much, so many tactics, so many strategies that you can apply to your business right now. So when it comes out, it's definitely going to be one you want to listen to. And in the discussion, you know, we talked about a lot of different things, but one of the things that we brought up, a lot of things Gabe brought up, was that knowing his numbers has given him a completely different perspective on his business. And here's why. You know, like I said in the intro, so many entrepreneurs have been told they need to know their numbers, but we haven't really been explained what it's going to do for us. And so here's what Gabe said, and I'm excited for you to hear it in the extended podcast from him, but I felt like it was so important. I wanted to share it right now. What Gabe said is that by understanding his numbers, it makes it easier for him to turn over projects, to transfer ownership, to give people responsibility without insecurity or anxiety. And when I heard it like that is such a such an important thing for entrepreneurs to understand about knowing your numbers, because here's what often here's what it often feels like as an entrepreneur when someone says, know your numbers. By the way, in my twenties I ran a huge company the first half of the decade that I ran that company, I, I didn't really understand my numbers that well, you know, I didn't know how to read financials. I got confused in most of the meetings with my accountant and I faked it. I didn't even tell them that. I didn't understand. I would like carry most everything around in my head. So I kind of knew how the company was doing. But what you don't realize until you understand your numbers is the level of ambiguity you're living with, the level of insecurity you're living with, the level of anxiety you're living with, and what that does to you as an entrepreneur. And here's my experience. You know, when we have people come into our program, one of the first things we have them do is create a dashboard that simplifies numbers. It's called CEO metrics, and it includes a number of measurements in the business so that an entrepreneur can look at all the numbers at once. And it also includes gross revenue expenses and profitability. And the reason we have people do this early in our program is that we want you to have clarity around your numbers because it lowers that anxiety and insecurity in what you're doing. But even more importantly, it lowers the anxiety and insecurity that you have in giving ownership to people. Now, let me explain how this works. When you don't know your numbers and you're delegating and you're giving people tasks and you're telling, you know, asking people to do things for you and you're giving people outcomes. There's always this level of insecurity of are things being done right? Are they being done the way that I want them to be? Are they being done in a way that we're moving forward? Are they being done in a way that's, you know, creating a liability or not creating liability? Well, here's one of the dashboards it's going to show you. Things are going in the right direction when you're looking at your financials and numbers are moving in the right direction, it will help lower that insecurity of fully delegating. It will help lower that anxiety of giving somebody ownership. And when you don't know your numbers, it does the opposite and it creates symptoms. Like we feel like we have to be involved in everything. We feel like we have to double check everything. We feel like we have to see everything, create every process, create every project, you know, be the center of all the things going on in the business until we have that dashboard that gives us the intelligence that things are going well without us doing that. And even if numbers go in the wrong direction, understanding that they are and understanding where they are gives us insight as to what changes to make in the business. And so hopefully this shares with you a different perspective on why understanding your numbers is so important. You know, it's it's about resolving anxiety. It's about making you confident in delegating to the people around you. It's about showing you the results of the decisions that you're making. And when you can simplify your numbers on a monthly basis and put them on a simple spreadsheet and understand what's going on, it makes you an infinitely better entrepreneur that's going to make way better decisions. But even more importantly, when you have that baseline insecurity and anxiety and discomfort of running a business lowered, when those things start to be more tolerable when they aren't as present, you make better decisions. You see your entire company with a different perspective. You trust the people around you more. You empower the people around you more. And. Those are the qualities of an incredible leader, but they're also the qualities of the entrepreneurs that run fast growth companies where people feel empowered, where the team step up, where they think entrepreneurially and they make things happen. And so hopefully this gives you a perspective on why understanding your numbers is so crucially important and what it can do for you at the foundational level of being an entrepreneur and growing a business. And if you're interested in getting some help around this, getting some help with, you know, understanding a dashboard like CEO metrics and truly empowering your people and transferring ownership and delegating more so that you can grow faster and do less within the company. Reach out to us. Go to simple operations dot com. Answer a few questions for my team. Sign up for a call and let us sit down with you and see if we can help you scale your business in a way that's predictable so you don't have to do it all yourself, and anxiety and insecurities go away and confidence goes through the roof. So you make better decisions and you grow the company you've always known you should. Simple operations dot com. We look forward to connecting with you.