Episode Transcript
[00:00:00] Welcome to another episode of Financial Snickens. We are continuing our series on information and financial. We're continuing our series on financial information for entrepreneurs. Today, we're going to be talking about developing and investing time in financial literacy. Today, we're going to be talking about investing time in developing our knowledge of financial literacy.
And you're thinking, why do this? It will enable you to make informed decisions and communicate effectively with financial professionals. And this is really important so you can be part of the conversation. Financial literacy is a superpower. It can empower you to make informed decisions, navigate challenges, and drive success of your business.[00:01:00]
Today, we're going to be talking about the importance of it for entrepreneurs and to provide actual. And to provide actionable insights on how to invest time in this critical skill set. So why, why spend time learning financial literacy? And what do we mean by financial literacy? Financial literacy is understanding the reporting.
That goes along with owning your business, and it's also part of understanding what the tax information is when you have a conversation with your accountant, and he asked he or she asks you questions or is trying to give you information about what to do in your business. This will help you to understand what they're talking about and empower you to ask questions.
The one advice I hope you take away from this is to ask questions because that's how we learn. [00:02:00] And if anyone shames you for asking a question, find another professional. So why do this? Why take the time out of your incredibly busy schedule and learn one more thing? Because it's important. Being an informed decision maker in your business.
Um, and I'm going to talk a little bit about how this will help you to run a successful business, whether it's assessing an investment opportunity, managing your cash flow, or setting your pricing strategies, which this is really key if you don't set the right pricing, you can't make a profit. This will have you a solid understanding of what these financial concepts are.
Also, you need to be able to communicate with your accountant, with your financial advisors. You do not have to be as knowledgeable as your CPA, but
you should be able to have a high level understanding of what [00:03:00] they're talking about and having a foundational knowledge We'll allow you to do that.
Understand the terms that they use. Understand the concepts will enable you to have effective communication with them, ensuring that you can actively participate in the discussions about your business health. So, how do you do this? How do you build up an understanding in financial literacy? There's online courses available.
You can absolutely spend time doing that. If you feel the need that you really need to go deep, go for it. There's lots of online courses available that you can go to. Um, I have, in my experience, I have done webinars that I have found to be valuable, and I've learned a lot from it, and I actually ended up Belonging to groups.
Joining Facebook groups. Um, small business owner groups, anything that [00:04:00] will help you gain the knowledge that you need. So another source is obviously books. Um, whether you are doing an audible or Kindle or good old fashioned paper books, um, reading these books by so many different authors, any book by Susie Orman, Dave Ramsey, newcomers, um, That are in the financial space are people like Tori Dunlap.
Uh, she wrote a book called Financial Feminist. Vivian Tu, uh, she wrote a book, Rich as AF, The Winning Mindset. And it really, you know, you have to decide what's your cup of tea. And then decide that, what book you're going to read. I have a hard time reading these books by myself, so I started a book club. I have several other business owners that we read all these books together and we have gone through in the last three years.
We have read over 20 books together and [00:05:00] it has become my mastermind group of new ideas about financial information. This also leads me to follow people on Instagram, follow people on Facebook, follow people on Tik TOK. I'm listening to podcasts. Some of these influencers are rock stars. Tori Dunlap, who I mentioned who wrote Financial Feminist, I follow her.
Her Instagram is, uh, first100k, herfirst100k. And I'll put links in the show notes. And Vivian, too, is richbff. Great information just about finance. And it helps you to understand more about Financial literacy because they talk in a really easy to understand language. And I they're the real deal. They are.
Um, the stuff that they put out there from what I have seen has been real. If you're following somebody on tick [00:06:00] tock or Instagram or Facebook
and you come up and you hear a really great idea. Run it by your accountant because there are people out there who may not be telling you the whole truth and may not be the real deal and your accountant will be most in tune with what's legal and what's feasible.
Another way to get some knowledge about finances and how other people are using them and what they use. Our networking and finding a mentor. So you can connect with industry peers and exchange insights and learn experiences of fellow entrepreneurs, especially people in your industry. I belong to a group of accounting firm owners and we share our financial information and we critique each other on our financial information.
And I have learned so much from these other women who. [00:07:00] Are my net, they're my network and I, the information that I've gotten from them has been invaluable at growing my company, knowing what reports to look at, what key information do I need to know and it's helped me change my business and it's allowed me to grow my business.
Faster and stronger, uh, seek mentorships, having a mentor is shown to be having a mentor has been proven to increase the success of a person or a company, uh, in bigger companies. A lot of times when a new person comes in, they have them get a mentor inside the company. So I strongly suggest you get a mentor.
I have a mentor and she is ahead of me in my industry. And she also has a thought process [00:08:00] that I find to be, um, thought provoking for me. And so her and I are a good fit. Not every mentor is going to be a good fit for you. You have to find who the right one is for you. And I meet with her and she talks with me about financial matters and reporting.
And she helps provide guidance for me on what's good for my company. And that has also been a relationship that has been nurtured for the last 10 years. And I continue to go back to her even though, you know, I feel like maybe by this point I should know everything, you don't. So, what should you be asking these people?
What, you know, what, what, where can you start? Where can you ask, what should you be looking at to learn about? Uh, I would start with some basic reporting. Asking either, you know, [00:09:00] going online and seeking out someplace to learn about the income statement, also called the profit and loss and learning to understand about the revenue expenses and profitability.
Also, find out about the balance sheet. The balance sheet is a way to familiarize yourself with the financial health and stability of your business. By interpreting these two statements about your business, it gives you a basic understanding. You can start to understand trends that are happening and to look at the financial health of your business.
Other reports that can, you can start to flex your muscle a little bit that you can actually do on your own or creating a budget, creating a budget for your company is all about. Understanding how much income is coming in and how much expenses are going out and you can do something as simple as putting it on Excel spreadsheet and understanding how much money is going to come in over the next year or [00:10:00] 6 months or quarter and how much money is going out.
But it's a good way to get started. And to take that baby step towards understanding the finances that surround small businesses. So as always, once you start to learn these things, you need to sharpen the sword, keep using it so you don't lose it. So how do you do that? Well, same as anything else. You have to do it regularly.
So create a habit that you do weekly reviews, weekly or monthly financial reviews. You can have a financial partner. You can have, um, in my mentor group, we have We have to share our financials, so I am held accountable every month, so I have created a system that all of my finances are done, and I have about an hour to look at them and digest them and [00:11:00] interpret what's going on and being ready to present them to other people.
So create a system so that you can have that habit of looking at your financials either weekly or monthly. Lastly, certain. Find an accounting tool that can help you do this. There is no need for you to learn how to do accounting or to have as much knowledge as your accountant. But having a financial dashboard, having accounting software, we use QuickBooks Online.
All of our reporting is in there. All the financial information that we need is in there. We know how to interpret the financial information, and that's your financial literacy. Also, keep learning. Keep up with your network group, your mentors, your online groups. Join some Facebook groups that [00:12:00] are part, are small business owners.
Um, I belong to a bunch of different, Facebook groups and LinkedIn groups. There is so much information available to us. And of course, keep a level head. If something sounds too good to be true, it usually is. So make sure that you're
following the real deal and getting good information, but keep searching and keep talking with peers and your accounting professionals, and that will help you grow this muscle.
And I guarantee you will not regret spending time investing in your financial literacy. The last thing that you can try, once you start to understand your financials, is share that information with your team. Extend some training to your team. Empower them to understand the financial implications of their roles.
In your company, [00:13:00] encourage them to ask questions, foster an environment where employees can ask financial related question and promote culture of continuous learning. So financial literacy isn't just a skill. It's really the cornerstone of the success of your company. And if you invest your time in developing this skill, you can confidently navigate the financial intricacies of your business.
And communicate better with your accounting professionals. Remember, the journey to financial literacy is ongoing and the benefits it brings to your business are immeasurable. Head over to my website, FirstStepsFinancial. com and click on the let's chat button. And let's talk more about financial literacy and what your road to get there is.[00:14:00]
