#52: Back To The Basics: Essential Financial Knowledge for Founders
Next Level Pros
Chris Lee
5 • 1.4K Ratings
🗓️ 17 November 2023
⏱️ 12 minutes
🧾️ Download transcript
Summary
Welcome to another episode of the Founder Podcast! Today, Chris Lee, explores the topic of finances. Operating a business often starts with a cash-based approach, especially during the early stages. Chris reflects on his experience running Founder Acceleration, a group of 50 entrepreneurs, and emphasizes the critical role of understanding the basic financials for scaling your business.
As Chris shares insights gained from scaling a business from zero to $233 million annually, he highlights the importance of CEOs and founders having a solid grasp of financial principles. While hiring professionals like controllers, CFOs, or accountants is valuable, Chris asserts that CEOs must possess fundamental financial knowledge to guide decision-making and drive profitability.
If you're looking to enhance your understanding of financial aspects crucial for business growth, this episode provides valuable insights. Tune in and take the first step toward becoming a more informed and strategic founder!
Don't forget to check out Founder Acceleration, where entrepreneurs gather weekly to discuss and learn from each other's experiences. Visit founderacceleration.com to apply and join this dynamic community of business leaders.
Highlights:
"Understanding the basic financials of your business is absolutely imperative to really be able to go and scale."
"You can hire a controller, you can hire a CFO, you can have a great accountant. But as the CEO, as the founder of your organization, it's imperative that you have a grasp on the basic knowledge."
"Your gross profit margin percentage should not vary tremendously, it should be within one to two points if you have a really tight dialed-in direct labor cost of goods sold, managing your inventory and those types of things."
Timestamps:
00:00: Introduction
02:21: Product Cost & Profitability
03:59: Revenue & Gross Profit
06:34: Acquisition Cost
08:19: Cost Management
Live Links:
🚀 Join my community - Founder Acceleration
https://www.founderacceleration.com
🤯 Apply for our next Mastermind
https://www.thefoundermastermind.com
⛳️ Golf with Chris
https://www.golfwithchris.com
🎤 Watch my latest Podcast
Apple - https://podcasts.apple.com/us/podcast/the-founder-podcast/id1687030281
Spotify - https://open.spotify.com/show/1e0cL2vI1JAtQrojSOA7D2?si=dc252f8540ee4b05
YouTube - https://www.youtube.com/@thefounderspodcast
Transcript
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| 0:00.0 | as the founder of your organization it's imperative that you have a grasp on the basic knowledge |
| 0:06.9 | so that you can give direction and make decisions that are going to push profitability within your organization. |
| 0:14.0 | Yo, y'o, welcome to another episode of the founder podcast. |
| 0:18.0 | Today, we are going to be jumping into a little bit about finances. So a lot of people in their business, they operate when |
| 0:28.2 | they're a small startup or when they're getting it off just based off of a cash business. |
| 0:34.3 | And so one thing I realized this week, |
| 0:37.4 | so we run a little group, it's called founder acceleration, |
| 0:39.9 | in which we have about 50 entrepreneurs, we get on a call every single week and we go through |
| 0:45.1 | like what's working in their businesses and whatnot and we dive in and we do Q&A and one thing became very apparent this week as we were discussing |
| 0:57.2 | a particular business and it was just understanding the basic financials of your business is absolutely imperative to really be able to go and |
| 1:06.9 | scale. |
| 1:08.1 | And so this is something for the longest time as we were scaling our business from zero up to 233 million dollars a year that I just didn't frankly |
| 1:19.2 | understand or look into on a regular basis and so one of the things as a as a business owner that you |
| 1:24.4 | really got to understand is those monthly financials what exactly am I |
| 1:30.4 | contributing to the bottom line and just some of the basic things, |
| 1:34.0 | so you know, you can go and hire a controller, |
| 1:36.0 | you can hire a CFO, you can have a great accountant, |
| 1:39.0 | but as the CEO, as the founder of your organization, it's imperative that you have a grasp on the basic knowledge so that you can give direction and make decisions that are going to push profitability within your organization. |
| 1:53.2 | So today we're just going to talk about some basic accounting principles that you need |
| 1:59.0 | to understand in order to scale your business. First and foremost is understanding |
| 2:04.7 | how the, your financials look and work, okay? |
| 2:11.2 | And so when we're talking about your P&L statement, your profit and loss statement, |
... |
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