Pillar 4: Financials, Know your numbers know your Business!!

You’ve shaped your idea, defined your market, and mapped your operations. Now it’s time to talk about the pillar that can make even the boldest entrepreneur sweat: financials.

Money isn’t just the fuel of your business—it’s the scoreboard that tells you whether things are working or not. Ignore it, and you’re flying blind. Master it, and you give your business the best chance to thrive.

Know Your Numbers, Know Your Business

It’s tempting to think “I’ll just focus on the work, and the numbers will take care of themselves.” But the truth is, if you don’t know your numbers, you don’t know your business.

At minimum, you need to understand:

• Revenue – How much money is coming in.

• Expenses – How much is going out.

• Profit – What’s left after expenses.

• Cash flow – The actual timing of money moving in and out.

(As time goes on we'll dive deeper into these particularly Cashflow)

Even a simple monthly spreadsheet is better than nothing. Numbers don’t lie, and they’ll often tell you the story of your business long before your gut does.

Revenue is Vanity, Profit is Sanity

It’s easy to brag about revenue—“We made $500,000 this year!” But here’s the catch: revenue doesn’t tell you how much money you keep.

• A café might pull in half a million in sales but spend almost the same amount on rent, wages, and supplies.

• A freelance designer might earn $10,000 in a month but spend $9,500 on software, subcontractors, and advertising.

Revenue is vanity—it looks good on paper. Profit is sanity—it’s what keeps the lights on. Your business plan should clearly show not just how you’ll earn money, but how you’ll keep enough of it to be sustainable.

Cash Flow is Reality

Here’s the one that trips up even experienced business owners: cash flow.

Cash flow is the timing of money moving in and out of your business. You can be profitable on paper but still run out of cash if your bills come due before your customers pay you.

• A builder might finish a big job and issue an invoice for $50,000, but if the client takes 90 days to pay, the builder still has to cover wages and suppliers in the meantime.

• A florist buying stock for Valentine’s Day has to pay the supplier upfront, long before the rush of sales hits.

Managing cash flow is about planning for these gaps—keeping reserves, setting payment terms, and tracking when money actually lands in your account. Reality bites hardest when the cash runs out and don't be in the situation you're borrowing money to pay wages for your staff.... trust me its not a great situation. Get in front and proactive with your cashflow management.

Key Numbers to Build Into Your Plan

Your financial pillar doesn’t have to be a 50-page forecast, but it should answer some basics:

1. Start-up costs – What will it take to open the doors?

2. Fixed costs – The bills you’ll pay no matter what (rent, insurance, software, vehicle).

3. Variable costs – Costs that change depending on sales (materials, fuel, packaging).

4. Break-even point – How much you need to sell each week or month just to cover costs.

5. Pricing model – How you’ll set prices to ensure profit, not just cover expenses.

6. Cash flow forecast – A simple look at when money is expected in vs. out.

Even if your first version is rough, it forces you to think about sustainability from day one.

Example: A Start-Up Electrician

Say you’re an electrician starting out. Your start-up costs might be a van, tools, insurance, and branding—say $30,000. Your fixed costs each month might include fuel, phone, accounting software, and loan repayments—say $2,000.

If your average job is worth $400 and costs you $100 in materials, your profit per job is $300. That means you need around seven jobs a month just to break even. (before your pay yourself!)

Knowing that number changes the game. Suddenly, your marketing and sales targets aren’t guesses—they’re linked directly to your financial survival.

Keep It Grounded

Financials can feel intimidating, but they don’t need to be. Think of it this way:

• Know your numbers, know your business.

• Revenue is vanity. Profit is sanity. But cash flow is reality.

Get those three right, and you’ve got a financial foundation strong enough to support your idea, your market, and your operations. Miss them, and no amount of enthusiasm will save you.

Because at the end of the day, business isn’t just about what you dream. It’s about what you measure.