Episode 85: The Gap Between Knowing Your Numbers and Actually Using Them

Welcome to the Creative Minds Smart Money Podcast, where we turn financial confusion into creative confidence. I’m Samantha Eck, Bookkeeper and Fractional CFO for Creative Entrepreneurs. Each week, I’m sharing my financial expertise and actionable strategies to help you build a thriving creative business.

Plus, you’ll hear from industry experts who bring fresh perspectives on growing your business beyond the numbers. Because building a successful creative business starts with strong financial foundations. Your next chapter starts now.

Most business owners don’t feel uninformed when it comes to their numbers. They feel stuck. They have the reports, they have dashboards, they have software, and still they find themselves hesitating.

Today’s episode isn’t about why information alone doesn’t create clarity. Knowing your numbers is not the same thing as knowing what to do with them. And today, that’s what we’re digging into.

So let’s dive right in. So why doesn’t having reports automatically just help you actually know your numbers and be able to make business decisions? Well, there’s a couple reasons. The first one is that your reports are static, okay? But your business is very dynamic.

Things are always changing. Things are always going on. Things are always happening.

So you have a very shifting and flowing business and your monthly statements can really feel disconnected from the daily decisions that you are making. There is an emotional experience of opening your reports and just feeling nothing. You know, looking at your profit models and being like, okay, what does this mean? Like, I don’t have any information.

People then assume that they’re doing something wrong, but you’re not. Because if you don’t understand how to look at your numbers or understand what’s actually going on, you’re going to think that you’re doing something wrong, but realistically you’re not. There’s so many times I can remember when I was running my own pin making and art business and I was looking at my numbers and I didn’t know my revenue.

I didn’t know how much I was spending on expenses. I didn’t know what my cash flow was. I was just kind of spending, making, selling, buying, doing all these different things without actually understanding my numbers.

And then at the end of the month, looking at my Etsy account and saying, oh, look, I made $300. But I had no idea if I actually made money off of that. I had no idea what was actually going on.

And I felt nothing. There was nothing that I experienced by looking at my numbers. It was just like, okay, I made $300.

But that’s not what you should be getting out of these reports. That’s not what you should be getting out of this experience with knowing your numbers. When you have information that doesn’t have context, all it does for you is creates overwhelm.

When you look at all your numbers and you have no idea what they mean, you have too many numbers and you don’t have enough meaning. Because what you fixate on, and this is what people always fixate on, is two things. What your revenue is, which is the wrong number to be focusing on, and what your bank balance is, which is a good number to be focusing on, but not without the context.

You want to actually have context around your bank balance. They tend to ignore the trends that are going on. So actually looking at trends and things that are happening, the timing of things.

So looking at when subscriptions come out, looking at when your revenue comes in, and the relationship between the numbers. So there’s specific things we want to look at when we’re actually looking at your numbers. And more data can actually create slow decisions.

So if you’re looking at 50 bajillion things and you kind of have that data analysis paralysis, right? You’re looking at your profit and loss and you’re like, okay, what should I actually be looking at? Oh look, there’s my revenue. I made $10,000 last month. But you missed the point, right? What did you make last month? What did you spend the most on last month in your expenses? What was your profit last month? If you don’t know these things, you don’t know the trends, you don’t know when your money is coming out, you don’t know what is going on.

You don’t know the relationship between your net income and your bank balance. You don’t know any of that. It’s going to create these really slow decisions that you can’t actually understand.

There’s a list of questions that most people don’t know how to ask when they’re looking at their reports. And again, this isn’t me telling you or trying to push you towards hiring someone, but this is just on a natural basis what most creatives and most people are thinking of when they look at their reports because they don’t know how to ask these. They don’t know, can I afford this? Because it’s rarely, rarely, can I afford this? Is it a yes or no answer? It’s not just instantly yes.

It’s not just instantly no. Can I afford this can be like, you can afford this, but here’s what we need to do. Or you could say, you can’t afford this because you have all this happening.

There’s context to this question. It’s not just saying, I can afford this. Ha ha, I have an extra $15,000 a month.

Yeah, you have an extra $15,000 a month, but if you don’t know everything else that’s going on in your business, can you really afford this? You know what I mean? So there’s also analyzing the timing of things. Again, analyzing when your subscriptions are coming in, analyzing when your money’s coming in. So if you have a monthly retainer that comes out on the first of every month, obviously you know every time that your money is coming in.

So that’s something that we need to look at. Obviously there is a risk. You want to know what the risk, why there’s a risk.

And you also want to know how that’s going to impact your margin. And I know with service-based providers, again, we’re thinking, what is my margin? But your margin is your profit margin overall. So how much profit you make.

Asking those vague questions and not having the information that you need to answer them is only going to lead to vague answers. If you’re asking yourself, can I afford to hire? And you’re not looking at the full contextual picture, it’s only going to give you a vague answer. You’re going to say, I think I can hire, but you’re not going to know for sure.

And that confidence is going to be shaken. There’s a difference between being curious about something and actually knowing. It’s knowing that you need help, but you just can’t figure out why to say it.

You know you need someone in there to help you out, but you don’t know who, you don’t know why, you don’t know what it is without being able to normalize and ask yourself those questions. Obviously, when we think we know our numbers, gut decisions feel great. But as we continue to grow and as we become a bigger business, those gut decisions don’t feel as good anymore.

They feel kind of foreign because often early stage businesses run on intuition because we don’t have a lot of expenses. We don’t have a lot of cash flow. Everything kind of like is just like, yep, I have the money for that.

I’m going to go ahead and get it. But as your money grows, your intuition alone gets louder and it doesn’t get smarter. So your decisions start to feel heavier instead of exciting, right? Because just because you have more money, it doesn’t necessarily mean that you can just spend willy nilly, right? This is the moment when you feel that, when you feel like your intuition is just too loud and everything starts to feel a lot heavier.

That is the moment that most business owners realize they don’t want to guess anymore. They actually want to be looking at their numbers. They want to understand them.

They want to know what’s going on. They need to know more than just their revenue and their bank balance. They need to know the deeper understanding of everything that is happening in their business.

So I know that we always get into the contextual, the emotional side of things, and then we go into the actual details. So what does it actually look like when your numbers are actually being used? What will it actually look like when they’re being used? This isn’t obviously a how-to because we’ve done so many of these videos where we’re talking about how we utilize our numbers. But what does that look like? Envisioning yourself with how your numbers are going to be used.

Your decisions are obviously going to feel grounded. They’re not going to feel rushed. So when you have decisions that are going on, they’re going to feel very grounded in what you know.

So you can be like, I can afford to hire. I can afford to do this because you know your numbers. You know what matters in your business without even looking at everything because you know when money’s coming in.

You know when money’s going out. You know everything like that. And I just want to kind of be clear on that.

A lot of people can say that they know their business without fully knowing their business. There’s been many times I’ve talked to people and talked to business owners in even like discovery calls and asked them, hey when does your money come in? And they’ve been like, I mean it’s it’s kind of all over the place. And then we look at their business and most of their funds come in around the 5th to the 10th of the month.

Let’s just say for example. Or someone is like, I asked them what are your subscriptions? And they’re like, oh I only have two or three. And then we look at their account and they have 15.

You know so if you actually know and you’re using your numbers properly you know what matters before even looking at it. You can explain the choices that you’re making in your business without going into this kind of emotional spiral or this decision paralysis because you don’t understand. And of course that confidence comes from understanding the impact of what this is going to do to your business.

Because once you actually know your numbers you understand the impact that anything you do is going to have on them. And that’s going to give you just that confidence. What is the actual role that these numbers are meant to play in our business and our lives? First of all the numbers aren’t answers right? The numbers aren’t the answers.

There’s context around the answers right? They’re inputs. They’re meant to narrow our options, reduce the emotional load that we have on things, and support decisions not replace any sort of judgment right? So when we look at it and we say okay we have $10,000 in revenue and end of the day we have $2,000 in net profit that does narrow our options right? When we have $2,000 and we’re looking at a $3,000 investment that reduces the emotional load because we know we only have $2,000. And then also again similar along that line we have the $3,000 investment we had $2,000.

It supports that decision to be like nope this isn’t for me this isn’t the right time for me because you you don’t have the funds for it. And it’s why financial clarity is a skill. So looking at a spreadsheet or looking at sheets is not just like something that you can just be like ahaha I understand my numbers.

Financial clarity is a skill. It is not just something that you can just pick up instantly. It’s something you learn over time.

It’s something that you really have to grasp by actually looking at your numbers and actually reading the story that they’re trying to tell you. And I know I’ve said that a million times but you can’t read the story your numbers are trying to tell you without having all the contextual data and looking at the full picture not just looking at small pieces of information and thinking that you know your numbers. If you don’t know when your money’s coming in if you don’t know when your money’s going out if you don’t know what’s going on with it you don’t really know what your numbers are and that’s not where you want to be.

Again if you’re feeling that heaviness and that emotional weight you need someone to kind of like guide you or at least yourself to guide you and figure out what’s actually going on with your business. So if your numbers feel informative but they don’t feel helpful it’s not a matter of discipline. It’s a matter of being able to translate them because that’s where that support is going to live being able to understand them and grasp them and utilize them for your business.

The goal isn’t to know more numbers it’s not to know every single number that’s going on in your business it’s to trust the decisions you make because of them. Because once you actually understand them and you feel like you fully know and you can grasp what’s going on that’s when you’re going to be able to trust any sort of decision that comes your way. If you guys enjoyed this episode please like it share it subscribe it share with your friends share on social media let them come and listen to these wonderful episodes with us because I love making them and I know you love listening to them.

If you guys need anything else as always or you want some new topics that we want to talk about send me a message on instagram or through my email and we can get chatting on there. Otherwise as always you guys I wish you the best week ever we’ll see you next week farewell fellow travelers.