Each of the 3 financial statements answer a different question:

1. Income Statement: Are you profitable?
2. Balance Sheet: Are you healthy?
3. Statement of Cash Flows: Where is cash going?

Let’s break them down one-by-one: Income Statement
Revenue - Expenses = Profit

Accrual financials align revenue and expenses, which highlights dollars made on each dollar of revenue (called profit).

Expenses are broken based on the type of expense they are:

• Cost of Goods Sold
• Operating
• Non-Operating

The iPhone generates 52% of Apple’s revenue,

but it’s not the future of the company.

Here’s what’s next (and how they created $51.41 billion in value over the last 3 years): June 29, 2007: Apple releases the iPhone

It is not an overstatement to say it was a world-changing device.

And it reflected in their financials. Revenue by year:

2006: $19.32 billion
2009: $42.91 billion
2012: $156.52 billion

810% growth & 135% ANNUAL growth rate.

Improving Gross Margins are the quickest way to increase Profit.

But business owners often don’t know where to start.

Here are 4 ways to improve Gross Margins quickly: But first, what is Gross margin?

Gross Margin is the percentage of revenue money left after direct costs (or cost of sales/cost of goods sold) are accounted for.

Most people make Financial Statements hard.

I want to make them easy.

If I only had 5 minutes to review a business’s numbers, here is what I’d do: First, I’d go to the Income Statement.

Revenue - Expenses = Net Income

When looking at this statement, you’re trying to understand: are you profitable?

I focus on 3 numbers:

• Revenue Growth
• Gross Margin
• Profit

Managing cash is one of the most important jobs of a business owner.

But how? You need good cash flow KPIs

Here are the 5 best KPIs for managing cash flow: • Quick Ratio

A ratio greater than 1 means that liquid assets (cash & equivalents) can cover short-term liabilities.

In times of uncertainty, the ability to cover liabilities allows you to act intentionally and confidently.

Most Accountants make financials too complicated.

The reality is, you only need to understand 3 metrics to master your numbers.

Here they are: When looking at your financials, there are 3 main questions:

• Am I making money?
• Do I have enough cash?
• Is my business healthy?

The following 3 metrics answer these questions:

Financial Statements scare most people,

but it doesn’t have to be hard to read them.

I’ve spent 12 years as a CFO, so let me break it down for you: There are three types of analysis when looking at statements:

• KPIs
• Vertical
• Horizontal

Business is hard,

and it’s made harder when you make the wrong choices.

It cost you money, time, and peace of mind.

Here are 8 ways business owners choose wrong daily: I’ve previously talked about fake wins vs real wins.

Today, we’ll use that framework to illustrate if you’re focusing on the right things.

https://twitter.com/KurtisHanni/status/1679846163757891584

Unsure which KPIs to track in your business?

The wrong KPIs can cloud your judgment and lead to bad decisions.

Grab some sticky notes and do this 7-step exercise to choose the right KPIs: 1) Identify a goal you want to reach

Ask: what do you want to achieve?

But many businesses set bad goals.

Use the SMART goals framework to make sure your goals are:

• Specific
• Measurable
• Achievable
• Relevant
• Time-bound

Most business owners get paid last,

which often means you get paid NOTHING.

Use this framework so it never happens again: As an owner, knowing how much you can distribute is hard.

You want to keep enough in the business to maintain and grow.

But take enough out that you get “rewarded” for ownership.

I quit my day job as a CFO,

and am going all-in on Twitter.

Here’s the monetization blueprint that you can use too: • Email Newsletter

Social media is rented space. Email is owned.

Get your followers to owned space. I do this by:

- Plugging email under Tweets
- Exchanging recommendations with friends

Equipment costs have increased by 37% over the last 10 years.

This makes managing them more important than ever.

Here are 9 factors you should consider before replacing equipment: • Percent of replacement value rule

If the repair costs more than X% of the ERV (estimated replacement cost), buy the new equipment instead.

A common number is 2%, but it can vary widely by industry.

Some could even be up to 50%, figure out industry norms.

Instead of looking at Profit,

this metric tells you 10x more: If I could only talk about one concept with business owners it would be this:

Profit DOES NOT equal cash.

When Steve Jobs rejoined Apple in 1997, their revenue was $7 billion and shrinking.

In 2022, they almost surpassed $400 billion, a 224% annual growth rate.

What changed? No, it wasn’t the iPhone…

Here’s how they did it: Steve Jobs returned to Apple in 1997, at a time when the company was struggling.

They made cuts and partnered with Microsoft for Office for Mac to stabilize the company immediately, but revenue remained flat until 2001.

I’ve spent the last 11 years as a CFO reading Financial Statements.

Let me teach you how to read them in 3 simple steps: There are three types of analysis when looking at statements:

• KPIs
• Vertical
• Horizontal

Content creation is exhausting and the feed never ends.

But good content systems can save you time and stress.

Here is a 4-part framework to crush overwhelm and become an elite creator: • Curate

Ideas are everywhere; you just have to be looking.

Things never stop, and it’s easy to “run dry” of ideas.

But good ideas are everywhere.

Amazon is the 5th largest company in the world ($1 trillion market cap),

and became that by cultivating a culture of innovation.

Here are 3 management techniques they use to create that culture (that you can too): 1. Two Pizza Team Rule

Agility and speed are crucial for growth and transformation, but traditional organizational structures stifle this.

To address this, Amazon came up with the concept of the Two-Pizza team: no team should take more than two pizzas to feed them.

Struggle with networking?

Use this system and immediately become elite: To be a good network you need 2 elements:

• outreach
• follow-up

But most aren’t tracking these. Their systems are non-existent.

Use this system and your life will never be the same:

What Mark Rober, 50,000 of his YouTube followers, and Super Mario Bros can teach us about life: Mark Rober experimented on 50,000 of his YouTube followers.

He asked his followers to play a puzzle, telling them he wanted to prove anyone could learn how to code.

In reality, he wanted to test their response to different scoring mechanisms.

98% of businesses are underpriced.

60% are underpriced by more than 5%!

For every $1 million, that’s $50,000 to the bottom line.

If you’re reading this tweet, you need to raise your prices.

Here’s how you can do it: 1. Clarify the benefit

Be clear, but concise on:

• Why you’re increasing them
• The value they’ll get at the new price

Communicate as you normally communicate with your customer.

I find in most situations a letter is best.

At the end of each Quarter, I make a point to:

• Review the previous quarter
• Look forward to the next

Use my 5x5 system to dominate the next 90 days: • What were the 3 biggest wins?

Too often we move to the next thing and don't reflect.

By asking this question it allows you to keep a running list of accomplishments.

It:

- reminds you what you’re capable of when down
- provides you with ammunition for future wins