In this episode, we tackle a topic that many business leaders quietly admit they should know more about, the basics of finance. From profit and loss to balance sheets and cash flow, we strip away the complexity to show that understanding your numbers is not only manageable, but essential for making sound business decisions. Drawing on real-world examples, we discuss the warning signs to look out for, how to interpret financial statements, and the risks of leaving the numbers solely to your finance team.We share practical insights on reading between the lines of your accounts, identifying potential issues early, and asking the right questions in board meetings. Whether it’s spotting discrepancies in working capital, understanding the difference between margin and mark-up, or managing cash flow with confidence, we show how a solid grasp of financial fundamentals can protect your business from unnecessary risk and help you seize growth opportunities.
Chapters:
00:00:00 – Intro & cider-making banter
00:04:15 – Why every business director must understand finance basics
00:09:15 – P&L, balance sheet, and cash flow explained for small business owners
00:15:40 – Cash flow statement vs cash flow forecast – what’s the difference?
00:21:10 – How to manage VAT and tax by ring-fencing cash
00:25:55 – The 5 key numbers to track in your business accounts
00:27:20 – Mark-up vs margin explained – avoid this common pricing mistake
00:29:30 – How to calculate your business break-even point
00:31:45 – Final advice: know your numbers to grow your business
Key Topics Discussed:
- The difference between profit & loss, balance sheets, and cash flow, and why all three matter.
- How to spot red flags in your numbers before they become critical issues.
- Why all directors, not just finance directors, are responsible for financial understanding.
- Common mistakes around mark-up vs. margin, and how to price correctly.
- Practical formulas and rules of thumb for quick financial checks.
- The role of assumptions in forecasting and the importance of realistic numbers.
- Managing VAT and cash reserves to avoid unnecessary stress.
- The value of timely, accurate management accounts for decision-making.
Who Is This Episode For:
This episode is aimed at business owners, directors, and senior managers, particularly in SMEs, who want to strengthen their financial literacy. It’s also valuable for sales leaders, operations managers, and anyone who participates in financial discussions or decision-making, but may feel less confident with the terminology and mechanics of business finance.
Quotes To Remember:
“Know your numbers, because then you can start to adjust accordingly.”“Profit doesn’t mean cash, and cash is what keeps you alive.”“Mark-up is not the same as margin, get that wrong and you’re leaving money on the table".
Actionable Takeaways:
1) Review your P&L, balance sheet, and cash flow together, not in isolation.
2) Learn and use quick-check formulas (e.g., break-even = fixed costs ÷ gross margin %).
3) Don’t wait months for management accounts; push for timely reporting.
4) Regularly check debtor and creditor days to maintain a healthy cash flow.
5) Separate VAT and other tax liabilities into a dedicated account.
6) Make sure your pricing method reflects your target margin, not just a percentage mark-up.
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