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Does Your Business Have Financial Confidence?

Posted by Tony Esposito to Investment, Accounting, Business Advice, Funding, Budgeting

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Ask yourself: How confident are you in your company’s financial position? How much knowledge do you have about the transactions and activity that flow in and out of your books? Not to mention, how much faith do you have in the accuracy of your financial picture?

 


For CEOs who manage accounting for their early stage companies, the answers to these questions don’t always fully materialize. It isn’t easy to come up with objective, accurate, and detailed financial statements and projections from within the bubble of your organization—especially when you may not have prior experience leveraging data in that way, or you just don’t have time amidst juggling a dozen other responsibilities.


Your gut may indicate a possible outcome of a given financial decision, but you might not have the facts or hard-earned judgment to support business decisions that determine your future success.


This is a huge motivating factor for the inDinero team. We think of ourselves as partners for growing businesses because we provide a financial picture that allows your company to maximize revenue and provide stakeholders with the information they need - when they need it.


This all adds up to what we call “financial confidence” or the ability to trust, make use of, and rely on your financial data to make smart business decisions. But let’s examine our terminology: What do those two words really mean? What does it take to achieve financial confidence? And for a founder or CEO, what does it feel like?

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Where does “confidence” come from?

Confidentia, the Latin root for the English word “confidence,” means “firmly trusting.” Trust is a powerful feeling. Consider how many people (including yourself) you truly trust. Executives require internal and external confidence to make decisions and lead effectively. If your people don’t believe in you, or if you don’t believe in yourself, good luck getting anything done.


Confidence springs from two basic elements: knowledge and faith. You need knowledge to make informed decisions, understand your capabilities and limitations, and grasp the potential meaning and impact of your actions. Faith allows you to grapple with all the things you can’t control, and possess conviction in the face of uncertainty. It’s a more precise form of hope.


Financial confidence doesn’t just provide you with a better defense for your actions; it forms the foundation of smart decision-making. Financial confidence is the what, how, and why of spending and borrowing. It illuminates the connective tissue between your transactions, cash flow, payroll, and federal and state tax returns. With financial confidence, you can tell another person, with a degree of certainty, how your business is performing and where you expect to go from here.

 

3 signs you have a healthy level of financial confidence

Financially confident leaders behave differently than their counterparts, and their companies stand apart as a result. Here are a few qualities that all organizations with financial confidence share:


A Sharper Competitive Edge

Financial confidence leads to better decisions - which means better margins.


For Nomad Goods, financial confidence means the ability to compare expenses to determine the most effective and efficient shipping method. Before developing financial confidence, the consumer electronics company lacked operational insight. The team couldn’t access or analyze their numbers and data in a way to make a compelling case for a certain business decision over another.


When you can maximize revenue and minimize loss, you have a critical and fundamental edge over your competitors. But moreover, financial confidence broadens your perspective, helping you see heretofore invisible opportunities to increase customer satisfaction and generate profit.

 

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“Having genuinely correct financials has helped us gain knowledge from our finances to make confident business decisions and—perhaps most importantly—has given us the peace of mind that empowers us to focus on growing our business and building amazing products.”

- Noah Dentzel, Co-founder & CEO of Nomad Goods

 


Happier Investors

Regardless of their size or approach, all investors and financial stakeholders want the same thing: higher ROI and fewer losses.


When you’re in the midst of growth, a lack of certainty is the last thing you want. As SaleMove co-founder & CEO, Justin DiPietro shares with us in The Startup Founder's Guide to Fundraising:

 

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“If someone's going to give you money, they're going to look at everything—literally, everything. From the very start, my team has always dotted our I’s and crossed our T’s, documenting everything... I definitely sleep sounder at night knowing I don’t have to worry about an interested investor finding holes or liabilities in our documentation.”


 

Your financial confidence gives them confidence. The more information you can provide about their investments, and the faster you can provide it, the happier they’ll be.


More Time and More Room for Growth

If you aren’t a trained CPA, accounting is likely nowhere near your favorite business tasks. It takes time, patience, and diligence—all of which are in short supply when you’re spending nearly every waking hour trying to build and scale your company. Typically, you’re using your energy ensuring the accuracy of your books and taxes not because you want to, but because you feel like you have to.


Financial confidence represents the end of this oppositional relationship between accounting and growth. Instead of viewing bookkeeping as a source of stress, financially confident companies see the living, breathing business decisions embedded in the data. It’s freedom in terms of more time, but also greater analytical latitude: you’re empowered by accounting, rather than constrained by it.

 

Ready to gain confidence in your company’s financials?

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Now that you understand what financial confidence looks and feels like, the next step is learning how to develop, and eventually, harness it. It’s about having invaluable information at your fingertips when you need it - and to know it’s still there when you’re focused on running other aspects of your business.


Business Growth Guide to Accounting

About the author
“Tony

Tony Esposito

Born and raised in New York, Tony is an expert in helping companies scale operations faster and smarter with technology. He has worked with and advised some of the hottest startups and is a mentor at numerous business accelerators, incubators, and co-working spaces across the country. You can reach Tony at tony.esposito@indinero.com or 732-500-6176.

Success starts when you take charge of your finances.

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