Demystifying Finance For Non-Finance Brains (And Reminding Finance-Brains Too)

_{[Read time: 5 minutes]}

If you don’t have a finance brain, let me apologize on behalf of all finance professionals out there — I’m sorry.

Finance has been depicted (or sold) as a complicated juggernaut of a topic.

Because of this, I fear that too many owners (and professionals) outsource too much or ignore essential aspects entirely. That’s a problem because finance is the language of business, and great decisions rely on being able to transform that language into meaning.

I’m going to guide you through 3 aspects today:

• Part 1 — Demystify what finance really is so you can translate the language of business better (and not shy away from it)

• Part 2 — Highlight the 3 financial tools any business (or organization) should use to navigate strategic decisions

• Part 3 — Share the 3 pro tips you can use to boost your finance skills and impress your CFO (or finance lead) in the process

I realize this is longer than most posts, but it is well worth the 5 minutes if you want to build an unfair advantage in your business.

Part 1 — Demystifying Finance

I’ll start with an admission:

• Yes, finance is a vast field that encompasses subtopics like accounting, banking, taxes, reporting, and more.

• Yes, maintaining good financial hygiene demands attention to detail.

• Yes, finance lingo can be daunting if you're not familiar with it.

But I promise it’s much simpler than it’s been sold to you.

During my professional career, I’ve held multiple finance positions, including one where I managed a $100,000,000+ spending plan.

(Notice I didn’t call it a budget? this explains why)

But let’s not get lost in jargon — because to understand finance, you first need to zoom out to the game of business.

It’s played:

• in millions of arenas

• among billions of people

• with trillions of potential outcomes

Everything around you, from the clothes you wear to the jobs you've had, is part of this game.

The game of business weaves philosophy, psychology, and economics together — and the only universal language we use to measure this game is money (i.e., financial data).

That means finance is the language of business — the method of communication.

And behind that language lies meaning that guides decisions and actions.

To truly grasp finance, look beyond the numbers and dollar signs — finance is simply the measurable results of decisions and actions.

Decisions and actions — not the money itself (that’s worth repeating).

For instance, a $1,000 increase isn't merely $1,000—it could signify various underlying actions:

• 10 sales of $100

• 5% interest on $20,000

• Canceling a $250 monthly service on August 31

• A new tax credit from a law change

• 10% price increase on $10,000 of services

If you only focus on the $1,000, you’re missing the meaning.

That’s what finance truly is — the data that gives meaning to your decisions and actions in a single universal language.

Part 2 — 3 Essential Financial Tools For Navigating Strategic Decisions

Strategic decision-making relies on navigating between:

• Present — where am I now

• Future — where I need to go

• Past — where I have come from

Now, layer in finance, and you can quantify any point between these three.

This is where a simple suite of tools becomes your best friend.

I don’t know about you, but I’m sure there hasn’t ever been a work day where I didn’t open a spreadsheet (Microsoft Excel or Google Sheets).

But let’s not debate software — instead, focus on using these three types of tools:

• Spending dashboard or analytics (for past vs. present)

• Projection tool (for present vs. future)

• Multi-year strategic plan (for past vs. future)

In the next part, I’ll share more about each one. But here’s why they matter—combining these tools will effectively quantify an outcome before you even make a decision.

So here’s my advice:

• If your business or organization doesn’t use financial tools — start with the three I mentioned (even the most basic version).

• If you're a decision-maker but aren’t involved in finances — get involved.

• If your business or organization underutilizes financial tools, email me, and we’ll resolve this immediately.

Part 3 — 3 Pro Tips To Boost Your Strategic Finance

1 — While being “strategic” is about the future, you can’t be strategic without understanding where you are right now.

This is why a spending dashboard is essential — it uses existing data to define your current position.

There is no more valuable data point than understanding your “here.”

When you’re lost, “there” doesn’t exist with “here.”

But it shouldn’t just be data that informs you. The best dashboards will focus on the impact datapoints that tell you when to push drivers and pull levers.

Eliminate anything else.

2 — It’s useful to envision where you’re headed, but assuming you’ll “continue experiencing” the present conditions for an extended time is wrong.

A projection tool determines a result based on your current strategy.

However, a good projection tool will show how your current strategy plays out in the future while accounting for change factors:

• Customers that don’t pay

• Price or cost changes

• Business or personal surprises

• Time away or more time on the business

• Time lag between decisions, actions, and results

A projection one month out doesn’t need much factoring, but a 12-month projection should.

Please don’t turn a projection tool into a strategic plan. Anything longer than 1 year starts to become misleading (unless it is super well-crafted and dynamic).

3 — Focusing solely on the final year of a multi-year strategic plan is misleading. The focus should be on the next 12 months.

Every multi-year strategic plan should show an improvement (however you want to define improvement). Otherwise, it’s just a poorly designed long-term projection.

That said, it’s hard to resist fixating on the final year.

Look at it, but don’t touch it.

Be the only one in the room, intently focusing on the next 12 months.

Because you should be thinking, “What are the few actions I/we need to take now to give me the best chance to achieve the improved result?”

Multi-year plans of the past are rarely assessed. If they were — we’d all realize the plans are never correct. This is why the real value is in the few actions (over the next year) that bend the curve toward the 5-year mark.

Side note: Most multi-year plans I’ve seen are 5 years, but anything between 3-5 years makes sense (but no more). Unless you are in an industry unaffected by change, anything over 5 years gets dramatically less valuable.

Bonus tip: The purpose of these plans isn’t only to assess “present vs. future” but also “future vs. future.” It's a strategic iterative process that accounts for numerous future scenarios.

The final plan tends to be the most ideal or realistic path that the business can execute—but it’s not “the” path—it’s just the one you’ve agreed upon to define your strategy.

I hope this starts to demystify finance a little bit.

Keep reading this newsletter, and I’ll make business and finance make sense.

Thanks for reading.

Peter

If you missed last week’s post:

Last week, I shared how growth can hurt you.

The crazy thing is you hope it happens.

If this post left you feeling like you’re exposed (in strategic finance) — I can help you:

I’m Peter, a former Harvard strategist (and director of finance) turned entrepreneur.

I now help businesses and organizations make decisions that move the needle with simple finance and operating strategies.

Reply to this message if you’d like to boost your financial processes and tools.