The Top 3 Financial Mistakes I See Business Owners Make

Hi, I'm Nicole! 👋

I'm a fractional CFO and the CFO of Swift Movement Studio, a parkour gym in Cincinnati. I spend a lot of my time helping business owners understand their numbers, build financial systems, and make better decisions using data instead of guesswork.

One thing I've learned over the years is that most business owners don't struggle because they're bad at business. They struggle because nobody ever taught them how to use their financials effectively.

Here are the three most common mistakes I see.

1. Not Producing a Profit & Loss Report

This is the most obvious mistake, but it's also more common than you might think.

Many business owners use their bank account balance to determine whether their business is doing well financially.

The problem is that your bank account only tells you how much cash you have today. It doesn't tell you whether you're actually making money.

I've seen businesses with plenty of cash in the bank that were losing money every month. I've also seen profitable businesses with very little cash because they were dealing with temporary cash flow challenges.

A Profit & Loss (P&L) report gives you a much clearer picture. It shows how much revenue you generated, how much you spent, and whether you made or lost money.

Without a P&L, you're forced to make important business decisions based on guesswork.

2. Producing a P&L That Doesn't Actually Tell You Anything

This is probably the most common issue I encounter.

A business owner will show me their P&L, but all revenue is grouped together and expenses are categorized so broadly that it's impossible to understand what's really happening.

Technically, they have a P&L. Practically, they don't have useful information.

Let's say you run a gym that offers memberships, camps, private lessons, and birthday parties. If all of that revenue is grouped together, how do you know which programs are driving profit? Which deserve more investment? Which are quietly losing money?

The purpose of a P&L isn't simply to satisfy your accountant at tax time. It's a tool that should help you make better decisions.

A well-structured P&L should help you answer questions like: Which programs are most profitable? Which expenses are increasing? Where are opportunities for growth? What areas of the business need attention?

The more clearly your financials reflect how your business actually operates, the more valuable they become.

3. Doing Mental Accounting

This one is incredibly common — and honestly, I catch myself wanting to do it sometimes too.

A business owner looks at their numbers and says: "Well, if you take out that expense, we actually made money." Or: "We've got a big sale coming next month, so we're basically profitable."

I've had those same thoughts before. It's a very human reaction. Nobody enjoys looking at financial results that don't match what they hoped to see. We naturally want to explain away the disappointing parts and focus on the positives.

The problem is that financial reporting only works when it's grounded in reality. If an expense happened, it happened. If revenue hasn't been earned yet, it doesn't belong in today's numbers.

That doesn't mean you can't forecast future sales or separate unusual expenses for analysis. In fact, those can both be useful exercises. The key is making sure you're clear about what is real and what is hypothetical.

The more honest you are with your numbers, the easier it becomes to make good decisions.

Final Thoughts

Most business owners don't need more complicated spreadsheets. They need clarity.

When your financial reporting is accurate, organized, and designed to answer real business questions, you can make decisions with confidence instead of relying on gut feelings.

If you're not sure whether your current financial reports are helping you make better decisions, that's often a sign that your systems could use some improvement.

That's exactly what I help business owners do through my fractional CFO services. My goal is simple: help you understand your numbers, make informed decisions, and build a business that's financially sustainable for the long term.

If that sounds helpful, feel free to reach out. I'd love to chat.