Top 3 Financial Mistakes

Hi, I'm Nicole! 👋

I'm a fractional CFO/FP&A Consultant 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 financial data effectively.

Here are the three most common mistakes I see.

1. Not Producing a Useful Profit & Loss Report

Not producing a P&L at all 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 or if you'll have enough money tomorrow.

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 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
• Whether you made or lost money

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

Not producing a USEFUL P&L 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?

How do you know which programs deserve more investment? How do you know if one of your offerings is 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.

2. 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.

3. Not Projecting/Forecasting Cash Flow

This is something I didn’t realize was an issue for businesses until I started talking to other people because, frankly, my business never really experienced this issue. Coming from the personal finance industry, one thing that I had pounded into my brain was that you:

1. Have to look into the future for big expenses or purchases you’re planning to make, and
2. Should ALWAYS have an emergency fund, no matter what.

When I first started working with Swift, I took my knowledge of personal finance and implemented those same principals. Looking back, that shielded us from a LOT of cash flow problems.

You should have a written plan of what happens to your bank account on a MONTHLY basis when all of your business plans come to fruition. When writing down your plan, you should be thinking to yourself:

• When will my sales receipts be collected into my bank account?
• When will be bills come due?
• What big expenses pop up every year that I need to make sure are covered?
• What new sales programs am I planning to run this year?
• How will payroll cost and when does my payroll hit?

What often happens is that all of the above things hit your bank account at wildly different times. Your bills and payroll may come due before you collect your sales receipts. Something might break in your facility and you have to shell out all of the money you were going to use to cover payroll. 

If you know in advance how much and which bills/expenses are hitting when, you can better plan to have that amount of money sitting in your checking account waiting for that exact moment.

One more thing I’ll say on cash flow in particular is often times a cash flow issue is really either a profitability issue OR a forecasting issue. You should start with the forecasting, then if you still feel like you just can’t figure out how to save more in advance for the big expenses down the road, you need to turn your focus to your profitability.

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 FP&A/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.