It is 3:15 in the morning. You did not wake up because of a noise. You woke up because of a number.
You are staring at the ceiling, and your stomach is in knots. It is that familiar, cold dread. The fog of financial fear.
Your brain starts its cycle. Did that client pay their invoice? Can I make payroll next Friday? You do some quick, panicked math in your head. If they pay, we are good. If they do not, I have to move money from savings... again.
Then the big one hits: How much am I actually going to owe in taxes this year? You have no idea. You just know it is going to hurt.
This is the dirty secret of so many successful entrepreneurs. You look the part. You are "crushing it." But behind the scenes, you are living in a state of financial chaos, running your business from your bank account balance. You are making decisions based on emotion, on fear, on a gut feeling... not on data.
You have convinced yourself that you are just "not a numbers person." You tell yourself you will deal with it later. You hustle harder, trying to outrun the financial truth.
But you cannot out-hustle a broken financial model. That anxiety you feel at 3 AM? That is the cost of financial chaos. And today, we are going to put an end to it.
That feeling of financial chaos... it is a feeling I know intimately. It is not just about business. For me, it started with a car.
When I first came to the United States from Brazil, I had nothing. No credit history, no financial footprint, no understanding of how the "rules of the game" worked here.
After graduating from college, I landed my first job as a tax accountant. For months, I walked 12 blocks to that office, saving every paycheck I could. I needed a car, but I was starting from zero. I spent weeks researching online—I mean, I got to the end of Google—until I finally found an affordable, used Chevrolet Cobalt. The only problem? The dealership was 400 miles away, in Austin, Texas.
I made that trip by catching a ride with a coworker who was visiting her son at the University of Texas in Austin. I walked into that Austin dealership with my job letter, the cash I had saved for a down payment, and my pride. And I found it.
Now, you have to picture this. The car was in Austin, home of the UT Longhorns, so of course, the car was bright orange. It was a two-door, manual shift. For a guy like me, at six-foot-eight, getting into this thing was like folding myself into a sardine can. I had to lean the driver's seat so far back that no one could ever sit behind me. I later named it the "Orange Crush."
But at that moment, it was my key to freedom. So I sat down in that little cubicle with the finance manager. I can still smell the stale coffee and see the flickering fluorescent light on his desk.
He ran my information, and he came back with a smile that did not reach his eyes. He said, "Well, son, you have got no credit. So, the best we can do... is 18%."
Eighteen. Percent.
I felt this hot wave of shame wash over me. I knew, instinctively, that I was being taken advantage of. That 18% was not an interest rate; it was a penalty. It was a tax on what I did not know. It was the price for my lack of clarity.
I had no choice. I signed the paper. And for years, I drove that Cobalt and paid that brutal, expensive lesson every single month.
Here is the truth: You are paying that same 18% Clarity Penalty in your business right now.
It just has a different name. It is the late fees you pay because you do not have a system for accounts payable. It is the thousands in taxes you overpay because you do not have a proactive strategy. It is the bad clients you keep because you are terrified of the cash flow dip. It is the team member you cannot afford to hire, even though you are drowning, because you have no idea what you can actually afford. It is the team member you cannot fire, because you do not know how to replace them with an A-Player.
You are paying a penalty for what you do not know. And it is costing you your freedom.
That 18% lesson was the beginning of my obsession. As a CPA, I see it every day. The entrepreneurs who fail are not the ones who lack passion. They fail for two main reasons: a lack of planning and a lack of focus, which leads to burnout. And both of those are just symptoms of the real disease: a lack of systems.
The problem is we treat our finances like a report card. We are afraid to look at the numbers because we are afraid they will tell us we are failing.
But your numbers are not a report card. They are a dashboard.
You cannot build a machine if you cannot read the dashboard. You are flying an airplane in a storm, and you are refusing to look at the instrument panel. You are just hoping you are high enough to clear the mountains.
The moment you change this one belief, everything changes. The moment you move from emotional drama to data-driven strategy, you take back control.
Financial literacy is not about being an accountant. It is not about complex spreadsheets. It is about knowing a few key numbers that tell you the truth. It is about building a simple system to review those numbers.
That is it. That is the whole game.
So let us build your dashboard. I call this system The Financial Fortress. It is not about complex accounting; it is about simple, operator-level control. It has three parts: The Mindset, The Dashboard, and The Cadence.
Step 1: The Mindset (Profit First)
Most entrepreneurs do not even have a formula. Their "system" is based on their bank account. Is cash balance up? So we are good. Is cash balance down? Crap, what happened?
They never look at their Profit and Loss statement, or P&L. And many entrepreneurs do not even know what that is. It is just a simple report that shows your Revenue (the money you brought in) and your Expenses (the money you spent) over a period of time, like a month or a quarter. They do not look at it because they do not have one, do not know how to build one, or are simply afraid to see the truth.
When they do think about it, they use the classic formula: Sales - Expenses = Profit. Whatever is left over at the end of the month, if anything is left over, is your profit. This is a recipe for leftovers. It guarantees you get paid last.
We are flipping the script. Your new formula is: Sales - Profit = Expenses.
Now, you are absolutely right. Most people hear this and they get stuck. They think, "How can I know my 'Profit' number? It is too hard to calculate."
Here is the breakthrough: The "Profit First" mindset does not start when the money hits your account. It starts when you create your proposal. It starts when you set your price.
You must build your desired profit into your pricing from day one. When you set your hourly rate or your project fee, you are already including a non-negotiable percentage that is yours to keep. You price your services to ensure that after all costs, your profit is already accounted for.
This way, the "Profit" in the formula is not a number you find; it is a number you decided on weeks ago.
The second part of the system is behavioral. The day that revenue comes in, before you pay a single bill, you fulfill the promise you made to yourself. You immediately take that predetermined percentage—it can be 10%, 5%, or even one percent—and move it into a separate "Profit" bank account. You do it first.
This is not an accounting trick; it is a complete system. It is a strategic decision (your pricing) combined with a behavioral habit (the transfer). It forces you to build an efficient, profitable business by design, not by default.
Step 2: The Dashboard (Your 3 Key Numbers)
You do not need 20 KPIs. You need three. For a service business, these are the only numbers that tell the whole story.
1. Gross Margin (Your Engine's Power): For every $100 you sell, how many dollars do you keep after paying for the direct cost of delivering that service?
* How to find it: Look at your Profit and Loss statement, or P&L. The formula is (Revenue - Cost of Goods Sold) / Revenue. For a service business, "Cost of Goods Sold" is simply the direct cost to deliver your service—think the salaries of your client-facing team or the specific software required for that one client. It is your measure of profitability. If this number is broken, no amount of "hustle" can save you.
2. Operating Overhead (Your Engine's Drag): How much does it cost just to keep the lights on, even if you made zero dollars?
* How to find it: This is also on your P&L. It is the sum of all your "Operating Expenses"—your rent, your marketing software, your administrative salaries, your utilities. This is the fixed cost of your machine.
3. Cash Runway (Your Fuel Tank): This is the most important number for your peace of mind. If all your clients disappeared tomorrow, how many months could your business survive?
* How to find it: Take your total Cash on Hand (look at your business bank account balances right now) and divide it by your monthly Operating Overhead number you just found. The result is your runway in months. This is the antidote to fear, and it is the number I want you to find in this week's challenge.
Step 3: The Cadence (The System for Review)
A dashboard is useless if you never look at it. You need a system. I call it the Monthly Financial Cadence.
It is a non-negotiable, 90-minute meeting you have with yourself, your partner, or your bookkeeper. Once a month. The agenda is simple. You do not look at 100 reports. You look at your three key numbers.
You ask three questions: What is the story behind these numbers? What is working? What is broken? And what is the one decision we can make this month to improve one of these numbers?
Let us walk through a quick example. You look at your dashboard.
* The Story: You see your Gross Margin (your engine's power) dropped by 8% this month. That is the "what."
* What is working? Your Revenue was actually up! You sold more.
* What is broken? You dig in and find the "why." You see that your team spent 40 extra non-billable hours fixing a mistake for one client, which drove up your Cost of Goods Sold (your direct costs).
* The One Decision: The decision is not to 'work harder.' The decision is to create a new quality control system, a new checklist, to ensure that mistake never happens again.
That is it. You have just moved from 3 AM panic to 90 minutes of control. You have moved from being a victim of your finances to being the operator of your machine.
Financial clarity is freedom.
It is the freedom to say "no" to that high-maintenance, low-profit client because you do not need their money. It is the freedom to hire that A-Player who can help you scale, because you know exactly what you can afford.
It is the freedom to go on vacation, truly unplug, and not check your bank account every four hours, because you know the dashboard is green and the machine is working.
That is the control we are fighting for.
So here is your challenge this week. Action Over Theory.
I do not want you to build the whole fortress. I want you to find one number. I call this the 15-Minute Financial Audit.
Tonight, I want you to open your business bank account. Open your credit card statements. Get a real, hard number for your total monthly operating overhead. Then, look at your bank balance.
Divide your cash on hand by your monthly overhead. The number you get is your Cash Runway, in months.
That is it. I just want you to know that one number. You might not like it. It might scare you. But it will be real. You will have replaced that vague, 3 AM fog with a single, actionable data point. And that is the first step to taking control.
And I want to give you the next step.
Once you have that number, I have a tool for you. It is the simple, one-page financial dashboard I use to track my essential KPIs. It is not a complex CPA spreadsheet. It is an operator's dashboard. It is the tool you can use in your 90-minute Monthly Cadence.
If you want it, email me at [email protected] with the subject line "DASHBOARD".
In the email, just tell me the Cash Runway number you calculated. I am not going to judge you. I am just holding you accountable.
You take the action, and I will give you the tool.
To your success, JT
