The Financial Operating System

Directory of each FOS component

Every business deserves a simple-but-sophisticated financial management system.

Unfortunately, most business owners were born from non-financial backgrounds (sales, management, ops, etc.) and most financial tools don’t bridge the gap between theory and practicality.

What is a financial operating system?

• What to look at — a set of financial tools

• When to look at them — a cadence for reviewing those tools

• What to do with them — actions coming out of reviewing the tools

This newsletter will act as a deep dive into this financial operating system. Subscribe to follow along as we build this system in real-time:

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The Financial Operating System

Below is an outline of the entire system with links to each section. Refer back to this directory as we continue building:

1. Planning — Knowing your business and yourself before jumping into the numbers

   1. Understanding your business model

   2. Your financial situation (where are you now)

   3. The 4 owner archetypes (where you’re going)

2. Review (financials) — Reading, interpreting, and using the financial statements

   1. How a business works

   2. Cash vs. accrual and when to use them

   3. How to have amazing bookkeeping — you need clean numbers in order to use them

   4. Reading financial statements

      1. Anatomy of the income statement

      2. Anatomy of the balance sheet

      3. Anatomy of the cash flow statement

   5. Monthly Financial Review (MFR)

3. Manage (cost structure) — Managing your cost structure (fixed vs. variable) and price structure (unit economics)

   1. Pricing structure — unit economics

   2. Cost structure — fixed vs. variable costs (operating leverage)

   3. Breakeven

4. Predict (profit & cash) — Forecasting both short-term and long-term financial performance

   1. Short-term — weekly cash flow and 13-week cash forecast

   2. Long-term — profit plan and cash budget

5. Fund — Building the best balance sheet for your business

6. Transition — Positioning the company for a sale or transition