Financial intelligence or Financial literacy?

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In this Short Talk episode Judith Germain and Ben Risser discuss financial intelligence vs financial literacy and how it empowers business owners to make better financial decisions.

Key Takeaways

  • Financial intelligence provides high-level, actionable data to make key business decisions. Financial literacy is the ability to understand financial information. Together they provide financial situational awareness.
  • Many small business owners operate financially blind between meetings with their accountant. A fractional CFO can provide guidance throughout the year.
  • A CFO can help prevent costly mistakes and position a business for growth. Their fee is small compared to the value they provide.
  • Accurately projecting cash flow is critical for a business to have financial situational awareness. A CFO provides an experienced, strategic perspective.

Topics:

Transitioning from Engineering to Finance

  • Ben started as an aerospace engineer but read Robert Kiyosaki and discovered his entrepreneurial spirit. He felt constrained and wanted to innovate in engineering.
  • He pursued finance designations and eventually started his own firm providing fractional CFO services to small businesses. He helps them write job descriptions to bring finance in-house.

Comparing Financial Intelligence and Literacy

  • Financial intelligence provides high-level, actionable data to make key decisions about hiring, purchasing, acquiring companies etc.
  • Financial literacy is an individual’s ability to understand financial information and formats.
  • Together they provide financial situational awareness – understanding where you’ve been, where you are, where you want to go, and whether you’re on track. This enables planning and budgeting.

Empowering Business Owners

  • Financial situational awareness empowers business owners to be proactive and plan/budget rather than be reactive. They can invest intentionally.
  • It’s possible but difficult for owners to empower themselves here. A CFO can help them up the learning curve.

Choosing a Fractional CFO

  • Interview several specialised CFOs to find the right fit
  • A CFO protects against blind spots and losses that outweigh their fees
  • They scale profits and growth beyond their fees

Achieving Financial Situational Awareness

  • Business owners need to accurately project cash flow
  • A CFO provides an experienced, strategic perspective and financial leadership

In this conversation Ben shares that accurately projecting cash flows is critical but difficult, determining distributions and avoiding shortages. Financial partners provide strategic foresight to balance owner isolation in decision-making.

Ben Risser is an aerospace engineer turned Fractional CFO, focused on helping executive leaders replace financial uncertainity with Financial Situational Awareness, thereby increasing their mission impact.


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Ben Risser can be found on LinkedIn here. His website is here.

You can listen to Episode 403 on any of the popular podcast platforms or apps (including Spotify, and Audible). If you prefer to listen to your browser you can do that below. Enjoy!