Running a $1M+ service-based business isn’t just about delivering exceptional client work—it’s about mastering the numbers that drive your growth. Whether you’re leading a law firm, dental practice, nonprofit, private equity-backed company, or SaaS business, your ability to read financial statements, forecast cash flow, and make confident money decisions determines how far you can scale.
At Finance Savvy CEO®, we’ve helped countless CEOs turn finance from something overwhelming into a growth-driving advantage. This guide breaks down the 10 essential financial concepts every CEO must know—and how they directly connect to scaling, profitability, and capital readiness.
1. Revenue: Your Growth Engine
Definition: Revenue is the money your business earns from sales, service fees, or other income streams.
Formula: Total Revenue = Core Sales Revenue + Other Revenue Sources
CEO Insight: Don’t rely on one revenue stream—diversification protects against market shifts and client churn.
2. Expenses: The Silent Profit Killer
Definition: Expenses are the costs of running your business, including direct labor, overhead, and taxes.
Formula: Total Expenses = COGS + Operating Expenses + Non-Operating Expenses
CEO Insight: Most CEOs underestimate expenses—leading to cash crunches. Tracking accurately is key to smart cost-cutting and forecasting.
3. Assets: Building Business Value
Definition: Assets are what your business owns—cash, equipment, property, intellectual property, or customer lists.
Formula: Total Assets = Current Assets + Non-Current Assets
CEO Insight: Assets create a long term advantage. They drive valuation, financing opportunities, and future growth potential.
4. Liabilities: Fuel or Burden?
Definition: Liabilities are financial obligations such as loans, vendor bills, or accounts payable.
Formula: Total Liabilities = Current Liabilities + Non-Current Liabilities
CEO Insight: Liabilities aren’t always bad—strategically managed debt can accelerate growth and expansion.
5. Cash vs. Profit: The Most Dangerous Misconception
Definition: Cash is money on hand. Profit is what’s left after expenses have been paid from the revenue you generated.
Formulas:
- Cash Flow = Beginning cash balance + Cash Received – Cash Payments
- Profit = Revenue – Expenses
CEO Insight: Many profitable businesses still fail due to poor cash flow. A Fractional CFO can help align profit with liquidity.
6. Monthly Cash Burn Rate: How Fast You’re Spending
Definition: The speed at which your business is spending cash.
Formula: (Beginning Cash Balance – Ending Cash Balance) / # of Months in the period of assessment
CEO Insight: Burn rate can help tell you if you need to reduce spend, raise capital, or change your growth strategy.
7. Cash Runway: Your Lifeline
Definition: How many months your business can operate with current cash.
Formula: Cash on Hand / Avg. Monthly Burn Rate
CEO Insight: Investors always ask: “How much runway do you have?” Know this number before they do.
8. Working Capital: Your Day-to-Day Freedom
Definition: The liquidity available for daily operations.
Formula: Working Capital = Current Assets – Current Liabilities
CEO Insight: Positive working capital means flexibility—without it, you’re trapped in survival mode.
9. Tax Liability: Plan or Pay the Price
Definition: The taxes your business owes or is expected to owe the government.
Formula: Tax Liability = Tax Rate × Taxable Income
CEO Insight: Avoid the “April surprise.” Build tax planning into your cash flow strategy to protect profits.
10. Depreciation: Hidden Costs That Matter
Definition: The reduction in asset value over time.
Formula: (Asset Cost – Salvage Value) / Useful Life
CEO Insight: Even though it’s a non-cash expense, depreciation affects profitability, valuation, and replacement planning.
Why These Concepts Matter for Scaling Beyond $1M
Understanding financial fundamentals isn’t optional—it’s the foundation for:
✅ Confident decision-making (when to hire, invest, or cut back)
✅ Capital readiness (showing investors and lenders financial clarity)
✅ Sustainable growth (scaling without burning out cash)
This is where our clients see the biggest transformation. Many come to us “knowing the basics” but stuck in the cycle of sell → deliver → collect → pay → repeat. The missing link? Strategic financial leadership.
How Finance Savvy CEO® Helps CEOs Apply This
- Fractional CFO – Ongoing Advisory & Coaching
For CEOs ready to scale with financial clarity and strategic guidance. - Financial Planning & Projections
For leaders preparing to raise capital, expand operations, or forecast growth. - Hosted Training & Workshops
For teams who need finance simplified, actionable, and applied to real business goals.