By Mary Ellen Normen, Empowerment Growth Strategist | Learning Experience Designer, NWCFO.com
When self-awareness and basic financial knowledge combine, small-business leaders behave differently around their numbers in concrete and practical ways. Most owners and managers have a mental story that goes like this: “We’re having a great month” or “Things are slow.” Instead of relying solely on their memory or gut instinct, self-aware leaders compare their story to simple reports. For example, if the shop is feeling busy, they compare actual revenue and average sale size to previous months to see if increased activity translates into higher profit rather than just more work.
Self-awareness entails understanding how you think, feel, and react—and how this affects others at work. According to leadership research, individuals with high levels of self-awareness are more likely to communicate clearly, respond constructively to feedback, and lead more effectively overall.
Self-awareness entails understanding how you think, feel, and react—and how this affects others at work. According to leadership research, individuals with high levels of self-awareness are more likely to communicate clearly, respond constructively to feedback, and lead more effectively overall.
Small-business owners and new managers benefit from self-awareness in a variety of ways. It influences how quickly you examine your numbers when something feels off, how you react to bad cash or sales news, and whether you seek honest feedback from your bookkeeper, accountant, or fractional CFO. If you have a tendency to avoid financial details when stressed or to pursue ideas without checking whether the numbers support them, self-awareness can help you recognize that pattern and choose a different response.
Financial Fundamentals Every Growing Leader Must Know
Financial literacy does not imply becoming an accountant. Small and growing businesses must be able to read simple financial reports and apply them to daily decisions such as pricing, hiring, and equipment investment.
Practitioner guidance for non-financial leaders focuses on a few fundamentals: understanding revenue, profit, cash flow, and basic margins; understanding how to read a simple profit and loss (P&L) statement and cash flow statement; and tracking a short list of key numbers over time. Resources for CEOs and owners recommend focusing on a few key KPIs, such as monthly revenue, gross margin, operating profit, cash balance, and how long it takes customers to pay.
When small-business leaders understand these fundamentals, they can make more informed decisions about whether they can truly afford a new hire, whether a discount is worthwhile, or whether a “busy” month is actually profitable.
They keep a short and simple KPI list.
Because small-business owners are busy, attempting to monitor dozens of metrics does not last long. CEOs and finance leaders are advised to maintain a short list of key numbers that are critical to the business model. Self-aware leaders admit to feeling overwhelmed by data and collaborate with their bookkeeper, accountant, or CFO to select 5-7 key performance indicators (KPIs) to track consistently, such as monthly revenue, gross margin percentage, operating profit, cash on hand, and accounts receivable days.
They Respond to Bad News With Curiosity
Every growing business faces unexpected challenges, such as a slow month, a large customer who pays late, or rising costs. Self-aware leaders are more likely to pause, observe their emotional reaction, and then ask, “What is this telling me?” rather than assigning blame right away. According to research on self-awareness and leadership, a curious mindset promotes better problem-solving and team trust. In practice, this could entail asking, “Did we change our pricing or mix?”, “Are we staffing too heavily for current demand?”, or “Do we need clearer payment terms?” rather than “Who messed this up?”
Simple Ways to Collaborate With Your Financial Team
Many small businesses do not have a full-time CFO, but they frequently employ a bookkeeper, accountant, or fractional finance partner. Self-aware leaders transform these relationships into true partnerships rather than one-way reporting.
They accomplish this by clearly stating what they want to know—for example, “Help me see whether we can afford another hire” or “Show me which work is actually most “profitable”—and then ask for explanations in plain language until the information feels useful. According to practitioner sources, this type of open communication transforms finance from a monthly chore to a regular input for making better decisions.
Self-aware leaders also seek feedback. They ask their finance partner questions such as, “When you watch how I make financial decisions, what should I continue doing? What changes could I make?” Evidence on self-awareness and leadership suggests that external feedback is required to calibrate how leaders perceive themselves.
Three Things You Can Do in the Next 90 Days
Improving how you use your numbers does not have to be difficult for small and growing business owners and managers. The following steps are designed to be realistic and concrete.
- Choose your “Big Five” numbers and review them weekly.
Choose five important numbers for your business—such as revenue, gross margin, operating profit, cash on hand, and the total amount customers owe you—and review them at the same time every week. According to Harvard Professional Development, regular, structured review enables leaders to connect data to decisions rather than reacting only in times of crisis. - Learn One New Financial Concept That Scares You!
If you tend to avoid certain terms, such as “cash flow,” “gross margin,” or “EBITDA,” make it your learning goal for the next month. Financial literacy practitioner guidance emphasizes the importance of focused learning in rapidly improving confidence and decision quality. You can ask your accountant to walk you through a real-life example from your business in plain language until you can explain it to a team member. - Notice Your Reactions and Write Down One Question
For the next three months, whenever you see a number that you don’t like—lower revenue, higher costs, or tighter cash—pause and observe your initial reaction. Then, rather than acting on that feeling, write down one question you will ask before making a decision, such as “What has changed since last month?” or “Is this a one-time issue or a pattern?” According to self-awareness research, this small pause-and-question habit can help leaders transition from reactive to more thoughtful behavior.
Conclusion
For small and growing businesses, numbers do not have to be mysterious or intimidating. When leaders combine basic financial knowledge with honest self-awareness, they can use simple reports and a short list of KPIs to make more informed decisions and have more productive conversations with their finance partners. Small practices, such as a weekly numbers check-in, learning a new concept, and asking better questions, gradually increase confidence and capability. If you would like more information or a coaching call, reach out to moc.OFCWN@OFNI and we will be happy to match you with one of our financial coaches.