Most CEOs achieve success through vision, leadership, and strategy. However, many business leaders struggle with understanding financial statements, the deeper mechanics of their company’s finances, and, most importantly, the importance of financial knowledge. In the bestselling book Less Is More, Jason Jennings reveals a surprising truth — he even refers to it as a “dark little secret”: the majority of CEOs, managers, and business owners who were not trained in finance and accounting cannot read a financial statement.
What, then, does this imply for a CEO? Why is it critical for a CEO to upgrade their financial expertise? The reality is that, in today’s fast-paced business environment, CEOs cannot afford to be uninformed about the financial landscape of their company. It is imperative to have a clear understanding of where resources are allocated, how to manage cash flow effectively, and how to make strategic financial decisions. Without this knowledge, there is a significant risk of making choices that could jeopardize the long-term stability and growth of the business.
This guide is designed to equip CEOs with the knowledge and tools necessary to enhance their financial literacy and acumen, so they can lead confidently without getting lost in spreadsheets.
1. Read Financial Books, Case Studies, and Listen to Podcasts
Books, case studies, and podcasts are incredible ways to get high-level, verified information from trusted sources in condensed formats. Carve out some time from your busy schedule and kick back with a book for a few minutes. For those constantly on the go, podcasts or audiobooks can be a great alternative, with opportunities to listen while making breakfast, exercising, or driving to work.
CEOs looking to increase their financial knowledge should seek out books on finance and accounting software, such as QuickBooks, to increase their understanding of the technologies available. Dive into broader concepts, such as business investing, M&A strategy, or fundraising.
Here are some recommended books to help improve financial knowledge:
- Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean by Karen Berman and Joe Knight
- The Intelligent Investor by Benjamin Graham
- Principles for Navigating Big Debt Crises by Ray Dalio
- Financial Intelligence for Entrepreneurs by Karen Berman
- Accounting QuickStart Guide by Josh Bauerle
- HBR’s 10 Must Reads for CEOs
Beyond books, case studies provide invaluable lessons from Fortune 500 companies. Analyzing financial successes and failures through Harvard Business Review (HBR) and McKinsey & Company reports can help CEOs recognize patterns, anticipate risks, and apply proven strategies.
Commit to ongoing financial education with these practical habits:
- Spend 20-30 minutes each morning reading investor letters from Warren Buffett or Howard Marks.
- Subscribe to finance-focused newsletters such as The Wall Street Journal’s CFO Journal.
- Listen to leading financial podcasts, including:
- The Investor’s Podcast – In-depth investment strategies.
- Master’s in Business – Insightful interviews with top financial experts.
- The Journal by WSJ – Breaking down major financial news.
For more finance podcast recommendations, click here for a list of the top financial podcasts.
2. Track Personal Expenses
A CEO who effectively manages their personal finances is well-positioned to make informed financial decisions for their business. When a CEO is adept at budgeting, saving, and investing on a personal level, they naturally build the financial fluency needed to oversee a business’s finances.
Managing personal finances requires a CEO to ask themselves practical questions:
- How much am I earning, and how much am I saving or reinvesting?
What percentage of my income is being spent?
How can I tweak these habits to achieve major personal goals like saving for retirement or investing in property?
Using financial management tools such as Credit Karma or Refresh.me for personal expenses can provide the CEO with a clear view of their financial habits, which translates into a strong understanding of business finances. These tools automatically categorize spending, track income, and offer insights into financial trends. A CEO who can identify patterns in their personal spending, such as recurring costs that can be reduced, can apply this same mindset to business expenditures.
3. Learn How To Reinvest
Experts recommend that companies reinvest at least 30% of profits back in their businesses. To increase your financial knowledge as CEO, learn about the delicate balance of reinvesting vs. sustaining profitability.
To keep the business financially healthy, reinvestment plans should support overall company goals, helping the business grow and stay strong over time. A smart reinvestment strategy allows a company to expand steadily while avoiding the risks of overextension or underfunding.
Engaging a Fractional CFO—a financial professional available on an as-needed basis—can provide valuable insights into high-level investment decisions, helping business leaders determine where and how to allocate resources effectively. CEOs who actively analyze key financial metrics, such as Return on Investment (ROI), Return on Equity (ROE), and Return on Invested Capital (ROIC), gain deeper insight into whether their investments are truly driving value.
4. Take Advanced Courses and Mentorship from Finance Professionals
Great CEOs continuously expand their financial knowledge, just as top professionals in any field commit to lifelong learning. Executive finance programs from institutions like Harvard Business School, Wharton, and INSEAD provide non-financial leaders with essential skills in financial modeling, capital allocation, and valuation techniques. Online platforms such as Coursera, edX, and Harvard Business Online also offer flexible courses covering investment strategies, financial risk management, and mergers and acquisitions.
Beyond coursework, mentorship from experienced finance professionals can accelerate learning. A seasoned CFO, investment banker, or private equity executive can offer valuable insights into complex financial statements, business evaluations, and potential risks. If finding a mentor isn’t possible, hiring a Fractional CFO can be a great alternative, offering expertise while helping improve the company’s financial health.
5. Get Involved With CFO’s Decisions
CEOs often rely on financial professionals, but it’s important to stay involved and understand the reasoning behind financial decisions. Instead of just accepting recommendations, ask important questions like:
- Why is this the best choice?
- How will this affect cash flow and profits?
- What hard decisions must we make to achieve our desired growth?
These conversations help build financial knowledge and give a clearer picture of the company’s financial health.
This helps the CEO build a stronger understanding of the company’s finances and stay more aware of its overall health and future growth. By staying involved in financial decisions, leaders can make better choices, spot potential problems early, and keep the business on a steady path.
6. Look Deeper Into Financial Reports
Look through and analyze balance sheets, income statements, budgets, and cash flow reports to get a handle on the way money is moving into, through, and out of the company. Start with cash flow analysis—look beyond the statement to see if operating cash flow is consistently positive. If cash shortages persist despite growth, the company may have a working capital issue, spending money faster than it’s being received. Identifying this early helps prevent larger financial problems.
Next, analyze profit margins to ensure revenue growth translates into actual profits. A declining gross margin may indicate rising costs, requiring better supplier negotiations or price adjustments. A low operating margin suggests excessive expenses, signaling the need for cost-cutting.
Lastly, financial ratios like debt-to-equity, return on assets (ROA), and current ratio should be tracked. Reviewing these numbers monthly rather than as one-time snapshots helps CEOs spot trends, make informed decisions, and maintain financial stability.
7. Join High-Level CEO & Investor Groups
Even the most experienced CEOs can learn from others who have scaled businesses larger, executed complex deals, or mastered financial strategy. Joining exclusive CEO forums, investor roundtables, and finance-focused groups like YPO (Young Presidents’ Organization), Tiger 21, or Vistage provides direct access to top entrepreneurs, private equity investors, and financial experts. These groups go beyond basic networking—they offer strategic discussions on capital allocation, financial forecasting, and investment opportunities, helping CEOs spot financial risks before they escalate.
Beyond formal groups, building direct relationships with investors, venture capitalists, and CFOs can provide insider insights that books and courses can’t match. Hosting private dinners or quarterly roundtables focused on market trends, financial risks, and investment strategies allows CEOs to learn from real-world experiences. Instead of just listening, they should actively bring their biggest financial challenges to the table, gaining practical solutions from leaders who have successfully navigated similar situations.
Let The A Team Help You Strengthen Your Financial Expertise
Managing business finances while running a company can feel overwhelming, but improving financial knowledge does not have to be complicated. Start with a simple step — maybe reviewing your cash flow, joining a CEO group, or getting expert advice from a financial mentor. The key is to take one small step, see results, and build from there.
The A Team employs a dynamic team of fractional financial professionals, ranging from staff accountants to Controllers to CFOs. Let our team of professionals hired on an as-needed basis empower your decisions. We’ll help you improve your financial knowledge while steering your company toward longevity and success.
Schedule a FREE consultation with The A Team today to discuss your challenges and create a customized plan to strengthen your financial expertise as a CEO so that you can make better, more informed business decisions.