As business people, we place a huge emphasis on making money and turning a profit. However, we rarely teach anyone in our company how to read a set of financial statements – the very documents that tell us if we’ve turned a profit or not.
We invest time and money to train our people on a variety of business functions, such as sales techniques, customer service and proper safety procedures, but we seldom invest in financial literacy training to learn the language of money.
We all learn to read, but few of us learn to read a set of financial statements.
The financial statements are the score board for your company – they tell you whether you won or lost, whether you hit your profit goal or if you fell short. They tell you whether you’re ahead or behind, and how hard you’ll have to work to make up the difference. In short, they tell you whether you’re winning the game.
However, we don’t teach our employees how to read the score of our game, and we rarely even give them a peek at the scoreboard.
They might hear about a ‘good year’ or a ‘bad year’, but it’s vague and the information is revealed only after the game is finished, after the year is over.
We run sales goals all the time. Good sales goals have specific, measurable and have a time deadline. For example, sell 1000 cases of X in the month of July. They are told what score they need to ‘win’, they know how long they have to achieve it (July) and they get regular updates to see where the stand in relation to the sales goal.
So why don’t we do this with our profit goal? Without profit and a positive cash flow, we’re out of business. It won’t matter whether we hit the case distribution goal or succeeded in a display drive, if the cash flow runs out, it’s game over.
Imagine that everyone on your management team was financially literate. Now, imagine everyone in your entire company was financially literate. How powerful would this be? How profitable would your company be? It would be like a financial nirvana. Drivers would optimize their routes based on efficient mileage and fuel savings. No longer would the truck run idling in the parking lot for 20 minutes just so the cab heater will warm up. Merchandisers would efficiently stock shelves instead of reading Maxim in the magazine aisle. Office workers would cheerfully answer the phone on the first ring instead of mindlessly checking their Facebook account.
Here’s the thing: financially literate employees are superstar employees. Why? Because they understand the language of money, and they understand how they make a difference in the organization.
So, why haven’t you trained your people to understand the financials? Perhaps you don’t know where to start. Here’s an easy way to do begin – subscribe to the Beer Business Finance newsletter – the weekly email with financial lessons geared towards beer industry employees. This isn’t just for the top brass, this information will benefit your drivers, merchandisers and even Ruth in the office who’s been with you for 35 years.
Teaching our employees financial skills, financial literacy, is good for them and good for the business. Once we learn the language of money, and teach it to our people, they will help drive the performance and value of the company. Knowledge is power. Teach, train, and unleash the power of the finances.