A new year is a great time to revamp strategies and set new goals. The finances of your business may be one of those areas that you want to review and determine what changes need to be made. As you work on budgets, taxes, etc., you may need to also think about who is currently involved in your business’ financials and who needs to be involved.
There are two schools of thought with regards to your business’ financials. The old school thought says that you should shut people out and keep things close to the vest. Don’t let the team know how much money you are making.
The new school of thought is one that values transparency, financials included. Today’s leader gets their team involved in all aspects of the business and has candid conversations about where their financial situation is currently at and where it’s going. I know of businesses that literally post their profit and loss in their break room. I am not suggesting that for you but it is helpful to see what’s possible.
If you are looking at whether or not to involve more people in the financial picture of the business, here are some people to consider getting involved. These are the people that will help you run your financials more efficiently and effectively this year.
I would hope that you have professionals running your books and doing your accounting. If you are doing the bookkeeping and accounting work yourself this may be the year that you should transition over to having a professional take over. You will free up time and possibly save money in taxes.
Anyone on your management team should have an intimate look at what the company is doing financially. I was the COO of a company that kept me in the dark about their financials. This was not a good situation. It made it hard for me to do my job effectively. Don’t shut your management team out of the financial picture. The more they know, the better your business will be at building an effective long term strategy.
Those responsible for a line item
What do I mean by this? If you have someone who is in charge of ordering supplies, they should know and understand the budget for this line item as well as where things are currently at. If you have an employee that is in charge of marketing, they should know what the marketing budget is and get feedback on how they are doing with their budget. Keep the people engaged in the financials if they have influence over these financials in some way.
The entire team
You don’t have to post your financials in your break room, but you should give your team as a whole a snapshot of how the company is performing. Things like revenue, net profit, margins, etc. They don’t need the nitty-gritty details. Just give them the high level information so that your team stays informed.
I see business owners get into a scarcity mindset about sharing their financial information. They wonder if their team will resent them because of how much money the company makes and if they will use this information to ask for a raise. My experience has shown that knowing the score allows the team to get excited about what’s happening. The more the team knows and is involved, the more they can, and are willing to support you as a business owner to reach your long term vision.