I spend a lot of time talking about owners and how owners should interact with their numbers.

Today we're going to take a little different look: why employees should understand the numbers.

This is important for the employee, but also the owner. A team full of bought in and "read up" employees are invaluable to a business.

But first, our (self-serving) sponsor.​

 

A message from ​SMB Financial Fundamentals Cohort​ 

Enrollment Open Today!

 

Hey, Kurtis here.

Today, I am opening enrollment for Cohort 2 of SMB Financial Fundamentals.

Our goal is to help you learn how to use your numbers to make better business decisions.

In March we did Cohort 1 and I appreciate that crew for letting me test things on them.

We’ve taken what we learned and are implementing it into Cohort 2:

1. Longer live sessions
2. More pre-recorded material (and space to digest it)
3. Assignments to help with application

In a combo of pre-recorded and live sessions, we’ll help you:

• Learn how to decode your financial statements
• Identify key results drivers for your situation
• Select, track, and act on your key metrics
• Use your numbers to make better decisions and tell your story

We won’t just stick to theory… we’re going to dig into YOUR numbers.

I do calls with each student and get into their exact situation.

Because of this, I can only accept 25 students.

PS. Because you read so far down, use EMAILCREW to get $100 off.

Want to advertise to 40,000 small business owners and leaders? ​Go here​.

 

5 reasons employees should understand financials

Before going to college, I had two career paths in mind: engineering or accounting.

The reasons for these paths were simple:

1. I was good with numbers
2. I had exposure to each path through family (mom was a CPA; grandpa an engineer)

In school, I was a horrible student. I didn’t study. I wasn’t motivated… until I got to Accounting. My grades were dismal but I got straight As in all the accounting and business courses.

So, you’d think, this man loves accounting. Wrong.

I didn’t love accounting… I loved what accounting did for businesses.

That’s why, when it came time to make decisions about my future career, I wasn’t thrilled with the idea of getting my CPA and going to work for a firm.

I didn’t like the idea of doing something I wouldn’t like for the next 5 or so years with the hope of getting a job because of that “credential.”

So I decided to take a slightly different path.

I took a job that had a software element, which I thought would help me learn coding and add this to my unique skill set. The job wasn’t what I expected, so I quickly made the move to a bigger company where I was a part of a small team.

I enjoyed that job but knew that this still wasn’t my ultimate goal. I was still spending too much time in the debts and credits and always looking for ways to get more involved in the business.

So, I started passively looking for jobs. I found that job rather quickly, working for a small business that was growing quickly.

This new role was a dream. It allowed me to do a bit more than just accounting and get my hands in other parts of the business.

This role also gave me to exposure to normal people, who had no interest in the numbers.

It exposed me to how many smart people there were out there that had no formal education in understanding their financials and felt lost.

It also reinforced my opinion that everyone needs to understand the numbers.

I vividly remember one time where we knew we needed some new IT infrastructure and asked the IT Manager to put together a proposal. He brought an elaborate solution that cost 10x more than we were expecting.

When asked why we needed these things, he didn’t have an answer outside of “it’s the best.”

The solution wasn’t rooted in reality and highlighted his lack of understanding in the business. He lost a lot of credibility that day, which made it hard for him to get traction on any other proposal he brought.

For owners, it’s obvious you need to understand the numbers.

But for everyone else, it’s not so obvious.

So today, this issue for those who aren’t the owner. This is a plea for why you need to understand your numbers.

To understand how your decisions affect your company

Too often in business, people don’t look outside their bubble. They get why they want what they want, but they don’t understand how it impacts the larger picture.

The perfect example is the IT leader mentioned above. There are a lot of solutions for the problem we were facing. Those solutions could be solved with $50,000 or $250,000. Coming with a $250,000 solution is saying “my problem is more important than all others in this business.”

Sometimes that is the case, but most of the time it’s not.

What if you could frame your arguments to highlight the impact of the decision for the business?

If you can clearly articulate this, you’ll have a better chance of getting your ideas adopted and noticed by leadership.

This is not only good for you, the employee, but it’s good for the business owner too. It helps translate a potential “foreign language” to a language they understand.

By bringing the $250,000 in a foreign language, it guaranteed nothing got adopted.

Delineate the why behind your raise or promotion

No one likes talking about money. This is made even more difficult through your lack of understanding of the economics of the decision.

Think in terms of the following:

1. What dollar value benefit have you brought to business?
2. How much your raise/promotion is in relation to that benefit.
3. How that raise/promotion will help you bring more value in the future.

If you’re in marketing, you can help them understand that retaining you should be a top priority because your marketing campaign will generate ___% returns.

If you’re in Accounting, you can help them understand how your skill at tax strategy can save them $__ per year, easily covering your increase.

If you’re in production, you can help them understand how your efficiency is resulting in higher profitability by $__ per project, meaning you’re only asking for ___% of the increased profit.

You have to know the audience you’re speaking to and what will resonate with them, but when you learn this, these conversations become a lot easier.

Create partners within the finance department

Finance departments often get a bad name. We’re known for our “nos.” I’ll admit that’s often the case.

Sometimes they’re good reasons, but other times its personal dynamics. By building allies you accomplish a few things:

• You make it easier for people to approve your expenses
• You learn what’s important to the organization and adopt it in your approach
• You build more company connections, which can lead to future raises and promotions

I’m big on building allies across a business, as you never know when those relationships will help you be more understood.

When you step out of your box and the regular role of the job title, you help others see you as a person.

Gain trust from your bosses and leadership

Leadership wants to know that they can trust you. If you show:

1. an understanding of things above your level
2. a care for the business outside your area of expertise

you show you’re not just out for yourself.

This also shows you have a wider range of knowledge than your expertise.

The ability to connect things inside your expertise to outside it gives you the unique ability to translate things into a more common language.

As your communication improves, you get the opportunity to become the go-to person for breaking down problems inside and outside your area.

You get in rooms you never would have been invited to before.

You have conversations above your level.

You are given the opportunity to offer your opinion in more situations.

This makes you indispensable, which ultimately gives you leverage and opportunities.

Communicate the big picture

By understanding the big picture, your ability to communicate clearly with each level of the organization becomes a huge asset.

If you’re supervising people, you can help them understand how they fit.

If you’re being supervised, you can speak the language of those in upper management and show a good grasp of the business as a whole.

There are stereotypes about marketing, sales, operations, accounting, etc. because the stereotypes are most often true.

When you break out of the stereotypes, you not only help the business, you help yourself.

The big picture helps you understand the why behind your work, which then makes it easier to communicate that to others.

—

I’ve got mixed feelings on giving employees an inside look at your company financials.

What I tell people is that with the proper education I think employees should have access… BUT most don’t do the proper education.

But, if you’re one of those employees who will learn on your own, go for it. You don’t need direct access to get a good feel for a business.

It’s because of my desire for people to better understand financials that I’ve launched my cohort.

Today I spoke to employees, but the owners understanding financials is even more important.

If you wish you had a better understanding of:

1. your cash flow
2. how much cash reserves you need
3. how to setup a financial operating system for your business

This cohort is for you.

Owners and employees alike will learn how to:

• Decode your financial statements
• Identify key results drivers specific to you
• Select, track, and act on your key metrics
• Use your numbers to make better decisions and tell your story

If you this interesting to you, I encourage you to ​check out the cohort​.

If you have any questions, don’t hesitate to reach out and ask.