4 Golden Rules: Teach Financial Literacy To Unlock More Profit

Who creates the financials in your company? 

Odds are if you asked employees this question most of them would say, "The accounting department." 

You understand the accounting department creates the company financial statements.

Employees create the numbers on the financial statements through the collective decisions they make and actions they take.

But do your employees understand this?

This is where financial literacy training enters the picture: to help your employees understand their part in creating the numbers and how their actions wind up affecting the numbers.

Following are four key points to help your employees understand and get more involved with impacting "the numbers" and financial success of the company! 

1. Teach the numbers.

Focus on financial or operational numbers that matter most to your company.

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At the top of this list are numbers that drive profits, and measure the efficiency and productivity of operations, labor, and assets to generate sales, profits, and cash flow.

Employees need not understand debits, credits, or adjusting entries. 

But they need to understand how their day-to-day decisions and actions affect the income statement, balance sheet, and overall business success. 

When business owners share business results employees may not understand what the numbers mean or how their individual or team actions impact the numbers and profit. 

Financial literacy training enables everyone to speak a common language of business. It also helps your employees:

  • understand the numbers that measure performance
  • form better ideas about how to make improvements
  • make better decisions

It’s critical to the success of financial literacy training to connect what employees do every day with the financial outcomes of the business.

2. Share "why."

Financial literacy training helps to get employees more involved in growing a successful business. Help them understand at a deeper level that if the business succeeds they will, too. Without the context of "why" they have little reason to care about the numbers.

3. Reinforce learning through frequent meetings.

Make learning events casual, interactive, impactful, and fun. Reinforce financial and business literacy lessons in weekly huddles, meetings, and discussions. Talk about the numbers. Take time in your weekly "huddles" to teach concepts.

4. Make financial literacy part of everyday culture.

Make scorecards and other signage of numbers so employees see, talk about, and work to improve them. Over time, they will develop a deeper understanding and higher proficiency to impact the numbers, profit, and financial success of the company! 

Does having your employees more involved to help you improve profits interest you? We’ve been practicing Open Book Management (OBM) since 1991. Please visit us at Profit-Strategies.com and let us know how we can help. 


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