Opening the Books
Saturday, August 28, 2010 • 8:52am
Sharing the company's finances with your organization might seem like a bad idea at first, but the benefits to your organization can be significant. Accounting transparency breeds trust among your staff and can offer concrete benefits. Aside from simply fostering a greater sense of solidarity among your team, sharing your finances can help you set revenue goals with your staff and provide them with a deeper understanding of what drives profitability and operating margins so that the firm can be more successful.
Here are a couple of things you might want to consider when sharing the company's finances:
1. Use simple charts and numbers so that everyone can understand your presentation.
2. Let your sales team understand how each customer is driving profitability and revenue for the company.
3. Invite your sales organization into the forecasting process. They will feel a greater sense of ownership and responsibility if they are part of the process.
4. Help the entire team prioritize their efforts. Let them see what activities are the most profitable. This should also reduce waste and efforts that have minimal impact to the business.
5. Tie compensation and bonus dollars to specific company and sales targets. This will be much easier if your team has been educated on the company's finances and how success is measured.
6. Make sure that every person with whom you share the books has a signed non-disclosure or confidentiality agreement. This can prevent leaks to a competitor or other third party.
7. Schedule periodic reviews with the team so that they can see how the business is trending for the fiscal year.
8. Use a CFO, accountant or bookkeeper to prepare the figures so that an unbiased source is preparing the information. This will improve credibility with the team and provide a more professional perspective.
Experience has shown that the majority of companies with transparent accounting policies have outperformed those companies that guard their finances as a great secret. Many small businesses are often afraid to open their books for fear their competitors could use it against them or their customers may not like what they hear. However, having an informed team allows them to maximize their contribution to the company and fosters a greater sense of teamwork and shared accountability. This ultimately leads to greater success for all.
Thanks to Alex Cook, Consultants 2 Go's intern who helped with research for this column.
Peggy is the co-founder of Consultants 2 Go® (C2G), a consulting firm that provides marketing solutions to Fortune 500 companies in the Financial Services, Telecom, Life Sciences and other industries. Consultants 2 Go was just named to the Inc. 500/5000 List as one of the fastest growing companies in the United States. Prior to starting C2G, Peggy was a Vice President at American Express. She holds an MBA from St. John’s University and a BA from the College of Mount Saint Vincent. She recently served as a member of the Advisory Board for The Academy of Our Lady of Peace, New Providence, NJ.
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