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Dig deep and find gold

Many owners are reticent about sharing their financials with employees for several reasons:

  1. They don’t want employees to know the amount of money the business is making.
  2. They are concerned that the numbers may leak to competitors
  3. Financial statements are private, it’s an owner thing and has nothing to do with anyone else.
  4. It’s a waste of time because nobody understands them
  5. The numbers come out too late to really allow meaningful discussion
  6. The numbers are incorrect, incomplete, or even cause for embarrassment.

Our view, at Flooring by the Numbers is the benefits of sharing outweigh the above concerns.

Consider great companies who go head-to-head like Walmart v Target, Apple v Samsung and Milliken v Mannington.  They have to publish all their numbers with detailed strategic commentary, and it does not compromise their competitive edge.

The secret sauce is how they internally execute.

There is a great book on how one private company used their open book numbers to motivate employees to greater success.  Read: The Great Game of Business by Jack Stack

Your financial statements are like a treasure map.

When you dig deep, you find gold

They can identify where hidden profit and cash exist.  A good understanding of your numbers can help your employees focus more effectively and be part of the organization’s success.

For example, many of your employees are quite comfortable with understanding gross profit margin.  A good amount may be familiar with the income statement and operating profit.

We have found very few are conversant with balance sheet metrics, particularly working capital.  A better understanding of receivables days, underbilling’s and retainage can make a massive difference to company cashflow.

Our signature phrase is relevant here: Revenue is Vanity, Profit is Sanity & Cash is King

Exposing people to these numbers can dramatically change behaviors for the better. We have found the more regularly you review your financials the more meaningful the discussion becomes. This is the result of both better understanding and witnessing what is working and what is not.

 

Not quite convinced?  Watch this 15-minute video that to see how treasure can be mined using your numbers.  It also shares our findings on how Covid affected flooring revenues and profitability:

Mining Your Numbers