Financial reports are the story of the business, told in numbers. It’s as simple as that. They tell the story of your business’s health – and its trajectory. Do you and your leadership team receive and review financial reports regularly? More importantly, do you understand them?
When we keep our finger on the pulse of our financials, we empower ourselves and our teams to know how what we do every day impacts the bottom line.
Putting our business’s growth goals into numbers as part of a budget process helps us gain clarity on what our operational plans will mean for the bottom line. If we are aiming to grow revenue by 20% this year, we build that into our budget and do some solid thinking: how are we going to get there? How many more customers/contracts does that mean? Do we need to review pricing? Will we need to hire or outsource some support? Our budget is our best guess as to our business’s future financial performance. The best budgets reflect the input of every member of the team. Why?
Growth businesses know that every member of the organization plays a role in financial success. While not everyone needs to know where every penny goes, it is critical that each team member understands how their operational decisions impact the company’s bottom line. When employees see the connection between their work and the financial outcomes, they are more engaged, motivated, and accountable. From our experience, some of the best growth ideas come from the least-likely rungs on the org chart. Growth businesses wisely seek the input of their entire team as part of the budgeting and financial review process. And then, they keep the team engaged throughout the year. How?
One of the best ways is by identifying key performance indicators (KPIs) that are relevant to each person (or department) in the organization. For a service company, this might look like a simple hours-billed percentage. If the target is 55% billable hours, then employees receive their past week’s hours report so they can track where they stand versus the goal. For a product company, this might look like On Time Delivery rates. If the target is 98%, the team receives a report showing how the past week’s rates compared to the goal. These KPIs ultimately feed into our financial goals for the business, and gives the leadership team leading indicators on financial performance before the end of the month. And, from our experience, keeping the team engaged in this way is actually fun.
Financial clarity is more than just a best practice—it is a business necessity. When financial decisions are made with transparency and alignment, growth becomes not only possible but sustainable.
