Figures That Tell a Story
February 8th, 2012I’ve become a relatively recent convert to the huge importance of financial literacy for business owners and managers. It’s staggering how many of us muddle along only half knowing the truth. Unbelievably, some managers don’t even know the difference between turnover and profit.
I learned the hard way that if you don’t keep a very close eye on the financial activity in your business, you can be tripped up. In my case that nearly destroyed the business I had spent years building. A former employee failed to collect a substantial number of fees. It didn’t help that she lied to me to conceal it. I discovered it eventually and rescuing us from the mess that you had brought us to started one of the most stressful periods of my working life, bar none. I have to accept that ultimately I was responsible and if I had been smarter financially I would probably have found out much earlier. I have learned from it and after a terrifying but highly valuable series of workshops at Cranfield I now know what measures and margins I’m aiming for. It’s no accident that I am a convert to the enormous value of a more financially literate management team.
Sales are important, but their only half the story. If your debtor days are far too high, or the margins on the sales is too low, you’re wasting money and could end up working for nothing.
Financial literacy means being able to understand finance so that you can make effective and informed decisions about the business. It means knowing about different forms of financial measurement and ratios and knowing how to interpret them.
Part of keeping costs under control is managing employees so that they work to their optimum. If you allow employees simply to do the minimum, these days you are leaking money. At a cost of salary +34% on average, employees are something of a gold-plated luxury. Make sure they give you gold-plated performance.
If you have a problem with under-performing employees get in touch. Russell HR Consulting provides expert knowledge in the practical application of employment law as well as providing employment law training and HR services. For more information, visit our website at www.russellhrconsulting.co.uk or call a member of the team on 0845 644 8955.
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Russell HR Consulting offers HR support services to businesses nationwide, including Buckinghamshire (covering Aylesbury, High Wycombe, Milton Keynes, Bedford, Banbury, Northampton, Towcester and surrounding areas), Nottinghamshire (covering Chesterfield, Mansfield, Nottingham, Sheffield, Worksop and surrounding areas) and Hampshire (covering Aldershot, Basingstoke, Reading, Farnborough, Fareham, Portsmouth, Southampton and surrounding areas).
