A Language We All Understand
The language of numbers is (or can be) one that is universal in nature - something that communicates effectively to all concerned parties. I’ll borrow a line from Stevie Wonder: “Music is a world within itself; it’s a language we all understand”. The same is true of numbers, if we are diligent about asking the proper questions from our accounting methods.
I chose this topic for today, because I realize fully that most small business owners do not view their accounting procedures as a communication tool. Most will view the “bottom line” as secret place where only the Owner (and partners) will venture; and all others are expected to keep doing what they do, in an effort to enhance the bottom line. Can you see the fallacy, even in the words of the above sentence? If I am on your team, and I don’t really understand what we are trying to accomplish; much less how we are progressing at the task, do you suppose that I will be motivated toward that end?
Do you believe that your margins might increase, if your employees took personal responsibility for their actions, as related to the profitability of the company? Well, I can tell you that it is true; whether you believe it or not. Given that this is a fact; would it not seem prudent to employ a method of effectively communicating your goals to the team, while simultaneously implementing a method of accountability for all players? You bet your life it is prudent, and that accountability is critical!
This is what budgeting is all about. You are communicating, as an Owner, to all of your team regarding your expectations. Once in place, it’s rather like having your “words” etched in stone as a measuring tool for the next 12 months. It is the criteria via which awards are validated, or heads roll - literally. Now beware, that the budget applies to ALL the team members; even the Owner, General Manager, or other higher ups. But no tool is more effective for communicating teamwork.
We recently did a week series on building a budget, and provided some good template tools and instructions for how to go about establishing the basic criteria and structure. There are downloads available, which you can easily tweak to your needs. You can find the series (steps 1 to 5) by searching for “step” in the search box above.
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