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How to Implement your Financial Strategy

In my previous article, I discussed 3 ways you can increase your profits. So once you have decided on yourfinancial strategy (whether for your company, business unit, department or organisation), the next step is to implement it.

What are the chances that it will be implemented? Whilst you can ensure your strategies positively impact profitability, growth and cash flow (and KPI’s) - it’s not all up to you. Strategies are after all, realised by people – so they need to understand them.

Imagine if everyone in your team understood:
  • The key financial drivers for the business
  • How the business is really doing
  • What key ratios the business measures and why
  • How they as individuals, can positively influence the financial situation of the organisation
Of course, there are lots of factors which are out of your (and their) control, but it is possible you are not addressing some of the basics. Here are three key steps which are often overlooked when implementing your financial strategy:

1. Communicate financial information in a simple way

Spreadsheets. With endless rows and columns, financial jargon and terminology that no one has ever explained. Does this sound familiar? Many managers wrestle with the confusion of traditional financial reports. Let’s face it – is the below document user friendly?

financial report

So why don’t we do something about this communication barrier? Like communicating finance and business using shapes and colours:

Communicating with shapes and colours

I’ve been using these colourful graphics for years. And the reaction is always the same – it’s fantastic! Whilst we happily spend thousands of dollars on marketing, we often neglect our own internal communication channels. Most managers are visual and by showing them shapes and colours you will find they’ll learn faster and retain knowledge. You rarely see an advertisement without graphics. So let’s start being smarter about the way we communicate finance.  Graphics can be created using inexpensive software and offer a great return on investment!

2. Do not assume that senior managers are financially literate already.

In the 90’s, I was a tutor at a management development centre in the United Kingdom. (It was a glorious place to work – in a stately home, surrounded by a golf course). One day I was asked to run a half-day session on our Senior Program – Strategic Finance. When my colleague briefed me, his instructions were – cover the basics. The basics being to explain the Balance Sheet, Profit and Loss and Cash Flow Statements. At first I thought he was joking, but it became clear he wasn’t.
So I followed his brief. And when I’d finished the class, a senior executive exclaimed to me “Do you know that is the first time I have ever understood that stuff?” I was blown away. Prior to this, I had been a partner in a firm of chartered accountants. I’d always dealt with senior executives in the finance area. It never occurred to me just how many people reach senior positions in companies without any formal finance training. These days, I never assume!

3. Make financial training enjoyable

Boring...If you were booked to attend a 2 day finance training session, how would you feel? You’d leap out of bed with excitement early in the morning. Not. Traditional finance training usually generates this image (on the right).

Okay, a little young you may say, but you get the point!
But at Birch Consulting Group, we make financial training fun and enjoyable – guaranteed!

When we conduct finance training, we start right at the basics. We cover personal finance (which everyone can relate to) and business finance – where we demystify all that horrible financial jargon.
We even play group games – with a counter and dice. We work in teams so no one need ever feel embarrassed by their lack of financial knowledge. One of Birch Consulting Group’s most important rules are – there is no such thing as a stupid question. And after all, in the words of Ned Hermann we are all smart and dumb in different ways”.

Remember, you can contact Birch Consulting Group for all your financial training needs.
And on that note, I wish you all a successful and profitable 2009!

 
© Birch Consulting Group