Do your employees understand how a company makes money?

As a business owner, this question seems overly simplistic. Do people know how a company makes money? Of course they do! Well, not quite. You have to remember, you and I know how a company makes money. We have been at it a long time. The fact is, most people DO NOT understand how a business makes money. They have no idea about the financials and the complexities of money in and money out.

For the most part, your employees will see the invoice for $10 000 and think, we are doing awesome! And they have no idea it costs you 5 000 or even up to 8 000 to make that. They purely think, well we just 10 grand in the bank. You know better, but your employees don’t.

I know this sounds simple. However, not one company I have worked with has a full team of employees that understands how the company makes money.

My suggestion to you is take the time to educate your employees how you make money.

Now you may be a little hesitant to open the books up like that for all employees. After all, growing up we were always discouraged from speaking about money. Asking someone how much money they make was rude. The balance sheet was some mythical thing the account knew about and you didn’t. In turn, today business owners hold their financial statements very close to the chest. And while I do not suggest opening the books up completely to your employees, let them in. Let your employees know and understand where all your profit margins are. Let them explore the overhead expenses. Let them know how much you make once all the costs have been accounted for.

In my experience, the more you do this as a business owner the more loyalty and the more ideas you get from your employees. Would you agree, two heads are better than one? If so, let the employees have a look at overhead. Now you have more minds thinking about the issue. Maybe they have an idea or two of how to reduce overhead. If your employees are involved in making decisions on that level, you have an employee for life.

The more you open up the true state of the company, for better or worse, the more your employees will be engaged. The harder they will work to continue to bring in new profits.

Adam DufresneAdam Dufresne
Rhapsody Strategies
Professional Business Coach
adufresne@rhapsodystrategies.com
613.709.4299

 

unstuck

I suggest reading Jon Denney’s book Unstuck. Jon is the owner of the PBCA (The alliance that certifies me as a coach) My writing, teaching, and learning is largely influenced by this man and this b

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