We’re getting close to the end of the financial year and the burning question is “How did you go?”
Is your business making the money you expected? Did you meet your targets? If not, why? What could you have done better to make the difference and meet your financial objectives?
Now is the perfect time to set some new and realistic goals for the next financial year. Every business wants to increase their profit, but this can only be done with the help of an enthusiastic team working with you.
So how can you motivate your team to help you attain your profit goals? Or are you even sharing these details to them? Do they know what your goals are?
In my experience employees often find it difficult to grasp the concept of profit. They are usually too far removed from it and often see increased revenue equating to more profit for the owner, but they think it does not help the workers. As we all know this is so far removed from the truth!
So I pose this challenge: How will you communicate your team’s role in your profit goals? Should you share financials with your people? How comfortable are you sharing this information with key members of your team? And as far as financials are concerned, how much detail should you share?
Understandably, small business owners may have qualms about sharing information about how their business is performing as this could create staff dissatisfaction, unwanted financial leaks and other potential risks. Can you trust your people with this information? What if they share your figures with your competitors? What if they use it against you and perhaps demand a salary increase?
A few weeks back, one practice owner shared the same dilemma, to which a business colleague, Shane Barker responded, “You can’t hide the profits forever and if at some point you would like to make revenue growth a target or KPI, then you would need to share the performance with your team.”
I fully agree with Shane. Once you make the decision to disclose your financials to your team, then you will be able to work out the best way to share the information. I believe this is an educational opportunity to help teach your team about the importance of making a profit, in order to have money available to reinvest into the business. This can be in the form of better equipment, services, employee benefits, improved working environment and more. We can’t expect our team to help us fully meet our profit goals if they don’t fully understand what they are. Your key staff should also be privy not only to the revenue, but also to the profit targets so that they understand where the business is going and are motivated to work towards a common goal. Their role should be communicated accordingly so that they feel that their daily efforts contribute to the company’s objectives. This could be a good opportunity to achieve greater productivity and profit in your business.
By all means seek a qualified opinion from an advisor or accountant regarding communicating this information to your key staff and take into consideration both the risks and the benefits. Weigh up your options and carefully plan so you can minimise the risk involved and reap the rewards you deserve.