Unconventional ideas can work in business.
It’s more than that, oftentimes it’s the unconventional ideas that have the biggest impact on your business. So let’s explore one. What if you were to open your financial results and play book to your entire team?
That's right, open your books!
There’s a strong argument in favor of this approach (and against) so let’s spend some time to see if it will be right for your business.
Why would you open your books?
A simple comparison shows how crazy that idea of hiding financials and the play book just might be.
Think about a professional sports team.
Imagine a top-level team where the only person in the club that knew the preferred tactics was the coach. The players don’t know what is meant to be happening and how they are meant to line up and play.
The great players will score goals, but the team won’t perform well. The team needs to be coordinated and aligned on the plan and tactics. The playbook needs to be open!
What are the benefits of open books?
Anecdotal evidence suggests that small business owners, operators and managers who have implemented Profit & Loss training for the employees and management can show profit improvements of up to 200%.
I would dearly love to find more data on this, and hear from your experience but this is the figure I’m currently operating on. And it makes sense when you think about it, let’s explore why.
The argument for open books
The traditional rationale to not open the books is something like:
"If they find out how much I am making, they will demand a raise!"
“They will never understand the numbers”
”They will rip me off!"
It appears that the opposite is true for companies confident enough to take the time to train their staff in this important area.
If you still need to be convinced, try this test: ask your staff what percentage of the typical dollar in revenue they think falls to bottom line profit.
My guess is that most answers will be between 25% and 50%.
This means that if you do not give them the facts, they think you are making up to 50 cents on the dollar. If you do not give them the facts, they cannot be of much help in improving profitability. If you do not give them the facts, you are standing in the way of their professional development and asking them to win the game without a play book.
Make sure that employees learn what it actually takes to run a successful business. By sharing information on costs and income, participants can see how the business works and what it takes to make a profit.
Sales typically increase because once people learn to read the numbers, they understand that cost-cutting is only half the battle. Hourly employees start coming up with brilliant, insightful ideas of how to build sales and reduce costs. They’ll even start implementing them independently and improving your business for you!
Knowledge is power. The more your staff knows what it takes to win the game, the more valuable they will be as players. They will be more engaged, and on your side.
Before you go...
We all know that small business is about doing the little things right.
The little optimisations, the high-impact tweaks and the 1% gains you can make to your business to make it a little better, a little more profitable and even a little bit more pleasant to run.
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