Church announcements are symptomatic of a common business problem. Leaders intend to communicate useful information but fail to make it understandable to all of the audience.

For example, this is the announcement made from the pulpit of my church yesterday: “If you are a first-time visitor, please tell us more about yourself by filling out the bottom of The First Cup and either put it in a giving box or visit Starting Point.”

• Visitors don’t know First Cup is the name of the piece of paper they may or may not have been handed entering church;
• Visitors don’t know what’s a “giving box” or where they’re located; and,
• Visitors don’t know what’s Starting Point and where is it located.

Here is a clear test to make sure you aren’t speaking in code: Could a first-time guest understand exactly what you are saying if they knew nothing about your church?

Speaking in Financial Code

Well-intentioned business leaders make the same error as church leaders. They inadvertently assume everyone in the audience shares a common level of knowledge.

For example, with the intent of communicating clear goals for the coming year, a CEO says: “Our top three financial objectives for 2017 are to increase margins by 5%, improve cash flow and add at least 5% to our ROCE.”

Most employees have never had an accounting or finance course.

• Employees don’t know much, if anything, how to calculate Gross Margin (also known as Gross Profit) much less how they can help improve it;
• Employees may have heard about Balance Sheets and P&Ls but few have seen a Cash Flow report. In fact, over 50% of business owners don’t know how to read, interpret or use a Cash Flow report; and,
• Employees may have heard the acronym ROI (return on investment) used but few have heard about ROCE (return on capital employed) or how to improve it.

The Jack Howe Question

My dearly departed friend and mentor Jack Howe taught me a lot about business. When someone asked me a question I don’t understand, Jack taught me to reply “What do you mean by that?“ One of two things happens: (1) The questioner explains the question using simple language you now understand and can clearly answer; or, (2) They drop the question because they don’t understand what they’re asking.

Finance for Non-financial Employees

If your employees say “What do you mean by that?” when they’re given financial goals for 2017, give me a call. I’ll teach them how to read, interpret and use a Balance Sheet, Income Statement and Cash Flow report during a 1/2-day onsite workshop.

To request a free workshop agenda email TomPryor@icms.net .