Why you need to understand Financial Statements

When I graduated college, I thought I loved accounting. In reality, I loved the operations of business.

As I’ve gotten further in my career, I’ve found myself caring less about the numbers and more about the strategy behind the numbers.

In the roles I’ve played, I’ve come to realize how few people actually understand financials. A lot think they do, but few actually do.

There is also a wide range of people that need to understand them, but have never been taught. Financials are seen as something that business owners and accountants look over and prepare for taxes, but in reality they’re a living, breathing organism that anyone can look at to learn about a business.

If you’re an executive, leader, or ever want to be one of those people, you need to know your numbers.

I know I won’t convince you by just saying it, so let me tell you why.

So you understand how your decisions affect your company

Too often in business, people look out for themselves.

What if you started framing your arguments to highlight the affect to the business?

If you can clearly articulate this, you’ll have a better chance of getting your ideas adopted and noticed by leadership.

To be able to delineate the why behind your raise or promotion

Discussions about money are hard.

By understanding your salary range and the benefit you bring to the company (in dollars), you can show how your raise or promotion helps the bottom line.

If you’re in marketing, you can help them understand that retaining you should be a top priority because your marketing campaign will generate ___% returns.

If you’re in Accounting, you can help them understand how your skill at tax strategy can save them $____ per year, easily covering your increase.

To create partners within the finance department

It’s rare that people like the finance department. We’re known for our “nos.” I’ll admit that’s often the case.

Sometimes they’re good reasons, but other times its personal dynamics. By building allies you accomplish a few things:

  • You make it easier for people to approve your expenses
  • You can seek to understand so you know how to approach it better
  • You build more company connections, which can lead to future raises and promotions

To gain trust from your bosses and leadership

Leadership wants to know that they can trust you. If you show an understanding of things above your level, and possibly things they don’t understand, you’ll become a trusted resource.

When you become the go-to person, you become indispensable.

Being indispensable opens up your options.

To focus on and communicate the big picture

Today it seems more and more people want to do their own thing. While working as an employee, understanding the big picture will help you prepare for your next steps.

Even if that’s not a goal, understanding the big picture helps you with the why behind your work.

When you understand your why, it helps you communicate that to others.

I dive into these reasons a bit more on my latest podcast, which you can listen to here.

If you want to better understand financial statements, here are 3 ways I can help:

  1. Purchase the Financial Statements Decoded eBook.
  2. Join the Financial Statements Decoded cohort waitlist (next one in January).
  3. Get one-on-one consulting on your financials and make more money (Booked through December 2022).

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