Knowledge is Power

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There is a lot of drama and myths around finances, and this is largely because people do not understand the meaning of the numbers.

On this episode of The AV Profession, Tim Albright and Brad Malone discuss how financial metrics can give your integration business the power of knowledge.

What if we simplify it and give people five to six basic metrics to follow?

“I find that a lot of AV companies are immature, sometimes in the executive suite, but definitely as you move through the ranks, there is less understanding of what the numbers mean,” says Malone.

There needs to be a Financial Metrics 101 course in every organization that says, “These are the driving metrics for our integration business from a financial perspective.”

Often, revenue is viewed as king. Revenue is important, but it is not what drives the company’s ability to survive – that’s net profit. But rarely do we talk about net profit. We talk about gross profit, but what is gross profit and what makes it up? And then, did we actually achieve it?

Sometimes, organizations don’t share this level of financial information with employees because it’s like, “Well, I’m opening my kimono too much and then people will know.”

You don’t need to share their salaries, but everyone should know the health of the company. And then each person needs to know how they can impact the health of the company.

It is inherent in a mature company, to train their people on the simplest financial metrics, so that they understand:

They are part of the business,
How their actions can impact the health of the business, and
There is a financial health to a business.

If we don’t go to a doctor or we never take measurements of our health, someday we go, “Oops, we’re not healthy.” The same applies to your integration business.

What are some ways to share financial information with your employees so they can help contribute to a healthier, more profitable, company?

Dashboards are one of the best ways to measure of the health of your business.

When you display your financial metrics and make them visual, you create a scoreboard. Now everyone can play the game. Dashboards give your employees the power of knowledge.

When employees start to see how their actions reduce costs, and any time they reduce cost, it is a direct increase in profit – this is something that we want to start measuring. And you can show everyone the results in their dashboard, so there is complete visibility.