3 Ways to Improve Financial Literacy Throughout Your Firm

Let’s talk about money.

Regardless of your Core Purpose, Mission, or societal aspirations, business is about money. It’s the fuel that (hopefully) enables the achievement of those things and more. It’s also the return for entrepreneurs and others who accept risk as they contribute to an organization’s success.

If only it was that simple!

Now imagine an entrepreneur / CEO transported back to her childhood dinner table at age ten. “Daddy,” she says, “At school, my friend David said his house is a million dollars. How much is our house?” Daddy looks across the table at Mommy, smiles awkwardly, rakes a fork through his mashed potatoes, and says with the best possible intentions of raising a polite and respectful child: “Dear, we don’t talk about that.”

This type of scenario has played out at dinner tables across the globe for centuries, which makes it easier to understand how children often grow into adults who are unable to comfortably talk about and engage with money. There’s no point during our schooling or early adulthood when we’re reconditioned to be okay with money. And yet, as business leaders, it’s literally our job to not just talk about money, but to use it as a tool facilitate growth!

“A child’s financial lessons aren’t taught. They are experienced through the actions of the parents.” –Linsey Mills

The values with which we were raised and our socioeconomic status shape individual mental models around money. For example, if someone considers spending $2,000 on a high-tech large-screen television for their living room as a massively significant expense what happens when he or she takes on a leadership role managing a $5 million line of business? Just think about the perspective—if $2,000 is massively significant, what must $5 million feel like?

Our emotions around this topic run deep.

I’ve had clients—some highly accomplished entrepreneurs and leaders—admit embarrassment and shame that they aren’t comfortable and fully literate with their own financials. I’m certain the few who were willing to admit it are just the tip of the iceberg relative to the reality of how many others share their feelings.

Now let’s broaden our perspective and consider all the managers, supervisors, and employees out there trying to do their best every day. They grew up the same way the rest of us did: probably not completely comfortable talking about and/or engaging with money. Yet these are the same people making day-to-day decisions, including many financial decisions, within your firm.

The bad news: There’s a steep cost associated with avoiding financial conversations, misunderstanding how money flows through the business, and operating with skewed perceptions of large versus small amounts of money. The good news: There are three straightforward solutions for those who see the value of a financially literate team.

Provide Basic Business Financial Education for All Employees

Several years ago, while onsite with a client team, I overheard some employees speaking about the firm’s push to grow revenue. One of them said: “Why should we work so hard for more revenue when all that does is help [CEO’s Name] buy more vacation homes?” In reality, revenue growth for this particular firm created more opportunities for employees to advance in their careers, more employment for their community, and more income for all via the firm’s profit share plan! The leadership team was incredulous when I told them what I overheard, then immediately wondered how many more of their staff misunderstood the basics of how money flowed through the business–and what that was costing them in terms of poor decision-making, productivity, and morale.

I’ve found mistaken beliefs about revenue to be quite common among employees, along with broad misunderstandings about the risks and costs associated with operating a business. In other words, business financial illiteracy.

For these reasons and more, it’s critically important for leaders to provide basic financial education to their staff.

Although I have numerous coaching clients who share their financials transparently with employees, transparency isn’t a requirement to provide basic financial education for staff. An education program can be general in nature or specific to your firm’s financials–either will work to improve the financial literacy of your team.

It’s critically important for leaders to provide basic financial education to their staff.

The best way to connect with staff on this topic is to begin by helping them understand that they personally have a Profit & Loss Statement (P&L) and a Balance Sheet for their own financial affairs. Show them a representative personal P&L for someone who works at your firm, including income (salary), less fixed expenses, less variable expenses, yielding a “net” that is hopefully positive and can be saved or invested–which is the link to their personal balance sheet. This can be an extremely engaging conversation for people who were never formally or properly financially educated!

The next step in this process is to introduce the P&L for the business, whether general or specific as I mentioned earlier. You can use the personal P&L example for reference as you help your team understand the flow from revenue to gross profit (operating income) to net income, and, of course, the ties to the firm’s balance sheet. Additional conversations about fixed versus variable expenses and the total costs of employment (which employees never understand unless taught!) help as well.

Although you can use an outside expert like a CPA to provide this training, I recommend, if possible, you utilize an internal resource. I’ve seen these programs executed successfully as a series of “lunch and learn” sessions and as more formal classroom education, with periodic refreshers over time. You might also consider including financial education in your new employee onboarding program, which ensures everyone shares the same basic financial knowledge and sends a “this is important” message to your new staff.

As I’ve written before, your people will behave in accordance with your expectations of them. Teaching basic business financial literacy to your employees establishes the foundation upon which your expectations of them can increase over time. How they make day-to-day decisions is the next step up from there.

Align Employees with Their Financial Domains

Whether you or they realize it, every one of your employees directly affects one or more lines in your P&L and on your Balance Sheet every day. Their daily influence on your financials should represent the “return” on your investment of salaries and benefits.

For example, a salesperson typically influences revenue, gross margin (operating profit), and travel, meals, and entertainment expenses. They probably also influence the receivables line on your Balance Sheet and potentially more, depending on your industry. And that’s just a single salesperson!

Now think about your entire team. Are they each individually aware of their day-to-day financial domains–that is, how their decisions and actions support specific line items in your P&L and on your Balance Sheet?

And are you getting a fair return on your investment in your staff?

This topic builds upon the basic business financial foundation I’ve recommended above. It’s best delivered by department or team and has the potential to dramatically change the kinds of things your people think about–and ask about–as they work. It’s also likely to improve the return on your employee investment!

As your team tunes into the financial levers they push and pull every day, you’ll need to consider providing them with additional data, as a guide. For example:

  • Do your relationship managers and/or salespeople see accounts receivable reports?
  • Does your shipping team see data daily to help them minimize costs?
  • Do your customer service representatives see renewal and/or add-on revenue reports?

Think through every team and role in your firm to determine what data, at which frequency, would support their efforts to positively influence your financials. In addition, you and your managers should reinforce financial connections, thinking, and behaviors in weekly team meetings and 1-on-1 coaching sessions. Before long, your team will begin bringing ideas to you that directly drive improved financial results!

As with the financial literacy training, you can be fully transparent or somewhat general with this, depending on how comfortable you are sharing the data. For the record, I am a proponent of full financial transparency, which goes hand in hand with the expectations of financial literacy.

Ensure Leadership Can Read and Interpret Financial Statements

You and your leadership team aren’t exempt from upping your financial game alongside the rest of your team. I’ve found that plenty of seasoned leaders and managers benefit from the basic financial elements we’ve already covered–so don’t take that for granted or allow anyone on your leadership team to skip the basic education process. It’s always time to lead by example!

Once you and your team have mastered the basics, this element provides your advanced financial education. Include your leadership team and potentially others whose careers would benefit from more advanced financial education. I’ve seen clients attend university classes (both in person and virtual) or engage an outside expert to dive more deeply into the nuances and ratios found in financial statements that tell the story of the business behind them.

Part of this process typically includes case studies. For example, using available financial data (if possible), assess one of your top competitors versus your firm as an intellectual exercise and/or evaluate another firm as a mock acquisition target.

It’s always time to lead by example.

As you and your leadership team become increasingly comfortable with financial data, reporting, and ratios, you’ll naturally begin to question your own financial reporting more deeply:

  • Are we getting what we need monthly and quarterly to make informed decisions?
  • Do we receive financial data rapidly after each period’s closing?
  • What additional analysis / reporting is required to support our strategy and plan?

Through this, you may also realize that you need to upgrade the financial leader within your firm. I’ve watched businesses take quantum leaps forward when they hired their first, highly qualified CFO!


“Money is the wise man’s religion.”


In business, money is both the fuel to create success and the reward that comes with it. Sadly, societal stigmas, norms, and well-intentioned childhood conditioning render many unable to be truly comfortable talking about, cultivating, and understanding the essential financial underpinnings of healthy organizations.

Although there’s a steep cost associated with this, the solution is straightforward, cost effective, and fast acting:

  • Teach your employees basic business (and personal) financial literacy.
  • Connect every team member’s day-to-day work to specific line items on your P&L and/or Balance Sheet.
  • Ensure senior leaders learn more advanced financial statement analysis.

Finally, and perhaps most importantly, talk to your children about money! It’s a fabulous investment in our collective future.


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