There is no shortage of leadership books or programs for success. As a company leader or business owner, your inbox is probably inundated with conference invitations and seminars. While many experts and renowned leaders make strong points about what constitutes leadership, many leave out financial transparency. Why is financial transparency vital to your organization? Edgewater CPA Group explains more in this article.
What Is Financial Transparency?
To be clear, financial transparency doesn’t mean you have to pop the hood to let everyone see every detail underneath. Some numbers are private, and perhaps others discrete. Instead, financial transparency means you communicate your financial goals and actual performance. If you run a $10 million company and want to get to $20 million, share that as well as actual performance metrics each month and quarter.
Additionally, good leaders communicate how businesses operate in revenue, expenses, and value. Owners sometimes assume that employees understand how companies make a profit, or they think the topic is irrelevant to the role. However, employees who understand financial goals and how their job impacts the bottom line are more likely to produce better outcomes. Who doesn’t want to know precisely how and why their job relates to sustaining or growing the business? Moreover, employees can’t achieve a goal when they don’t see the financial plan.
Why Is Financial Transparency Important?
Left without explanations, people tend to come to their own conclusions. Often the conclusions they arrive at are way off-base. Especially when employers compete for good talent, it’s essential to have honest conversations about pay, expenses, and non-financial business perks. When you communicate financial performance and educate employees on why it matters, you develop better, more well-rounded employees who have a vested interest in its success. The approach also tamps down gossip, focuses on facts, and gives staff a sense of ownership, engagement, and buy-in.
What about the Exit Strategy?
Wise business owners have an exit strategy, whether to eventually sell the business, go public with an IPO, or transition leadership through succession planning. Interestingly, leaders and business owners often seem hesitant to communicate this strategy. Now, you shouldn’t share things that put the organization at risk. Done well, communicating a compelling vision, including any exit strategy, equips employees to buy into the strategy and work together toward a common goal, especially if the end result benefits everyone.
Edgewater Can Help with Financials and Strategic Planning
Edgewater CPA Group provides financial services for businesses all over Carmel, Fishers, and Hamilton County. We help companies plan strategically for the future, maintain bookkeeping and accounting accuracy along the way, and fulfill tax filing requirements. We want all of our clients to achieve their financial goals through growth, acquisition, or whatever that looks like for them. After all, we win when you win. Call (888) 317-4835 to schedule a consultation.