Why should I be considering finance training and how can I make it engaging?

In the modern business world, it’s common to encounter pressure to perform better year-on-year and improve financial results. Even if you’re doing well already, the pressure is probably there.

In your personal life, if your target was running a six minute mile last year and you pulled it off, it’s unlikely you’d give up there. This year you’d want to run a sub 6 minute mile. Whether you set these goals yourself or not, there’s pressure there to reach them and achieve targets and arguably, this pressure is felt more by SMEs.

One way of alleviating that pressure could be through increasing financial awareness among your staff through finance training. Everyone can benefit from an understanding of the basic principles of finance, in terms of management and in terms of growth – an understanding of how employee’s actions or processes have an impact on the bigger picture can be second-to-none to ensuring success – perhaps motivating them too.

Finance training

It isn’t a secret that there are a number of intelligent and experienced employees who may not necessarily have a particularly developed understanding about business finance, about how profits may be generated or how to improve them. There may be a lack of understanding surrounding cash flow management or the importance of working with a low stock level.

Finance can be dry, there’s no denying it. Not only can it be dry, it can be really difficult to get your head around. Managers sometimes aren’t keen to attend finance training; they merely attend just because they’ve been instructed to do so. They engage at the time and listen but down the line, the training escapes their mind as they have so many other things to focus on; things they may deem to be more important and therefore, there is no change in behaviour. There was no impact.

The truth of the matter is, learning by teaching isn’t always the best way to learn, in fact, it often is not. Sitting there at school in a maths class (unless you enjoyed maths) was never particularly stimulating for a number of us. You could sit there all day being spoken at by the teacher, eventually when it came to doing the activities you probably generated enough of an understanding of algebra to successfully complete an exam but did you remember it months or even years later? Probably not.

Now I want you to think back to a time when you taught yourself something. You probably considered it something either important or of interest. Do you still remember it to this day? You may have been guided by someone else but you picked up the bulk of it yourself and owned that learning process. You really engaged your memory and you were pragmatic about it. Can you see how taking a more active approach may be beneficial?

The point here is, whilst certain things may be mandatory; they don’t have to be boring. The world is transforming at an alarming rate. Arguably, people and their perceptions may need to keep up with the times. As technology develops, an ever-increasing number of people have free and open access to a staggering amount of information, more often than not in the palm of their hands. Technology can lift the tethers off, people can learn as and when they wish and they can make it interesting too, they know where to go to find information and in the majority people have a keen desire to find out new things.

Knowing this, you can be sure that trying to teach your employees in the way they don’t actively learn anymore isn’t the best approach. Why not make things a bit more enjoyable?

The answer to successfully raising financial awareness may rest somewhere between a game and a simulation. A game in itself may not be sufficient to offer the learning experience, however, when you introduce simulation elements, it’ll be much more likely to show clear engagement from participants.

Here are some pointers on making sure that your finance training simulation is effective:

  • It must feel “real” – keep it as close to reality as possible and it needs to relate to the real life business IE. If it’s a burger bar, make it about a burger bar
  • All the theory must be developed but not overcomplicated, concise but not half-baked and just overall credible so that it is believable, so it needs to be a well thought out idea that people can relate to. Prior preparation is key
  • There must be elements of teamwork to reflect the true business environment
  • It needs to include the impact of competition and the outside world

Now, here are some suggestions on areas you need to cover within your finance training simulation and the stages of learning for the participants:

  • There needs to be a physical simulation of trading. With participants having visibility of business transactions, a basic understanding can be formed
  • Accounts need to be manually prepared. With a link between profit and loss accounts and balance sheets being made with relation to the physical transactions, participants will start to understand the source of the numbers
  • There needs to be an element where people decide on a strategy. With limited assets, decisions need to be made on expenditure, including elements such as product development and capacity improvement
  • The strategy needs to be implemented with a known competitive position

So, you have improved the financial awareness of your employees. You’ve made finance training something more interesting and something that has impact; it’ll stay with your employees and hopefully, be at the forefront of their minds. What does this mean for your business? How can you see if the increase in financial awareness is impacting the profile of your business? You could potentially wait until the end of the year and see what the accounts are like, alternatively; why not take a more proactive approach yourself? My Business Profile lets you monitor your business’s profile over a period of time and see how the decisions you make are impacting the credit rating of your business. If, for example, you’ve educated your staff in the importance of working with a low stock level to increase your cash flow and they are now ordering products just-in-time as opposed to heavily building stocks months in advance, you can see the impact that this positive action is having on your business’s profile.

Source: Alan Cowey