The Secret To Making People Care About Money

This is the Unbreakable Business newsletter - created just for COOs and Operations Teams who want to build a company that won’t fall apart.

In this issue, I’ll run through a set of principles that you can use to ensure each member of your leadership team not only understands the finances of the business, but actually knows how to use that information to make real decisions.

Today, we’ll cover:

• ✏️ Why you should never stop training your leaders

• 📊 How to review metrics so other people can understand them

• 🙋 How to get your team to see the relationship between their actions and the numbers

Enjoy!!

🤝 News Flash: You REALLY Need To Do This Well

One of my 2023 goals as the COO of SaaS Academy was to improve financial literacy and awareness amongst our leadership team.

A key element of this was running a world-class financial review meeting.

I know, I know: “Matt…you think we don’t review financials?”

In our company, we had tried many iterations of “financial review meetings” before, and they always fell flat - it felt like just reading numbers out loud…not actually influencing decisions.

Ring a bell? Good.

So when I decided to rebuild this cadence in 2023, I wrote down a list of “what would need to be true” in order to turn it into a world-class meeting.

Spoiler alert: we made it happen. In this issue, I’m going to share with you exactly what we did and how we got there.

🎓 Education > Information

This is the first assumption we all make: if someone is in a position of leadership, they’ve gotta know how the numbers work, right?

❌ WRONG ❌

Your leadership team doesn’t have as much financial aptitude as you think they do.

That’s not to say they aren’t qualified for the seat they’re in. Oftentimes they’re just used to glazing over the numbers without truly understanding what they actually mean.

You don’t know what you don’t know. ⬅️ and neither does your team.

So, what’s the fix?

The first step that I took was to create a training session for my leadership team. I didn’t take this lightly - it took a lot of prep work. Slides, curriculum, goals, Q&A, etc.

That session taught them:

• What our major financial KPIs were and what “healthy” looks like

• How we’ve been performing over the past two years to help them build context

• Examples of key decisions that we made and how they impacted the numbers

• Exercises on how to “extract the context” out of the spreadsheets

And we did a pretty healthy Q&A afterwards to make sure that all of their questions were answered.

This was a critical first step in my opinion - information without education is just noise - so you’ve gotta take the time to ensure that everyone has the knowledge they need and that you’re all “speaking the same language”.

🤯 Teach Them How to Feel

Alright, cool - so now your team is trained up on the basics. But how do you make sure that they ALWAYS know where the business stands - without you having to tell them?

It starts with nailing the time horizon. Ya gotta remember, people tend to over-index on the importance of a single month. You’ve probably done this too (I know I have). You have an awesome sales month, and it’s party time. You have a bad churn month and you’re pissed off for weeks.

My mantra: A month is a blip, three months is a trend, twelve months is the status quo.

This has really helped instill a sense of stability in the business - and has also helped to curtail the “slingshot” effect of good month / bad month, over and over again.

The team knows that I’m not gonna be handing out fist-bumps 👊 until we see positive change three months in a row - it’s just the way we operate.

And the same thing is true for a bad month. I’m certainly not going to ignore it - you NEED to know the root cause of a performance decrease - but nobody’s heads are gonna roll if we have one bad month as long, as we understand why and correct it.

This organizational switch in mindset will not only change how your team makes decisions, but how they analyze the results of those decisions.

📊 Build Real Context

So far, we’ve talked a lot about “good months” and “bad months”.

But even just focusing on “months” doesn’t really give you enough context.

By comparing one month to the prior one, it’s still just a snapshot - but for some reason, that’s the only thing that most businesses do.

We’re gonna do it a little better.

I deployed two different “context-building” data strategies into our reporting to help get a better view of the trends and historical performance ⬇️

1. Use rolling data - Pulling up the monthly metrics is cool, but in addition to those, I surface all critical metrics as Rolling 3 (R3) and Rolling 12 (R12) month metrics.
   

   Example: If we have a great month, but the R3 is still declining…we don’t have a trend yet. Gotta keep working.
   

2. Perform prior period comparisons - not just month over month, but quarter over quarter and year over year.
   

   Example: If we are growing for three months in a row, that’s cool - but if we’re climbing out of a hole after a big nosedive last year, that’s not as impressive as hitting unprecedented high water marks. Two different situations, and we should be able to decipher one from the other.

🔎 Zoom in on the Month

You probably feel like I just wrote a thousand words on why monthly reporting sucks 😂 

I don’t dislike it, to be clear - it’s the baseline expectation - it’s just not the FULL picture.

With that said, I do create a detailed monthly performance report - because it’s what people are most comfortable with. Plus, it helps them correlate monthly results with the actions that they’ve recently taken.

Every change in a metric can be traced back to an action that was taken in the business.

A great monthly performance report combines financial data, non-financial KPIs, and commentary / root-cause analysis - all in ONE PLACE.

Take the time to prepare the data - when you crack open the numbers like this, you’d be amazed what kind of ‘aha’ moments it unlocks for your team. 🔑

⬆️ The sum of those three parts (financial data, non-financial KPIs, and root cause analysis) will drive a well-rounded report that shows everyone what happened and (most importantly) why it happened in the first place 🤯 

📊 Preload The Reporting

I give myself a 3 working-day deadline to circulate the reporting package prior to our review meeting.

➡️ That’s the expectation I need to meet for my team.

This gives them enough lead time to pre-read the reports and get familiar with the data prior to our review meeting.

➡️ That’s the expectation my team needs to meet.

Hitting my deadline is incredibly important - I’ve missed it a few times and only given people 12 hours of notice on the reporting…which is an epic fail You always want to set your team up for success - and 12 hours of lead time ain’t it. (and it’s my fault when that happens, not theirs).

Without proper preparation for leaders to digest the data, the meetings will be a watered-down waste of time.

💬 Leaders Drive The Dialogue

First and foremost: I’m not just going to sit there and read the reports at the team 🤮 

When everyone actively participates in the conversation, that’s when you are actually reviewing the numbers with the team.

I know…easier said than done. Here’s how I crack it:

➡️ Every participant in the review meeting must bring at least one insight and one question to the call - and THAT’S what we review during the meeting.

➡️ Insight: Something that they learned about the business by reading the data

➡️ Question: Something they didn’t understand or want to double-click on

They know better than anyone what the story is behind each number in their department - so we’re well-served to let them drive the dialogue.

Of course, as the “owner of the numbers”, I’ll add important topics to the list if I think they’re missing - but whether or not your team is picking out the important points on their own is the feedback loop that you’re actually looking for as a leader.

📽️ Go To The Movies

Wanna jam on this in a video format? Check out my latest YouTube video where I run through this framework in under four minutes 😮‍💨 

Also, make sure you subscribe to my channel so you don’t miss awesome videos like this one.

🎯 Default To Action

Here are the key action steps you can take TODAY to put things in motion:

1️⃣ Train Your Team

Have you taught your leadership team how you evaluate financials for the business? Are you assuming that they know things they might not know? 

Assuming makes an ass of u and me…you get the point 😂 

Education is the first step to being informed. If you own the numbers, it’s your job to teach people how to understand them.

If you think there’s a need for this…even a slight one…you’re right. TRUST YOUR GUT. There is a need, and you should set up a quick training session for your team ASAP.

✅ Set your team up for success. You own this outcome- make sure they have the tools to understand the numbers.

2️⃣ Add The Context-Builders

Evaluate your current monthly reporting package - are you surfacing those R3 / R12 numbers as well as pointing back to YoY trends?

If not, you’re likely letting recency impact your perception of how the business is performing - which can be pretty dangerous.

Pick at least 3 critical metrics (revenue, profit, gross margin, etc) and surface them using R3, R12, and YoY data - and make sure to show your team what it means and how it should be interpreted.

✅ Don’t let the trends get buried in the noise of the current month - use this data approach to measure the actual trajectory of the business.

3️⃣ Let Them Drive

Deploy the “one insight and one question” approach for your meeting - and watch everything change.

This type of participation is invaluable- it will spark conversations across the team. No more speaking at a sea of eyes looking straight through you.

Once they’re driving the talk tracks and asking the questions, their focus will increase 10x - and so will the quality of what you deliver.

✅ You won’t get anywhere without insights from your leadership team. Hit the gas and let them take the wheel.

With that, my friends, I hope you’re pumped up to take these steps and really bring those numbers to the next level with an inspired team in tow.

Next week, we’ll be taking you through one of the most uncomfortable but EXTREMELY important parts of being a leader - Coaching Poor Performance.

Contrary to popular belief, this doesn’t have to be a crappy experience for either of you. 🤜🤛

Always in your corner,

MV

📣 Overheard On The Interwebs

Financial Management in 280 Characters

This one’s from literally my favorite newsletter on the internet - CFO Secrets (you should sign up).

In a single tweet, it’s the entire framework for financial management - from five year plans down to weekly reports.