In my 25 years of working with CEOs and leadership teams, I have always been a bit surprised by their overall lack of financial management knowledge. It’s often not that people are disinterested or lazy; rather, they prioritize other things. Finance is seen as an area that is best left to the experts. There is a general feeling that the learning curve is too steep and the knowledge too specialized for them to attain.
This overall lack of financial literacy among the “non-experts” in the company can become an issue as the business grows and requires more thoughtful and timely decision-making. It also means there may not be sufficient expertise to evaluate the advice and actions of the perceived experts.
I regularly tell my clients that business success largely comes down to people and math decisions. While the former will be a topic of another document, this primer has been written to introduce most of the financial management (math) issues a business will deal with, starting with understanding what the numbers mean. It has not been written for experts, but for everyone else in the business, so that they can get a rudimentary understanding of what’s important. I hope that you find it useful.