- Monday 15 January 2024
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As our clients progress through their career, a point comes where they find themselves working in some form of management capacity, either leading teams or departments, or taking the decision to start their own company. In the last newsletter we looked at ‘imposter syndrome’ and the impact it can have on confidence and leadership. In this article we’ll look to one of the key areas that individuals, in particular those with an engineering background, may find challenging; Financial Literacy.
Before looking at how you upskill in this area, it’s worth reflecting on the benefits that an understanding of finance can offer:
- Informed Decision-Making: Leaders continually face crucial decisions that impact a team/department/company trajectory. Financial literacy enables you to analyse data, interpret financial statements, and grasp the implications of your decisions.
- Strategic Planning and Goal Setting: Financial literacy equips you with the ability to craft comprehensive strategies and set achievable goals. Understanding financial principles allows you to create realistic budgets, forecast cash flows, and allocate resources effectively, thereby steering your team, department or company towards sustainable growth.
- Risk Management: Every business encounters risks, and leaders must adeptly navigate uncertainties. A solid grasp of financial concepts can help you assess risks, identify potential financial pitfalls, and implement strategies to mitigate them, thereby safeguarding the company’s financial stability.
- Effective Communication and Collaboration: Business leaders must be able to communicate effectively with stakeholders, investors, and other departments within the organisation. When you can articulate financial data clearly and understandably, it fosters better collaboration and alignment towards common objectives.
- Monitoring Performance and Accountability: If you understand financial metrics, you can effectively monitor performance and hold individuals accountable for their contributions. Being able to establish key performance indicators (KPIs) that measure success and drive continuous improvement is really important.
- Fostering Innovation and Growth: Can you identify opportunities for innovation and investment that drive business growth? You should have the capability to assess the feasibility of new projects, evaluate potential returns, and make strategic decisions to capitalise on emerging trends and technologies.
There are several ways for you to improve your financial literacy, even of you don’t have a finance background. While an MBA is generally considered the ‘go-to’ for ambitious executives, the time and cost pressure (especially if not covered by your employer) can be off-putting. Nonetheless, engaging in professional development courses or seminars focused on financial management and accounting basics can be immensely helpful. Many companies offer in-house development courses, while the IMI is a good resource for those who wish to avail of it. We have directed a number of clients to Skillnet and have received excellent feedback.
Finally, seeking mentorship from financial experts within or outside the organization, or just regularly reviewing and analysing financial reports (even with the help of Chat GPT) can significantly contribute to enhancing financial acumen.
Let us know if you’re thinking about expanding your business knowledge into the financial world and we’ll happily guide you through some options.