Debbie’s Financial Workshop Insights

Financial management? Scary stuff. 

But understanding the intricacies of financial management is a necessity. So that’s why we invited the amazing finance powerhouse Debbie Corrie to host one of our FIM Workshops.

Debbie has guided businesses through smooth and rough waters over her career, (including the pandemic) and she’s dedicated to providing fiscal education to as many as will hear her message. Her published work, “Loving Failure: Getting Control of Your Business Health,” shows her dedication to offering practical finance management tactics.

The workshop Debbie gave called “Owning Your P&L” delivered a comprehensive look at many topics, but the most noteworthy are:

  • Managing your Profit and Loss (P&L) statements
  • COGS, Pricing, and Profitability
  • Healthy Teams, Healthy Books

So let’s jump in!

Financial Navigation and Growth Strategies

Navigating your company’s finances is crucial for steering your company towards profitability and growth. 

“A Profit and Loss (P&L) statement is more than a financial summary—it’s the story of your business’s fiscal path.” 

This brief but powerful document should play a pivotal role in decision-making as it highlights income, costs, and earnings.  Careful examination of a P&L statement should enable leadership teams to identify inefficiencies, monitor economic health, and develop strategies that will ensure success.

One of Debbie’s more interesting concepts is to look at your P&L and embrace a ‘preparation for sale’ mentality. Basically, running your company like you’re planning on selling it, even if you’re not. 

This approach focuses on the critical factors that define what a successful business really is. Factors like profitability, optimized operations, and peak performance in every department. 

Because when you’re “preparing” to present your company for sale, you’ll be more careful to cross all the T’s and dot all the I’s and that alone will contribute to what’s really important. 

Cost Management and Price Selection

Accurate Calculation of Production Expenditures

Key to any company’s financial success is a clear understanding of production costs. Typically called the cost of goods sold (COGS), these are the direct expenses involved in creating your products that are offered to your consumers. 

It’s pivotal for businesses to accurately compute these costs to assess their gross margin accurately. An inaccurate calculation of your COGS will quickly send your business down a very undesirable path. 

The more detailed you are in your COGS breakdown, the easier it is to pinpoint any areas of excess spending and operational inefficiencies.

Any basic COGS breakdown should include details about your:

  • Materials: The raw elements utilized in product creation.
  • Labor: The man-hours dedicated to goods production.
  • Overheads: Indirect costs such as utilities and rent.

Meticulously evaluate these details. It can be tedious but do it anyway. The progress and longevity of your company depend on it. 

Establishing Effective Pricing Mechanisms

Understanding your COGS paves the path for establishing effective pricing strategies which directly influences your company’s profitability and market positioning. 

Dynamic pricing practices must reflect various factors, including market dynamics, consumer demands, and competitive actions. The focus should always be on offering value to your customers rather than competing solely on cost. The race to the bottom is not pretty. 

  • Value-Based Pricing: Setting prices that customers perceive as reflecting the value of the product or service.
  • Market-Responsive Pricing: Flexible pricing that adapts to external economic conditions.

Do your research and select the option that works best in your company. If done correctly, this approach to pricing enables you to build a solid brand and retain substantial profit margins.

Upholding Profitable Margins

The ultimate goal of mastering cost and pricing structures is to ensure you have favorable profit margins. All the indicators we’ve discussed so far will reflect the company’s economic well-being and operational effectiveness, but keep this in mind: markets change and life continues moving so it’s important to reassess pricing policies to ensure your COGS remain in line with fluctuations in the market and customer trends.

Increasing Your Financial Health by Working With Your Team 

Debbie concluded the workshop by discussing perhaps the most important factor of all: financial success through successful teams. Fostering strong teams and strong values throughout the company will significantly impact your financial performance.

The Significance of a Committed Team

It’s important to recognize that a committed team extends far beyond just being happy doing their basic job. Employees who are fully committed not only display a vested interest in their roles but also generate added value for the company. 

Commitment like this is a strong catalyst for increased productivity, superior quality, and improved service levels. Exceptional employees often lead to higher customer satisfaction and loyalty. And we all know that happy customers are return customers. 

Additionally, teams with high levels of engagement typically generate new ideas and approaches that can build and strengthen your business. When they are comfortable in their working environment, they will be able to create and grow under your leadership.

Aligning Individual Goals with Company Goals

Individual goals mean nothing if they don’t point toward larger company goals. And company goals go nowhere if there isn’t a team working toward them. 

To bring the two in sync, Debbie suggests using the following few practices: 

  • Open Dialogue: Keep your employees informed about the company’s goals, challenges, and achievements. They will feel a greater sense of belonging and accountability when they know what’s going on.
  • Participation in Decision Making: Ask for input from ALL team members. There’s no greater way to empower your teams when they know they’re involved.
  • Appreciation and Incentives: This can be a slippery slope if done incorrectly but acknowledging and rewarding efforts can significantly motivate everyone. Be sure to do a lot of research before implementing a program.

Consistent Support: Provide continuous performance feedback, as opposed to yearly evaluations. This helps keep everyone aligned with their goals and promptly addresses any issues that may come up.

Sum it Up

Debbie is a true master of finances but the most noteworthy part of the workshop she gave is that she truly understands and teaches what’s most important.

Profitability and efficiency is a numbers game, no doubt about it. But more importantly, it’s a people game. No matter what your P&L looks like, no matter how detailed and amazing your finances may be, the critical key to the entire equation is your people.

In your constant drive for profit, make sure to keep an eye on your P&L, manage your costs and pricing, and remember that you work with real people. Treat them well and you’ll see profits.