Why managers must learn finance skills

Regardless of business, every manager must be versatile and diverse in their skillset. Being able to bring out the best in individuals and get them to deliver promptly and on time is important to any company. Managing people is not one category because people do not exist in one area. And one particular set of skills managers must develop early on, for the sake of the staff and the business is finance skills.

Why finance skills matter

Businesses can only exist if finances are in order. The main point of a business, for many academics, is survival not profit. Being able to continue operating in current and turbulent financial climate is itself hard work. Obtaining success is now measured in how long we can keep going, not how much we can get out at the end.

Writing in the Independent, William Kay noted, in terms of personal finance:

“Survival will become more important than profit, protecting money more important than maximising it. Anyone inclined to put money into the stock market may… wince and think again. Multiplied several million times over, that adds up to a huge drag on asset values.”

To be able to get the most out of finances, we need to be skilled in understanding how to manage it. Managers, being central to any business, must care about having such knowledge since it cannot be left up to only a few at the top to make sure a business survives. These days, anything can end a business so we must all do what we can to keep it moving.

What kind skills matter

Managers should encouraged to take a finance course, to get them up to scratch on some key concepts. For example, are we aware of cash versus accrual accounting? The main difference is the timing and recording of transactions. Cash is used by small businesses and often personal finance. Accounting only happens when money is received or paid out. Accrual isn’t dependent on the cash’s existence: accounting happens as soon as transactions happen or are incurred. We don’t wait for the money to appear or disappear, we record it immediately. Most businesses use this latter method.

Managers, even non financial managers, should learn about basic financial statements. The main aspect here is learning what information is being noted and why.

Similarly, managers should definitely learn about how to create a budget for their department. This not only helps provide a strong argument in favour of particular projects, but helps prevent any mistakes or miscommunication involving finances (armed with knowledge about finance statements, managers can be powerhouses in their company).

There are all sorts of other finance skills managers should consider, if they want to do the best they can for their business and help their departments remain important.

(Image credit: Steve Wilson / Flickr)

Tips to stay ahead in today’s world

Businesses must be faster and yet more accurate than ever before. With rolling news that never stops, constant sources of information and a wealth of knowledge at our fingertips, all businesses should be rethinking how they operate. There’s no point in business people ignoring progress, even if it has resulted in them feeling overwhelmed. If we don’t keep up, we’ll either be left behind or swept aside by those able to ride the currents.

We should therefore consider the various ways we can use tech to help us stay ahead.

Use Social Media

One often overlooked area businesses must consider is social media. Though each platform is different, each caters to particular needs and audiences. For example, Twitter is ideal for short, instant messages that many will read quickly. Tweets are easily shareable and, recently, can contain various forms of media: videos, static and moving images.

Facebook allows for longer posts and tends to mean a more engaged experience, as clients write directly on our pages and accounts. With other tools, like Facebook Live, we can also create relevant, longer content.

Aside from marketing, social media can act as a source of business, industry and market news. Considering how quickly information is distributed, this can help us stay on top of what’s happening in our field and those related to us.

Be ready to upgrade

All sorts of equipment can quickly become outdated. For example, computers stop receiving software support. This means they can no longer run the latest versions of important software clients might use. We must be willing to upgrade where necessary, meaning we should have money put aside specifically to upgrade the tools we use everyday.

Upskill staff

Be sure to carve out time for staff to improve themselves. This keeps them abreast of information and where the market is going. They improve their own skills, meaning they become more valuable in general and specifically for us. We’re therefore investing. In this way, we have staff who are constantly keeping their heads above the water.

(Picture credit: unsplash / Pexels)

Why communication is essential for business today

We all know that communication is key to all interactions. But it’s one thing to understand this and another to actually implement it in a meaningful way. To that end, we should consider precisely what communication means – especially for modern business in a world that appears to be in constant communication.

What is communication in business?

Communication is simply the passing of messages or information between groups. Yet, this becomes more complicated in a world where we can communicate in a range of sophisticated ways, instantly. Whether it’s Skype calls or social media sharing, media and information is able to be packaged and sent anywhere and everywhere.

There are two targets of communication for business: customers and its staff. And even within these are different categories. For example, with customers we can either communicate our ideas with them or open up discussion. This is known as one-way communication (from us to them) and two-way communication (from us to them, from them to us).

With customers our goal is to sell, while with staff we’re trying to complete tasks that we eventually can sell. This makes communication with staff as essential as communication with customers. After all, with customers, this is often the very basis of continuing to exist as a business. As Small Business Chronicle notes:

“When communication lines are open between a business and its customers, it can directly affect the sales of the business. When a business effectively communicates to prospects and customers how its products and services can benefit them, it converts prospects into customers. Good communication ultimately boosts the bottom line of a business.”

Good communication

Bad marketing is, basically, bad communication. We fail to properly convey our intention, which is to effectively convince people to deal with our business and use our services or products. When we see social media blunders which results in people being fired, we should recognise this alongside any kind of major miscommunication.

No business wants to be associated with individuals who are bad at communicating. This doesn’t mean not working with those who have bad People Skills – after all, even when we drive a company car or wear a company uniform, we are communicating to the outside world the values of our business.

As we noted, communication is what turns prospects into paying customers. This doesn’t just happen once, but every time. After all, every customer was once a prospect, but not every prospect is a customer. Furthermore, customers can become loud critics if we fail to communicate properly. This means communication must be done correctly, all the time. To that end, we should consider communication courses, for ourselves and staff, constantly – the lessons learned could be the reasons our business succeeds or fails.

What gets people to buy expensive things?

Most people are not rich, yet most of us still want a home and cars. The question is what motivates people to acquire items, usually beyond their means? Expensive doesn’t necessarily mean luxurious: After all, cars are necessary for travel and homes are needed if we want somewhere to live. Indeed, for most of us, we’re not talking about Ferraris or big mansions. Yet, even the least expensive will set us back somewhat.

What then drives us to get them?

Necessity and indulgence

Too often when discussing issues of why people buy expensive items, we assume that the items are not important. But as we noted, homes and cars are often necessities. This doesn’t negate that cars and homes can be luxuries, as any unbelievably large mansion or someone’s third or fourth car demonstrates. No one needs houses so large they take up nearly a whole field. And we can’t drive more than one car at a time.

Yet, rich people will and do indulge in such excess because they can. And, unfortunately, wealth is often tied to a sense of fulfillment according to researchers. This is so potent it leads even those who can’t afford luxury items to acquire them through credit. Writing in the Journal of Consumer Research, Marsha L. Richins concluded:

“Materialists are more likely to overspend and have credit problems, possibly because they believe that acquisitions will increase their happiness and change their lives in meaningful ways.”

This mindset doesn’t come from nowhere. Other researchers have shown the mere desire for items can be sufficient fulfilment. But again, this only shows us luxury goods not necessary ones.

What is necessary?

How then do we judge necessity when there is a heavy price tag? A good way is to consider a common, but fairly expensive item: cars. According to recent data, used BMW 1 Series from 2012 was the fastest selling car in the UK, in August. The car has proved reliable, safe and fairly recent. However, it’s not so recent that it’s priced at an exorbitant amount but not so old the technology is out of date.

Consumers are not looking for cars with parts that are difficult to acquire. Considering how quickly car technology advances, people also want safety as priority and fewer cars are safer than BMWs. The point is, cars are a necessity and consumers can make smart decisions to acquire the best one – without it being seen as an indulgence. Indeed, though it is a BMW, no one’s first thought when hearing about a used 2012 car is that it is a luxury vehicle.

The contrast here is that we are putting necessity above material desire, but still able to compromise for both. This is possible on all manner of purchasing choices. Everyone – whether seller or buyer – must keep this in mind as we enter an increasingly difficult financial future.  

Money management tips for students

Students are usually young people suddenly thrust into financial responsibility. Before, they might have found themselves under the care of their parents. Now, they’re thrust into the deep end, where have to balance their studies alongside merely surviving. Anyone would struggle but the chances are students haven’t had as much experience – let alone savings – to make it on their own all of a sudden. Here’s what they should be considering.

Managing loans

Many students deal with student loans, since education costs are enormous. This means they can consult financial aid officers at the university they’re studying at. Alternatively, some countries, like South Africa, offer a National Financial Aid. As South Africa Info highlights:

“Much of an National Student Financial Aid Scheme loan can be converted into a bursary, which does not then need to be repaid, depending on one’s academic progress. A 100% pass rate would result in a 40% bursary rebate on an NSFAS loan.”

Of course, this is dependent on countries. It’s important students understand what is required for their loans. This means, going in, they can begin budgeting properly and knowing what they can do to reduce the total repayment – for example, achieving a 100% pass rate.

Saving properly

As we noted, a lot of responses to managing a loan has to do with saving properly.

The only way to put saving structures in place is to have proper budgeting. Students must calculate what they need and how much they will have, then prioritise. Presumably studying means students won’t be indulging in too many luxuries, instead focusing their energies on those areas to get higher grades (as we noted, this can also mean reducing financial burdens on loans and, indeed, increase chances of obtaining bursaries).

Investing

One form of saving students must begin considering early is investing. This means instead of putting lump sums away, we direct our funds into areas where money can work for us, without input.  

There are a range of options to consider from unit trust investment to property, though the best option for young people is probably the safest. Of course, the safer an option the lower our chances of reaping greater rewards.

Being able to manage our finances is a very important life skill for anyone, especially those entering the business world. If we want to create a new, financially-savvy generation of entrepreneurs, we must encourage smart money management.