Expenditure or Investment?

Possibly the two areas of expenditure that get closest examination in troubled economic times like these are Marketing and Training. Is that because they are two of the easiest budget lines to remove?

There must be a reason, but attacking spend here is surely short sighted. With the customer / client base constricting is not marketing (in its various guises) the way to promote yours as the business to buy from?

Similarly with Training, in the absence of training people to do the right thing more often they are likely to keep practising bad, or inefficient, habits.

What is the cost of the lost opportunity compared to investment in training?

As someone once said;

"if you think training is expensive, try ignorance"

Measuring the return on training is essential but unless those doing the measuring understand the relationship between Risk and Reward, and how Return on Investment impacts profitability then it could be a case of garbage in, garbage out!

So, if we don't understand the finance terminology we cannot make any conclusions about the health of the organisation or a particular product or service. Speaking the same language enhances the chance of making the right diagnosis and reaching the right conclusions for the business.

If a doctor takes your temperature and it reads 39° then you know you should stay in bed because you are ill. But what if the Finance Director says the profit margin is 13%? What does that mean? Is the business healthy or sick?

Understanding Business Finance = Informed Business Decisions