Learning to speak Finance
One of my biggest revelations in the last few years is how much we depend on finances. What got me there was my personal experience trying to build something. Every time I have an idea that, of course, I believe deeply in my heart is always excellent and will put a dent in the universe. However, as I start playing in my head the following steps, I get stuck in the operational aspect. So I asked myself how much it would cost and how I would scale my operations. The questions immediately seemed not trivial to answer and indicated some gaps in my understanding.
“Everyone needs money; that is why they call it money” — Danny DeVitto, a qoute from a good movie Heist.
To deal with the challenge, I have started looking into financial management solutions, specifically personal budgeting. It is one of the areas that many people talk about and has a vast amount of material to study and review. However, most solutions are concerned with limiting spending and resource allocation, usually not in the most exciting areas. I feel something is missing in that approach. It overlooks the “why” that is a critical motivation element.
I believe that money is a metric that drives resource management. By resource, I mean anything we use in our operations with limited quantity, such as time, utilities, ability to purchase, hire, etc. It is a tool to make things happen effectively and efficiently. As managers love to state famous Kelvin’s quote, “what is not measured, cannot be improved.” Therefore, by working well with money, we should be able to achieve our goals effectively.
Money is also a social tool. I recently started reading a book by Tony Fadell, who shared his journey in the technology world in his latest book Build. Tony dedicated this book to young people beginning their careers and trying to follow their big dreams. He shares one of his experiences working for a very perspective start-up employing top talent and failing financially after not being able to establish well-defined goals and execute them. That was when Tony learned the importance of good management and the customer focus philosophy. Tony spoke about a turning point in his life when he transformed from a geek wanting to build something cool into an experienced master looking to bring value to his customers. When I heard that, I asked myself what pushed such a talented person to that discovery. The answer was simple — money. Money sends clear feedback to any builder about the purpose of building or lack of it and the limitation of the environment where we need to operate. Of course, we can complain about life and how challenging the situation is. However, the bottom line is that we must manage situations and adjust to succeed. Following the money is how we trace our operation methods. Some of those work, and some don’t.
Businesses share their story of operations in the language of Accounting. We have many examples of successful processes that lead to growing businesses we all know. Speaking the language will help me read the original manuscript and learn how successful operations work from the best. How exciting these stories would be. What if those are applied to our challenges and help us manage our situations?
