I was in a meeting, reviewing a Business Case with one of my staff, the proposal was sound, it was a great idea, but I just couldn’t see how the financials would work, so I probed and probed, trying to see if we could make it work.
Finally, the project manager said to “with all the questions you’re asking you’d think it was all about the money“.
I took one look at her and said “you’re right, it is all about the money“.
Once you get to a certain level it does all become about the money, and the sooner we understand that, the sooner we can speak the language of senior management.
CEOs and CFOs all they talk about is the money, but usually in code ROI – Return on Investment, NPV – Net Present Value, EBIT – Earnings Before Interest and Tax, COC – Cost of Capital, etc., etc.
Revenue, Profit, Market Capitalisation, Earnings Per Share, etc., these are the things that interest the Board and Share Holders, not necessarily great ideas, it’s the money they can generate which is important.
When it comes to our Business Cases, the most important thing is the NPV, Net Present Value, this is what allows the Senior Management to assess the relative merits of different Business Cases, it’s what they use to decide where they should invest the company’s money.
If we want a slice of that money for our project, our proposal, then we need to be able to explain both what it is, and also what it means financially. Why should they invest?
If we fail to do that, then no matter how great our idea is, it might never see the light of day.
I have even been involved in presentations where they only thing looked at was the financials and the payback period, and if the idea didn’t have a payback within 2 years then they were not even prepared to discuss it.
If I could give junior managers one piece of advice it would be to become very familiar with finance, the terms, what they mean, and why they are important.
Learn them, understand them, become fluent in them, and then you will be able to speak the language of senior management, which will help improve you image and also your chances of success.
Remember, in business it is all about the money!