DEMYSTIFYING THE ENIGMA THAT IS FINANCIAL STATEMENTS IN SALES
- Clayton Ainger
- Feb 28, 2023
- 3 min read
I remember the first time I picked up a set of financial statements and flicked through the pages. All I could think about is ‘where do I start’? Very quickly I felt overwhelmed, confused, and exposed to a world of potential embarrassment with my colleagues, and customers. In front of me was 80 pages of numbers, words, and photographs in what looked like a glossy magazine.
Many salespeople I work with tell me a similar story. They all understand the importance of financial statements, but they feel so uncomfortable looking at them, they often avoid using them altogether, or don’t use them effectively to support their conversations with customers.
Did you know...
76% of salespeople avoid talking to customers about their business, because they are confused by financials and don't know where to start.
Instead, they go into a meeting with preconceived ideas about what they think their customers want to hear, talk about the wrong things, and end up frustrating or upsetting the relationship. If by sheer luck they manage to make a sale, I guarantee they have left money on the table.
This article, is the first in a series of 'training blogs' whose purpose is to help ease any overwhelm, or confusion and remove any fear or avoidance you have understanding financial statements. My goal, is that by the end of this series you will know where and how to start reading any set of financial statements, and more importantly use this new knowledge to have effective business conversations with your customers.
Financial Statements can be your friend and can become the catalyst to your success in talking to your customers about their business.
To be successful at reading any set of financial statements and talking to your customers about their business, you need three things - to be curious, willing to ask questions and listening your customers responses. Then you will gather new insights into your customer’s needs, their business and which products / services they will buy from you.
Lets begin with a three key insights...
The first thing you need to know about financial statements is...
they are simply telling a story about what has happened in your customers business over the past 12 months. You don’t need to understand the detailed nuances of the story. You just need a few pieces to reveal the essence of what happened, so you can ask questions and talk about it, letting your customer share with you the most up to date version.
The second thing you need to know about financial statements is...
there is only one page (or one section) you need to locate and read called the directors report (also known as chairman’s report). This will tell you the story highlights from the perspective of the directors who run the business.
The third thing you need to know about financial statements is...
there are just seven numbers you need to understand that will help you to prepare a ready-made commercial conversation with your customers – four in the balance sheet, and three in the income statement:
o In the balance sheet – tangible assets (aka plant and equipment), inventory (aka stock), accounts receivable (aka debtors) and cash.
o In the income statement – revenue, expenses, and operating profit.
To support your personal development...
Over the next seven weeks... I will post a short training blog about each of the seven numbers mentioned above that will enable you to do what I call a financial ‘quick and dirty’ review and start to build a framework for a ready-made commercial conversation that you can use for any customer meeting.
To get you started...today!
Step 1:
Download the financial accounts for one of your favourite customers.
Step 2:
Turn to the contents page, locate and read the directors report, looking out for information on strategy (short, medium, and long-term), business challenges, future plans, investment opportunities and key influencers.
As you read through the directors’ report, highlight areas of interest that your products or services could add value to your customer, help them to become more effective and efficient, and write down the questions you could ask to find out more information about these areas from your customers. This is called a general business review.
Curiosity is the key...
Financial statements may appear to be a complex mystery, from another planet, but I promise you that with consistent practice they will become very familiar and reading them second nature. Although, in the beginning, it will feel clumpy and bumpy as you find your way around the pages and understand the meaning behind the numbers.
Please know and remember:
You don't need to be financially astute.
You don't need to be able to do maths.
You don't even need be good at it.
All you need is to be curious...
Curious about your customer.
Curious about their business.
Curious about how you can help.
A final recommendation...
Before you look at the financial statements of any customer, first, pause, and remember a favourite happy moment in your life. A moment in your own life story that brings you joy. Remembering this moment, will shift any unconscious thoughts of fear, uncertainty, and doubt about your capability, to ones of curiosity and intrigue. It is from this state of mind, you should always review and read financial accounts. It will also make it a lot easier.
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For our members only, after the final blog in the series has been sent to you, you will receive a gift of our ‘Quick and Dirty Review’ template which will help you remember what you are looking for and where.
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