Should You Share Your P&Ls with Leaders?
Apr 18, 2023
We are in business to make money. That’s why aspiring business owners decide to jump into the journey of entrepreneurship, franchise ownership, and business management.
As we grow, we hire leaders to take over and manage our business, with unit managers to supervise our stores and, when we go multi-unit, we hire district managers to oversee the district so that we can have true time and financial freedom.
Of course, we expect them to manage our business as we would, and also, their commitment and focus on maximizing profitability in every unit and district. But for them to be successful and fulfill your expectations, they need to have access to key information.
This leads to questions like:
- How much information should you give?
- What type of data do they require to produce the results you expect?
- What’s the best way to provide this so that they can make the best possible use of it?
Providing the information for the sake of it is not enough. There has to be a defined process so that this knowledge can be useful in the day to day activities.
In this blog, we’ll go over WHY you should share information, WHAT to share, and HOW to provide it to achieve the expected results.
But first, a story…
Just like many people, I joined the franchise world as a temporary job, actually as a pizza delivery driver at Domino’s Pizza, over 35 years ago. I was 21 years old and I have failed miserably at running a little boutique of my own, so I decided to close the business before I owed anybody any money.
When I became part of the store crew, which was a corporate unit, one of the first things I noticed was the profit and loss statement literally taped on the wall of the manager’s office. Next to it, there were other documents and information that he decided were important for everybody to see and share.
I started reading the Profit and Loss Statement, P&L as they called it, and little by little I began to understand the numbers and all of the things that I did not know when I had all my business, that if I had known, I would not have failed.
Having access to this knowledge, and learning and understanding what the numbers meant and what I could do every day to make a difference, really changed how I saw my job. And it also inspired me to become an assistant manager, and eventually, a unit manager.
I share this story because, since the very beginning of my career in franchising, I have always believed in the power of sharing information. But it’s not just about what you share, but also why you share it and how you share it.
That's what's really critical and what will help your team members do what you want them to do while representing you in their business.
Why should you share your Profit and Loss Statement?
Let’s say that your single-unit business makes anywhere between $500,000 and $2 million in annual revenue per year. You would be handing all of the keys to a leader in your unit. How can you do that and not give them the numbers and the information they need to manage that enormous business?
Now, imagine multi-unit leaders, whether a district manager, area coach, area supervisor, or whatever you call those people that oversee multiple units. These particular leaders have the responsibility and the expectations of a multi-million dollar business in their hands!
They cannot do their job being blind about the proper knowledge, numbers, and analysis to understand what they're doing and what they're striving for. Having this critical information will help them attend to the issues and opportunities so that they can be successful at doing the job the way you would do it.
Think about it! You need to maximize the profitability of your business, which means having committed business managers who run the stores just the way you would.
The only way to have that is by giving them the knowledge you have, and that includes your numbers.
What financial information should you share?
Many franchisees and business owners hesitate about sharing the full P&L. But there's a certain minimum amount of information your leaders should have:
- A weekly dashboard of your 5 to 8 most important key performance indicators (KPIs). These numbers are controllable and the ones that make an impact on your business. That’s why these key items will give them what they need to do well in the business and be successful at their job.
- The objectives and goals you want them to achieve.
- Where they are now so that they can then see the difference and then act upon the critical strategies they need to make a change in those particular numbers.
It’s up to you to share a simple dashboard or the full profit and loss statement. But remember that having access to this information can really make an impact on how your staff views the business, how they view themselves, and how they view you and your trust in them.
If you are concerned because you don't want them to discover how much money you're making, I guarantee you that 95% of your employees believe you make more money than you do. So, by showing them what the business truly makes, they might be much more conscientious about what they do in their jobs every day.
How to provide a P&L to your leaders?
How you share this information is crucial because, as I mentioned earlier, just giving information that people do not understand, cannot read, or interpret, will be more detrimental than sharing the information.
Here’s a five-step process I recommend to provide this information:
1. Educate, educate, educate
One of the reasons I have been successful in my career is that I have always focused on educating, training, and coaching people.
I know the impact that this knowledge had on me when I was a pizza delivery driver. Therefore, every time I had a region or a district in charge, I was always educating and teaching the staff how to interpret the dashboards and how to understand the profit and loss statement.
You have to show them, step-by-step, the math information and knowledge so that they can truly get it. If you just give the information, they won't know what they're reading, how to understand it, or what they have in their hands.
Depending on where your people are, it might take you a lot longer than you think. But it’ll be worth it!
2. Delegate
Once your leaders are educated on how to understand, interpret, and analyze the P&L statement or the dashboards, you can delegate the responsibility.
It would be up to them to train their staff and manage the unit, report the results, and own whatever is happening in their stores.
3. Follow-up
When you delegate, you trust but also always verify. You have to follow up and make sure that they're analyzing and understanding the numbers the right way.
4. Incentivize
If you truly want to cause change, you have to motivate your team to accomplish their goals. Let them know what will happen if they reach those objectives and how they are going to win.
5. Reward (bonus) and accountability
Of course, the next step is to reward them if they achieve what you set for them. If they don't get the results you expected, go back to either educate them, because maybe they didn't actually get what they needed, or there might be accountability.
At the end of the day, you are giving the keys to a $400,000, $800,000, $1 million, or a multi-million dollar business if it's a district manager. And as such, your leaders need to be responsible for the results of their units.
But I will tell you that the carrot always works better than the stick. So if you truly want the team to be motivated and excited about accomplishing the goals through learning and understanding the information, incentivizing them and rewarding them is the way to go.
By doing all of this, you'll inspire your team to achieve the goals that you want them to achieve on your behalf as they're managing your business. I hope that this was of use to you and makes you think a little bit about, what to share, how to share it, and why to share it.
Learn about the development and training programs that we have created at The American Franchise Academy, to help franchisees, district managers, and unit managers, our newest program that we’ll be launching very soon.
Go to www.AdmissionCall.com to talk to one of our admission specialists and discover what our training programs can do to bring your business to the next level!
In the meantime, don't forget to subscribe to our YouTube Channel and our Franchise Success Formula podcast on Spotify, to get more tips and information like this, and follow us on our social platforms (Facebook, Instagram, LinkedIn).
Reflections:
- How can you inspire your leaders so they are as committed and focused on maximizing profitability as you are?
- Are you sharing at least the minimum amount of information with your leaders?
- What are the key indicators that move your business forward?
- How are you doing the follow-up on your leaders?
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