The Case for Open Book Finance

Today’s blog post is written by Brie Jonna, Implementation Specialist, PatronManager.

Off the top of your head, if you were to name who is involved in understanding and making financial decisions at your organization, who comes to mind? Likely, your board of directors, or perhaps your executive-level management? Now think about whose actions affect your organization’s finances. Who sells the tickets? Who uses the office supplies? Who processes the donations? Have the people in those roles ever been made aware of how they personally affect your organization’s finances and overall success? If not, shouldn’t they?

Before coming to work here at PatronManager, I held a variety of roles (including office management, marketing and outreach, and financial management) both in arts organizations, and other small local businesses. What I learned while bookkeeping at one of those businesses, an incredible local restaurant and market, really stuck with me. They followed a model called The Great Game of Business, which at its core encourages every employee to operate as if they own the business. 

One of the key components and probably most well-known facet of The Great Game is open book finance (also known as open-book management). Put simply, open book finance is the practice of allowing everyone at your business access to your financial records. Because of the nature of the business model, many non-profits already practice open book finance, even if not intentionally; but if you’re not one of them, there are many advantages to consider.

Even though non-profits are not driven by the bottom line, financial stability is still deeply important and necessary for a mission to be fulfilled. Having an organization that is financially strong can only help you focus on your mission without having to cut corners for lack of resources. Many of the principles of open book finance can be applied at your organization to help you achieve that financial strength as well as engage employees, and have staff at all levels of your organization making informed decisions.  

Successfully implementing open-book management goes far beyond handing out a profit and loss statement at your staff meetings and telling your staff to meet their goals. For it to really take effect and make change within your organization, leadership has to invest in educating, supporting, and engaging staff at every level so they are able to fully understand and participate in the company’s financial decision-making.

At this point, you may be wondering, why exactly is it important for my summer intern to understand the company’s profit and loss statement? The answer is: because the staff doing the day-to-day work of running your organization make decisions on a daily basis that affect the business’ financial success. And if their actions affect the finances, then wouldn’t they be the prime candidates for brainstorming ways to affect change for the better?  

For example, your box office staff use your software and sell tickets on a daily basis. Do they know how much your software costs, and why you decided to invest in a comprehensive CRM system? Do they understand how ticket sales goals break down from week to week, and day to day? Do they know what will happen if you don’t meet those goals? Do they pay attention to sales trends so they can notice if something has changed?

One example that I often gave to staff at the restaurant was regarding credit card fees. I would pull a report and show them the level of sales in a given month, and how much we paid out in credit card fees that month. Staff members were often shocked at how much it cost the company to accept this form of payment. And while credit card fees are indeed understood as a cost of doing business, if your staff is aware of what a hit that can be to your organization, when a customer walks up and asks if they prefer cash or credit card, your staff can take the cash, and avoid the fees. Just like if your intern knows that your copy machine is a rental, and you pay a fee for every copy you make, they may be more careful to avoid misprints while helping with that huge summer mailing. These changes may seem minuscule, but when everyone participates, small changes can really add up!

So, wondering how you can start implementing some open book principles into your organization’s operations? Below are some specific suggestions, but the main rule, in my opinion, is to just “make it fun!” Finance has a bad reputation for being boring and difficult to understand, but at the end of the day, it’s just a game. There are rules, there’s a team, and there’s a way to win, and who doesn’t love winning?

  • Group Goal Setting: Your goals are essentially the rules of the game — they tell you what you need to do to win. If everyone is involved in the process of setting those rules and thoroughly understands them, then they’re more likely to feel invested in participating in the game itself.
  • Mini-Games: Gamify meeting your goals with short-term themed challenges. Prizes don’t have to be monetary! They can take the form of a  staff lunch or gathering; even a special late start day for the winners.
  • Huddles and Huddle Boards: Gather your whole company on a regular basis (weekly, bi-weekly, or even monthly) to look at the progress you’re making with meeting your goals and to preview what you have coming up. And use huddle boards in these meetings as visual representations of those goals that show your budget, forecast, and actual and year-to-date numbers.  
  • Finance Class: At some point, it might be good to have an all staff finance class, just as you would with any other important topic such as data security. The purpose of this would not be to talk about balance sheets or bore anyone to sleep with math problems but to review the basic aspects of your company’s profit and loss, share common financial acronyms, gauge your employees financial understanding, and allow time for questions.
  • Play the Price is Right: Pull a monthly income statement and isolate some costs that your staff might not be aware of. How much is your monthly rent, or utility cost? How much do you spend on office supplies? What about cleaning supplies or services? Then ask your staff to guess what the monthly cost is for those items. The person who is closest without going over is the winner! And now you have a great opening to discuss those costs with your staff.
  • Use Graphs, Memes, and Gifs: Because everyone learns differently and the visuals can really hit home with some folks. (And because everything, finance included, is better with cute animals.)

Open book finance may seem overwhelming, or unnecessary for your organization, but think of it like this: if you were playing a soccer game, and your goalie just sat down and stopped playing, you might still win the game, but it would really be better if everyone played. If your staff is your team, and a balanced budget is the goal, then you have much better chances of winning if everyone knows the rules and plays the game. Go, team!

Want to learn more about The Great Game of Business and open book finance? You can buy the book or check out a plethora of great free and paid resources from ZingTrain.

Learn More about PatronManager, the powerful CRM platform that helps you sell more tickets, raise more money, and cultivate stronger bonds with your audience, all in one database.