It is often said that English is the language of business. Clearly this is a true statement, though the recent US-bred financial crisis no doubt had other nations wishing they could not translate. But it is a language that does not tell the whole story. To truly understand what your business is telling you, you must become fluent in the language of finance.

The earlier in your career that you accept this reality, the better. If you aspire to run a business, division or any discreet business entity, you need to (minimally) become comfortable with this unique language that is outlined in the Profit and Loss Statement (P&L) and the Balance Sheet. These documents and their lesser known relatives are akin to the charts that a doctor uses to assess the health of their patient. They provide a view of the patient from a number of different angles and perspectives in order to frame a complete picture of health.

We make it more difficult than it needs to be. I can remember sitting in undergraduate financial classes with some of the most boring educators on the planet. Subjects that could be made tangible and readily understandable with the right illustrations, real world applications, were presented in a dry and academic manner, kind of like learning Latin or some other dead language.

But finance is anything but dead. Knowledge of the financial health of your business is essential, because without financial health, the other stuff doesn’t matter. There are sources of financial knowledge everywhere, from the traditional education sources to the wild west of the internet.

As part of my coaching practice, I often encourage developing leaders to spend some time with their company controller, finance manager or CFO. I have found these executives to be patient and willing teachers. After all, it is in their best interest to have leaders who are financially literate and conversant.

You do not need to be a financial expert, unless you hope for a career on Wall Street. But do not let your pride get in the way and pretend to know more than you do. I’ve seen this too many times with managers that rise through the ranks in specialty areas who are not responsible for profit generation. Regardless of where you come from, all senior executives are expected to know how an organization makes money.

The earlier in your career you learn the real language of business, the financial language, the better off you will be. Knowing the financial leverage points paves the path as a general manager, either of your own or someone else’s business. It  also helps you to understand those situations in which you might become the next “cost” that needs to be eliminated from the business in the ongoing quest for profitability.

This entry was posted on Friday, July 10th, 2009 at 9:15 am and is filed under Career Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.