Team Training: Top 5 Expenses

Overview

Most employees believe their company’s net profit is 36% when the average across 212 industries is only 6%. Employees don’t know how much it costs to operate a business, because they have never owned a business. Employees rarely know the difference between revenue, profit and cash.

Do you want to teach your employees how much it really costs to operate a business, but the thought of sharing your income statement makes you nauseas?

Great news! Your employees do not need to see your income statement to understand how much it cost to run a business.

The Top 5 Expenses training activity is a safe, quick way to teach your team about the company’s true operating costs without revealing too much information too fast.

Benefits of Training Activity

Increase employee’s awareness of how much it really costs to operate a business.
Better understanding of how everyone can optimize and reduce expenses.
Lay the foundation for sharing more information about numbers and processes in the future.
Employees act more like owners by asking great questions, using the information to solve problems, and identifying problems before they become an emergency.

Steps to Complete the Training Activity

Before the training, review your income statement to select the top 5 expenses you would like to discuss.

Tip: Group similar expenses together. For example, instead of listing the labor accounts separately, add them together and share the total. Also consider sharing the total building expense instead of listing utilities, janitorial service, supplies, insurance, rent, repairs and maintenance separately.

Prepare a list of questions to ask your team related to the Top 5 Expenses.

For example, if labor is on the list, ask your employees “How much did the company pay last year for payroll?”

If advertising makes the list, ask your employees “How much did the company pay for this ad?” Play your radio jingle, watch your tv commercial or display your most recent magazine ad.

During the training, ask each question separately and instruct your employees to write their answer on a piece of paper or small white board.

Why is this step important? It’s common for one or two employees to answer all of the questions but you’re left wondering what everyone else is thinking. When you ask everyone to write down their answer, you have the opportunity to see what all of your employees are really thinking.

Ask your employees to reveal their answer.

Tell the correct answer.

Share the story behind the number.

Example: “last year we tested three new advertising methods – social media, local magazine and radio ads. We enjoyed a great return on our investment with the local magazine, so we signed up for another year. The social media ads generated a lot of window shoppers which overloaded our sales team. We are reevaluating our options before we start the social media ad campaign again. It is hard to tie the radio ads to a specific sales number, but it is fun when I meet someone new and they sing our jingle. We may continue the radio ads for branding purposes. We have not made a decision yet since the contract does not renew until August.”

Teach how each department affects the expense.

Example: “the receptionist helps us optimize our advertising costs by responding quickly, taking accurate notes, and keeps the prospect informed when the schedule changes. The sales team helps us by converting 89% of the leads. We believe the new follow up process we implemented 9 months ago has helped us convert more leads. The operations team helps us keep advertising costs low by delivering what we promise and earning 5-star reviews which generates free leads and referrals in the future.”

Explain how the Top 5 Expenses affect other areas of the business.

Effective advertising increases sales.
Mistakes drive up labor and material costs.
Workers compensation insurance premiums are based on payroll expense.
Routine maintenance on the trucks reduce major repairs and extend the life of the asset.

Reflect with your team

Before you end the training session, ask your team questions like

What surprised you most?
What did you learn?

Reinforce the training

At the next meeting,

Celebrate wins with your team by acknowledging the employees that identified ways to reduce the Top 5 Expenses.
Not everyone absorbs numbers the first time, so quickly review the information. A quick matching game is an easy way to spark the conversation again.

Here’s an example of a simple matching worksheet:

Ask your employees to match the expense account to the amount the company spends every year. Your employees should end up with a worksheet that looks like this:

Repeat

It’s easy to repeat this training activity with other expenses. Either dive deeper into your top 5 expenses or you can select the company’s next list.