Business Literacy

Business is a team sport.

Teach your employees the rules of the game.

I’m sure you’ve seen the quote “teamwork makes the dream work.” It’s true. Great companies are built by great people working together.

Employees feel a sense of purpose in their job when they understand the big picture of the business and how they personally contribute to the success.

Business literacy will help you win as a team because it teaches your team what success looks like and how they affect revenue, profit and cash.


What is business literacy?

Business literacy is also known as business acumen and business savviness. Business literacy is the ability to quickly understand and deal with a business situation in a manner that is likely to lead to a good outcome.

Companywide business literacy training may include:

  • The basics of how the business works 
  • The ways your business generates and uses cash.
  • How the business measures success.
  • How to use the information to make good business decisions and solve problems independently while performing their day-to-day responsibilities.
  • How employees contribute to the company’s success.
  • Creates a common language so everyone can join the conversation to make improvements.

How is business literacy different from tracking KPIs (Key Performance Indicators)?

Business literacy goes beyond posting sales numbers on a whiteboard or KPIs in the break room. A true business literacy program:

  • Shows how everything is related. Employees do not know the difference between revenue, profit and cash. Business literacy training teaches your team the relationship between numbers. An increase in marketing expense should drive an increase in sales. An increase in sales will result in an increase in cost of goods sold and accounts receivable. Accounts receivable eventually converts to cash.

KPIs focus on one number like increase sales by 25%. Business literacy training teaches your team how all of the numbers are related. Your sales team needs to know how to convert more sales, but they also need to 

  • be mindful of how offering too many discounts for the sake of increasing sales will affect profitability
  • know how to properly estimate costs
  • clearly communicate the payment terms so the accounts receivable balance converts to cash on time. 
  • Breaks down department barriers and unites the team. KPIs are usually assigned to one employee or a department. The employee or department focus on their goal and is rarely aware of what is happening in the rest of the company or how their actions impact the rest of the team.

Business literacy training teaches your team how one employee’s actions affect another employee. How one department depends on the other departments. How each employee impacts the company. Your receptionist affects sales and your accounts receivable clerk affects customer satisfaction. Business literacy shows how all employees affect every area of the business from revenue, profit and cash flow to customer satisfaction and culture. It builds awareness and accountability that shifts the burden of increasing sales and customer satisfaction to the entire team instead of only one person or one department.  

  • Shares the stories behind the numbers. Every number on your financial statements has a story. The number represents the end result of all the decisions you and your employees made, the lunch breaks skipped to deliver a service on time, and the mistake an employee made and had to start over. There are a lot of plot twists and cliff hangers that happen throughout the month. 

KPIs focus on the end result. Business literacy teaches your team the stories behind the numbers and how they can rewrite the story next month. Your team will start to use the lessons learned to help predict the future. You’ll hear feedback like “if we sell 10% more of our most profitable service, we’ll increase our gross margin by 25%.” Or maybe you’ll hear “our employee turnover has reached an all time high of 15%. I think it is related to our new internship program. I’ll dig a little deeper and report my findings next week.”  

  • Equips the employees with the right amount of information to control, measure and guide their work. KPIs simply state a goal of increasing gross profit by 15%. Business literacy teaches your team how gross profit is calculated and how the number can be improved by everyone.

What topics should be covered in business literacy training?

The goal of business literacy training is to give every employee a working knowledge of how business works, how success is measured and how employees directly affect the culture, customer satisfaction, company's success and cashflow. 

Business literacy programs help employees answer basic business questions like:

  • How does our industry normally operate?
  • How does our business operate?
  • Who is our ideal customer?
  • How does the business make money?
  • What are the most common profit leaks?
  • How do all the departments work together and impact each other?
  • How does my role contribute to the company’s success?

After the basics are covered, it’s common to teach employees how to solve problems and make decisions without asking the owner questions every day. This training provides guardrails for the business as it grows by teaching the ability to answer questions like:

  • When should we say no to a customer?
  • How do discounts affect our profitability, culture and customer satisfaction?
  • If we make a $2,000 mistake, how much do we need to sell to cover the cost?

Results your company may experience from business literacy training:

  • Bridge the gap between perception and reality. Did you know the common perception is your business has a bottom line, net profit margin of 36%? According to a study of 212 industries, the average is 6.5%. Walmart is 3.1%. Do your employees fall into the 36% misconception? Business literacy training will help your employees understand the difference between the price customers pay, the amount the employee earns and the company’s bottom line.
  • Unite your team and strengthen your culture by creating more of a team atmosphere that removes the barriers between your departments. There’s a common saying “It takes a village to raise a kid.” Well, I believe the concept applies to business too. It takes your entire team to grow a profitable company. 
  • Better estimates and assumptions. You’ll enjoy more accurate budgets and projections, because employees understand how every number is calculated and how they can improve results.
  • Business literacy also equips employees with financial skills they can use in their personal lives. Financial stress is a common reason for poor work performance...why not help them succeed at work and life.
  • Competitive advantage. Basic business literacy training helps your employees solve problems in real time, see opportunities, face challenges, and protect cash flow.
  • Help your employees join the conversation. Before long, employees will identify flaws in systems and consider lost opportunity costs. 
  • Ownership mentality. Your employees are more likely to care about the company’s long-term well-being when you trust them with the right amount of information and encourage them to make decisions.
  • Identify a problem before it becomes an emergency. Employees that understand how business works are more likely to warn you when something does not seem right instead of blindly trusting the process. Wouldn’t it be nice if your employees tell you the price of a part doubled so you can adjust the price your charge? Do you want to know when your largest customer mentions they plan to request three bids for services you’ve provided to them for over a decade? Your customer-facing employees hear things. Properly trained employees are more likely to look out for the company and warn you when something does not seem right.
  • Enjoy your business more because 100% of the pressure is not on you to make every decision, identify every issue and solve every problem.
  • Set your business on autopilot. When you align your business literacy training with your guiding principles (core values and mission), you’ll help your team make wise decisions without you. You can enjoy a real vacation knowing your employees are thinking more like an owner and are equipped to make decisions when you are not working.


Benefits your employees will experience from business literacy training:

  • Boost in job satisfaction.
  • Enjoy a healthy work environment like Simon Sinek describes as the Circle of Safety. Instead of employees working against each other, everyone looks out for each other leading to a great culture.
  • Feel valued, trusted, and empowered.
  • Inspired and motivated, because they understand how they contribute to the company’s long-term success.
  • Lower stress level.
  • Better understanding of personal finances – some business literacy training starts with personal finances to help connect the dots.
  • Increased awareness and appreciation for what it takes to operate a business.

Signs your company needs business literacy training

  • Wish your employees understood the difference between the sales price and the actual cash left over to pay income taxes, replace old equipment and fund future growth plans.
  • Everyone is busy, but the results do not show up on your financial statements.
  • Stuck in a cycle where you and your managers tell your employees the rules, set a goal, and are disappointed when they do not accomplish the goal.
  • You cannot escape the day-to-day operations, because the business is dependent on you to resolve every emergency.
  • You want to work “on” the business, so you can invest time in growing the company, developing future leaders and nurturing the culture.

Myths about Business Literacy

Myth: Business literacy training requires sharing my financial statements with employees.

Truth: It’s best for employees to learn what they need to know to be successful. Most employees do not need to learn how to read financial statements.

Myth: Employees know the difference between revenue and profit.

Truth: Most employees believe their company's profit is 36% when most industries average 6%. Employees don't know how much money it takes to operate a business. Employees rarely know all of the business that happens between revenue and profit.

Myth: If I teach everyone how business works, they will quit and become my competitor.

Truth: It takes more than a few business classes to operate a business. You're not teaching them how to start a're teaching the big picture of how a business works. If you provide the right type of training, you're more likely to discourage them from starting a company. They will see the truth between revenue, profit and cash and will think twice before starting a business.

Myth: Employees will share the information with my competitors.

Truth: Teaching your employees how business works is motivational to your employees. They will feel trusted, empowered and a great sense of pride for the company. They are more likely to protect the confidential information when they understand it.

Myth: Employees will use the information against me to ask for more money.

Truth: You're pulling the curtain back to show them the big picture. They'll understand the conversation does not stop at the profit line because cash is needed to pay income taxes, fund future growth plans, replenish cash reserves and replace aging equipment.

Myth: Employees know their KPIs and we track them every week. We don't need to teach how business works.

Truth: KPIs are not enough. Employees need to know how the number is calculated, why the number is important and how the number is affected by everyone in the company. KPIs are usually confined to one department. Business literacy training knocks down department barriers by showing everyone how they affect the numbers. Your receptionist affects sales. Your operations team affects cash flow.

Myth: Everyone will learn what everyone else makes. 

Truth: Labor is one of the largest expenses for service companies, so it is common to share the total not individual salaries. You may even share the total for each department. There is no reason to share individual salaries with the entire team. Remember, you are only sharing the right amount of information the employees need to be successful and make decisions.

What business literacy is not.

  • Business literacy is not a fad.

In 1954, Peter Drucker wrote the following in his book, The Practice of Management:

"[The worker] should know how his work relates to the work of the whole. He should know what he contributes to the enterprise...if he lacks information, he will lack both incentive and means to improve his performance."

In 1995, a group of academics found in their research, business literacy impacts productivity, customer satisfaction, quality and speed which leads to higher profitability and a competitive advantage.

  • Business literacy training is not a one-and-done type of training. It takes time to layer the various types of information your employees need to be successful in their job. Plus, one of your responsibilities as the owner is to be the CRO…chief repeating officer. It’s common to “get it” during training, but we quickly forget when we do not use the information every day. You must create a business literacy program that never stops helping your employees succeed.

  • Business literacy training is not simply posting a copy of your balance sheet and income statement in the break room. This is information overload. Most employees do not know how to read financial statements and it’s rare they need to know every number on your financial statements.

  • Business literacy training is not accounting training. Yes, numbers will be discussed but only related to what the employees need to know to be successful in their job. 

  • Business literacy training does not require your employees to learn complicated math. The only math you’ll need to know is how to add, subtract, multiply and divide.

  • Business literacy training is not boring. Loyal employees are curious how your business works! Simply align their learning needs with what they need to know. Involve employees in the learning process by adding fun, interactive activities. Make it easy to digest and apply in their job.

How to start a business literacy program

Focus your employees on numbers that matter. Your business literacy program does not have to be an elaborate training designed with countless reports and a never-ending list of unfamiliar words and acronyms.

Start small. A quick win will build momentum and increase buy-in.

Step 1: Identify training need.

Think of the domino effect that will have a chain reaction to other areas of your business. What topic will have the most impact if everyone on your team is focused on it and it is improved?

Brainstorm training ideas by creating a list of

  • Your key numbers. Your team may benefit from learning how they affect a key number or how the key number is calculated.
  • The core processes. Break down department barriers and build unity by teaching how everyone contributes and benefits from efficient processes.
  • The questions you are asked on a regular basis. Teach your team how to solve the problem and answer the question without you.

Step 2: Explain how the key number is calculated or the core process works.

Example: Briefly review the entire sales cycle with everyone on the team. Then, dive deeper in the sections that affect the closing rate.

Step 3: Show how each employee affects the key number or core process.

Example: Help everyone see how their individual performance affects the company’s ability to close more sales.

  • Does the administrative staff know customer satisfaction starts with them?
  • Do your salespeople have the presentation skills and training needed?
  • Who will follow up?
  • How much of a discount is allowed to close the deal?
  • What add-on services can be used to sweeten the deal?
  • Do your sales team know how discounts and add-on services affect profitability?

Step 4: Paint the picture of what success looks like.

Answer simple questions like

  • Where are we now?
  • Where do we want to be a year from now?
  • How will we move the needle?
  • How will the improvement affect the employees, company and customers?

Example: Our closing rate is currently 60%. The number is down from our historical average of 72%. Our goal is to increase our closing rate to 75% by the end of the year. The new follow up procedures will help us close more sales. We will experiment with other ways to increase our closing rate.

Step 5: Reflect

Give your employees time to digest the information, ask questions and share their thoughts. This may be a great time to brainstorm ideas to help solve the problem.

Step 6: Track your progress and review the effectiveness of the training.

Listen to your employees. If they are stuck consider organizing a brain storming session or provide additional training.

Step 7: Rinse and repeat. Pick the next key number or biggest problem area you want to improve and start over.

Still not sure where to start?

Check out one of these activities to help you jump start your business literacy program. Trust me…you’ll be addicted when you see your team win together as they improve together. 

Don’t Allow These Hurdles Stop You!

  • I’m allergic to numbers and math.

News flash…you use numbers every day! This morning you may have weighed yourself and noticed a trend in today’s number vs last week’s number. You may have checked your blood sugar level and concluded you need to avoid donuts in the break room. You understood the risks when you drove 70 mph in a 60-mph zone because you were running late to a meeting. As far as math is concerned, you and your team will only need to know how to add, subtract, multiply and divide. Business literacy is a skill you can learn. You’re not allergic to numbers or math. You simply need to invest more time improving this skill. 

  • We are a growing company so we do not have the time to slow down to provide this type of training.

Training is a necessary part of operating a business. Business literacy training will actually save you time, energy and money. It may seem like a waste of time to pull your employees away from their job. Abraham Lincoln is given credit for saying “give me six hours to chop down a tree and I will spend the first four sharpening the axe.” Business literacy is like sharpening your axe.

  • We’re a small company, so we cannot afford business literacy training.

Absolutely! Business literacy training is inexpensive since you and your managers can implement the training and progress at your own pace. Plus, there are inexpensive resources online to help you create your own business literacy program.

Businesses enjoy a large return on their investment when they pay for external training and implement what they learned.

  • Our team is happy and we’re profitable, so we do not need business literacy training.

Congratulations! You’re light years ahead of most companies. One of the great aspects of business literacy is your employees will learn how to make decisions in your absence, identify opportunities and face obstacles. The economy and your business may be great today, but is your team ready to face turbulent times? Business literacy will help prepare your entire team so you can weather the storm together.

  • Our expenses are as low as they can get, so business literacy training will not help us.

There’s a lot more to business than keeping your costs low. Business literacy is about teaching your employees how business works by providing a complete picture – revenue, expenses, profit, cash, collections, safety, operations, and much more.

The Bottom Line

Yes…teaching your team about business takes time and effort but it is not as complicated or mysterious as you may imagine.

Employees at every level of your company can learn how business works, how to track the numbers and how to help the key numbers move in the right direction. Your employees will become financially savvy, engaged, and empowered team players. They will get the why as well as the how of their job. 

What do you have to lose? Your employees already think you take home the majority of the revenue your business generates…why not teach them the truth? You may hear a response like “are you kidding? All this work for only 6¢ of every $1. What can we do to increase it to 10¢?”

When you educate your employees about the realities of your business and make them conscious of what makes the business profitable, everyone wins.

Good luck on your journey to create a business literacy program. Let us know if we can help you shorten the learning curve.