Financial Statement Anxiety

Last time I shared how one of my earliest professional presentations was met with outright boredom and disinterest. Have you ever wondered why, despite being essential to the success of an organization, the topic of finance and accounting is generally met with blank stares, glazed eyes, and low interest?

I suspect a key reason many business owners do not perk up at the mention of finance is likely due to math anxiety. If you have ever experienced some form of math anxiety, you are not alone. Per research published by the National Library of Medicine, about 93% of adult Americans indicated some level of math anxiety. Maybe this originated with a math teacher who was unable to adapt their teaching style to meet different learning styles. It’s possible, there was embarrassment from struggling to complete a math problem in front of the class. During my own education, I experienced foundational math principles presented in an awkward or illogical manner which led to additional frustration because math is cumulative (yes, intentional bad pun!). Whatever the reason, it’s highly likely that math anxiety is hindering many business owners from fully utilizing the powerful tools of financial statements. A builder would probably be very inefficient without knowing how to use a hammer or tape measure correctly. Conversely, a business owner is inefficient without having at least a comfortable, working knowledge of how to use their financial tools.

Over the years, I’ve seen probably hundreds of financial statement tutorials. Some have had very nice graphics or other attention-grabbing elements. Yet, from my perspective, they all have the same weakness. There’s a lack of a meaningful reference point to assist the viewer. Generally, the statements are of ACME or some other fictitious company. Sometimes, the published statements of a known public corporation are used. Some people will gain useful information. However, I suspect others will suffer at least the same level of anxiety due to the lack of meaningful reference points. “

It may seem obvious, but it’s essential to use the business owner’s actual financial statements to effectively tutor. As I prepare a client’s financials, I’m looking for actual examples that I will use to help explain financial concepts. During our discussions, I carefully listen for anything that has been confusing. Then, at the conclusion of a month, I highlight specific transactions which help the client grasp the impact to the financial statements. I’ve learned it’s much easier to internalize finance and accounting principles, and generally, much more interesting than the theoretical. No longer is the financial review just a “check the box” exercise. Instead, it becomes a powerful management tool. The old cliché of “teaching to fish” is appropriate. I hope this perspective will help to generate more interest in your business financials.

Author’s Note: All of my blog posts are written by me