Money is what makes the world go around and you could argue that working as a business/finance consultant in a financial world I would automatically say that. I am sure if you were to ask a HR consultant they would state that people are the most important aspect of a business.
In my working career, I have seen massive changes over the past 30 years of how money is used and viewed and ultimately used both on a personal and business level. My first part-time job, I was paid in cash on a weekly basis and other monthly jobs I have been paid via both cash and cheques. Cheques are now virtually obsolete and the use of cash becomes less and less as we move to online payments and paying for services via cards, through chip and pin and now contactless.
However, I go back to one of the first accountancy lessons I undertook and a key message of ‘Cash is King”. Cash is not so prevalent today as it was, but the underlying message is that without cash or money within a personal or business account, then cash flow becomes negative and this then causes issues for the individual or business to be able to operate. How long can you sustain an overdraft and at what cost? If you are constantly relying on loans and overdrafts to survive, how do clients perceive you in terms of risk.
Working as a business consultant I am shocked when working with clients at how finance is perceived and how it is not always given the priority it should. This ranges from staff taking it in turns to write internal financial reports when the time is available, to having a general lack of understanding of what the figures are telling them. Many companies cannot tell me what their breakeven point is and the difference between creditors and debtors.
A friend of mine who is a virtual PA recently asked a question on Linkedin, where she was greeted with a large response. I have a similar number of connections and I asked a question, of how do you feel about numbers, finance and budgets in relation to your job. I received 2 responses.
Whilst, this was not intended as an exercise, it clearly showed how a generic question about business was received as opposed to something about finance and money. This has then led me to start looking at what are the psychological barriers to numbers and finance and is the barrier to finance, the actual number itself opposed to the detail behind the numbers.
When you say the word finance to people, more often than not you are met with a negative response. People can just find numbers, well, a bit scary. For the main part, people associate numbers with finance, and finance can be a very emotive and secretive subject. Clients are often reluctant to show the details behind their accounts or discuss them in any detail. However, if the client is a limited company, the disclosed accounts are available to view in the click of a few buttons on Companies House webpage.
Our relationship or our feelings towards numbers, therefore, is more complex than we perhaps think and so it can be useful when working with clients with a view to achieving financial sustainability and a workable financial strategy to apply a level of psychology.
The history of numbers is a mysterious one, but it is safe to say that without numbers, we as a civilisation wouldn’t have advanced as far as we have. Numbers are all around us and like colours, have their own psychology and associations, we prefer some to others!
The number 1 is strong, often associated with the beginning, the first, the best and the number of the divine. Even numbers are considered more feminine, odd more masculine, perhaps due to their sharper, edgy shape. The number 7 has religious connections and is considered lucky, perhaps due to its constant presence in our lives, seven days in a week, Seven Wonders of the World and seven colours in a rainbow. The number 10 is practical and offers a sense of completion, dependability and an all-around good egg. There are hundreds of these associations and superstitions surrounding numbers, some going back thousands of years and so quite often we have unconscious feelings and behaviours towards numbers from a young age that are already inbuilt.
The psychology linked with numbers is a very real thing and can be seen around us everywhere in marketing. The meanings behind numbers are influenced by different factors and so getting it wrong could have dire consequences for your product or brand! Isn’t it funny how people may feel that a 14-day turnaround is more attractive than a two-week wait? Or, that a payment over 180 months feels less committal than a payment for 15 years? Why is a top ten list so much better than a top 8?
Working predominantly within the Health and Social Care sector, which is driven by legislation and contracts, providers are often at the mercy of interpretation and what commissioners can afford to pay and if they can apply annual inflation. It is interesting how a fixed increase in £s can look appealing to a provider on a residential fee of say £400 per week but in real terms, if applied to a £1,600 per week fee, it is far less appealing. For example £20 per week on £400 is a 5% increase but on £1600 per week this reduces to a 1.25% increase.
When trying to display value for money, bigger is more often better – 600 minutes of talk time in your mobile contract opposed to 10 hours. It is often better to disclose turnover in the £000’s, e.g. £6,000 with the extra noughts opposed to showing £6k. This also works in reverse, where you don’t want to show large increases and a % can still give a positive message but not the big increase which would have been shown if disclosed as an amount.
The psychology of numbers is around us every day, and in a way, we have become comfortable in that arena, but when it comes to finance, it can be a different story.
Understanding the way people think and how they react to numbers, is a crucial element in being a successful Business Consultant, in helping clients to fully understand the impact of numbers and the finances affecting their business. Understanding the way your client approaches their finances helps you to adapt the way in which you work. Being able to speak to clients in a language that they feel more comfortable with, can certainly increase understanding and engagement in the process.
By ‘bearing all’ financially, a client can be left feeling vulnerable and subject to emotions of fear, pressure and judgement. Here at Chequergate, we understand this and always do our best to calm your fears, and help you feel more at ease with finances through your increased understanding of finance.
If you would like to hear more about an introduction to budgeting, cost types, business growth and potential issues to your company, all achieved without using numbers, but metaphors, please get in touch now.