When you hear the word leadership, you probably picture executives sitting in a boardroom or a CEO controlling a crowd with charisma and charm. But there's another form of leadership, albeit a much less glamorous one, that's just as important.
It's called financial leadership, and most of the top business leaders have it down pat.
- According to a July 2016 report from Heidrick and Struggles, new Fortune 500 board members mostly have career experience in finance.
- According to another research report, this one from staffing agency Robert Half, more than 52 percent of FTSE 100 CEOs--that's the Financial Times Stock Exchange, an index of London's top 100 companies--have a background in finance.
That's because leadership isn't just about charisma, vision, decision-making or strategy. It's about understanding the financial ramifications of your decisions.
You could have the grandest plans in the world, but if you don't have the means or, worse yet, do have the means but can't manage them, the only vision you'll be left with is the one in your head.
I learned this lesson the hard way back when I first got into business selling grillz, custom jewelry, men's diamond earrings and other hip hop accessories several years back.
The truth is, I lacked financial leadership. So I got hurt. I got hurt come tax time. I got hurt when I had little to no money to reinvest back into growth strategy.
But it wasn't just me. My suppliers got hurt with late payments. My customers and distributors got hurt with late shipments. And my pride sure as hell got hurt when my cards would get declined at the register and I had no clue why.
Not because I couldn't make money. I just didn't know how to hold onto it. That's because I was disorganized and lacked financial leadership. Let my failure be a lesson to you.
Here's are four quick and easy ways to build up your financial leadership:
- Take a free finance and accounting course. The SBA offers a free one on reading income statements, balance sheets and understanding basic accounting.
- Use software to get organized. Quickbooks and Mint are two I've used.
- Read on basic finance. Subscribe to sites like Growella, as one example.
- Seek mentors. I've used SCORE to meet 1:1 with local experts for free.
But, most importantly, identify and correct your red flags... like, right now. Comb through your credit card, merchant and bank statements. Cancel useless subscriptions. Do due diligence on questionable expenses to identify the ROI (or lack thereof).
Now I know what you're thinking. If you're like how I used to be, the idea of doing this might make you nauseous. Again, I know. I've been there. But this isn't optional.
Financial leadership is mandatory. If you don't become your own financial leader, nobody else will. And that's leaving your fate, your hopes, your goals and your dreams up to chance. You deserve more than that and financial leadership will give you a real shot.
Remember: if you don't have control your finances, you don't have control of your life.