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Three reasons why people can lack financial confidence

Three reasons why people can lack financial confidence

It is surprising how many people just hand over all financial responsibility for their company to accountants because they don’t have the confidence to talk about this aspect of their business without really thinking about the impact that can have. The reality is that many business owners (and professionals who specialise in other fields), may lack confidence in understanding and interpreting financial information. However, this fundamental lack of financial understanding or knowledge, particularly where they are relying on guidance from an accountant that may not be forthcoming can create real problems that affect business success including:

  • Overspending
  • Spending on the wrong things
  • Misunderstanding which products and services make money
  • Misunderstanding which clients generate the most profit
  • Running out of cash
  • Not recognising good investment opportunities
  • Developing a ‘no’ culture to new ideas and projects

Of course, you don’t need to be an accountant to run a business, but knowledge of financial strategy and the ability to interpret the financials results in the confidence to answer financial questions and make decisions. If you or your non-finance managers struggle to understand your company’s financial statements and aren’t comfortable talking about the numbers, Mellor Financial Training provides financial training courses, specially designed to help you to understand the basics. 

We give people the tools and knowledge they need to better understand the financial performance of their business, empowering management teams to make better and more timely decisions to enable growth. We understand that it isn’t easy to navigate the language and complexities of finance, so our online, blended and bespoke financial training courses bring simplicity and clarity to financial uncertainty and confusion.  

Three barriers to gaining financial confidence

It is crucial to the success of an organisation that business owners and managers can make sense of financial documents and reports. However, for people without a background in finance or accounting, finance can seem complicated and full of financial jargon. This can be difficult to understand and presents a barrier to confidence and communication in financial matters. People are put off by the complexity of language around finance and can feel under pressure when they don’t understand the terminology.

Another reason for a lack of confidence can be the fear of making a mistake. Many owners and managers avoid making crucial business decisions because they can’t get to grips with the numbers. They may not realise the opportunity to invest or diversify when it presents itself, and not moving forward at a crucial time for fear of being wrong could seriously impact profits and growth.

And finally, taboos and communication barriers can hinder open discussion and prevent knowledge sharing between departments and management teams. Good decisions come from open communication and working together as a team, so barriers to this process hinder strategic thinking and can result in missed opportunities or even investing in initiatives that fail to take the company forward.

Financial jargon and complexity

People can feel under pressure to understand financial jargon and the terminology and complexity of finance can be both intimidating and overwhelming for those without a background in finance or accounting. Financial language can trip people up, just the word ‘capital’, for example, has a multitude of uses and meanings when used in financial information.

Not understanding financial jargon can hold people back from asking the right questions, resulting in a negative impact on financial decision-making within a business. A lack of confidence around financial information can stifle growth because people are put off from taking part in discussions or putting ideas forward because they find the vocabulary intimidating. They may have an idea that would benefit the business but are afraid of being shot down because they don’t know the right financial jargon to present the idea as a viable opportunity for growth.

At Mellor Financial Training, we believe that business owners don’t need to be full-blown accountants or finance managers. Our jargon-busting financial training programmes build confidence by helping non-finance managers understand and interpret key financial and accounting terminology. By simplifying concepts and making finance less mystifying and more relatable, business owners and their management teams will gain the confidence to discuss financial issues more openly and make smarter financial decisions.

Fear of making mistakes

If people are unsure of themselves or feel inhibited because they don’t know the right terminology, they feel unable to speak out for fear of making mistakes and looking stupid. Companies cannot get the best out of their employees if they lack confidence and are afraid to express an opinion, especially at the management level.

By the same token, financial or accounting staff should not ignore the contribution of others just because they don’t have the right financial vocabulary. This can lead to negative or dismissive behaviours, blind spots and confusion. What is more, cultivating a culture of uncertainty can foster a financial stigma, leading to resentment and damaging overall company performance. 

Instead, businesses should foster a learning mindset, encouraging working across teams, so that all departments benefit from the perspective of others, and employees are not afraid of expressing their views, even if they are not au fait with the correct terminology.

At Mellor Financial Training, we help organisations understand their financial performance better by providing the tools and knowledge through financial training programmes. We help people to be more confident, bridging that knowledge gap and enabling them to understand financial information so they can contribute and make smart business decisions. Contact us to learn more about our innovative training approach that ensures a personalised learning experience for every participant.

Communication Barriers

Communication barriers can prevent people from putting forward viable suggestions or stop them from asking the right questions. If individuals feel uncomfortable asking questions because they are not sure what something means, an important perspective or objection can be missed, resulting in a bad business decision. In business, the discussion should be open to contributions from everyone.

We believe that financial information should involve and be accessible to all decision-makers, whether they work in the finance department or not. Our finance training programmes help to break down communication barriers by increasing the confidence and knowledge of delegates. We give them the knowledge they need to understand and interpret financial information which will enable the business to grow. 

In this article, we have explored the three main reasons why people lack confidence in finance:

  • Financial jargon and complexity
  • Fear of making mistakes
  • Communication barriers 

These three barriers to open discussion between departments need to be addressed to give individuals and organisations the confidence to understand financial terms and information. Lacking the knowledge or confidence to ask the right questions can lead to bad decisions, affecting company performance. Mellor Financial Training provides effective financial training programmes to bridge these knowledge gaps, making sure that you, your management team and your employees can interpret financial information to make informed decisions. If you are ready to take that first step towards boosting financial confidence in your workplace, call us today to start the conversation or explore our financial training options and calendar of events on the Mellor Financial Training website.

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