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Shared Financial Management Builds Alignment For Food Businesses

As we have talked about before, entrepreneurship is a really difficult enterprise. It involves raising money (usually more than you think), relentlessly selling, new product development, relentlessly selling, developing quality control processes… Did I mention relentlessly selling?

These are a lot of things for one person to learn how to do well. Imagine if you as an entrepreneur tried to help everyone understand what needed to be done to make the business succeed. How do you even go about having that conversation and leading that charge?

One strategy that some food entrepreneurs employ is open-book management. Open book management is essentially sharing the company’s finances and key financial drivers openly with managers to increase their buy-in and understanding of the company’s performance. By sharing company finances and expecting financial literacy of managers, open-book management allows multiple leaders to use the same language and work towards the same goal. The differences between overall profitability and profit margins by department become clear when discussed in a context the managers know and understand. Using a common set of financial statements allows managers to have more meaningful conversations because they can point to specific items on those statements when discussing possible courses of action.

Open-book management can even drive growth because the managers’ and the organization’s goals are more easily aligned. On our podcast this week, Nicole Sallaberry talked about how the Great Basin Community Food Co-op started as a buying club in the back of a punk record store but now has about $4.5 million in annual sales. This growth has allowed them to hire more staff and get more healthy and local food into their store. To help them understand what they need to do to grow, department managers meet weekly to discuss benchmarks and financial goals as part of their management responsibilities and so department managers can be groomed for positions of higher leadership.

Like shared governance (another feature of food co-ops), open-book management is a huge commitment. It means helping managers improve their financial literacy and training them on how to use financial statements and internal/external benchmarks to inform decision-making. The need for education and technical assistance around this topic shouldn’t be underestimated. But, under the right circumstances, open-book management can create more aligned and optimized food businesses that are profitable for the long term.


And now, our roundup of the best food and beverage finance news, events and resources from around the web…

Food and Beverage Business Models

Business Model Insights

Raising Capital

Raising Capital

Grocery Store Shopping

CPG/National Brands

Grocery Store Produce Section

Market Trends

 Farm Bureau - Agricultural Contribution to GDP

Farming and AgTech

Mergers and Acquisitions

Deals/M&A

Events

Industry Events

Categories: Insights Newsletter