Breaking into the outdoor industry doesn’t usually have much to do with good financial management. Sure, many of us may have put off a “real job” to hike the AT or risked a raise rather than losing out on the first chair on powder days. But even if numbers are not your area of expertise, growing your understanding of finance basics demonstrates your commitment to professional development and an interest in your company’s well-being -- two traits that are key to advancing your career.
“The more you understand the impacts of your decisions, the better decisions you’ll make,” said Audrey Hicks, Outdoor Research’s vice president of finance and administration.
Even though Outdoor Research is a private company, Hicks said it’s open with its financial results internally and thinks it’s important to educate non-financial managers about the company's bottom line. “Everyone who has operating expenses is an integral part of the company's big picture,” she said. “All those dollars add up.”
Whether or not your position involves accounting and finance responsibilities, it’s easy to get lost in a sea of acronyms and accounting jargon. The meanings of financial terms such as balance sheet (a snapshot of a company’s assets and liabilities), GAAP (Generally Accepted Accounting Principles) and leverage (a company’s debt/equity ratio) aren’t necessarily intuitive. Yet understanding them is the first step toward applying good practices and making sound decisions when it comes to the company dollar.
Spend some time familiarizing yourself with key terms. Be sure to clarify the meanings of seemingly simple words, too -- such as income, revenue, cost and sales -- which can cause confusion in communications. (See the resource websites listed below.)
“Beyond (having a grasp of basic) vocabulary words, it would help immensely if managers/owners practiced being extremely consistent when communicating about accounting and finances,” said Kira Riedel, founder and president of CFO Services. “When you say ‘revenues,’ what specifically is included in that figure? Don’t say ‘costs’ without being more specific. Are you including shipping? Are you including discounts? Are you including refunds?”
Every company has different metrics -- that is, an agreed-upon standard to measure change. Knowing those standards within your own company is key. It’s also important that everyone across all levels of the organization is educated on them.
Hicks recommends that CEOs and business owners learn how banks and investors view and measure their business. They also should educate their managers on how financial statements work, how cash flows and how spending impacts the organization.
Even if you’d rather spend an afternoon on a local crag, investing in a little financial education will help you make better business decisions and move up in any company -- whether or not it’s in the outdoor industry. “I think the outdoor industry has a longer-term focus on reaching goals -- whether they’re financial, environmental, personal or outdoor-related,” said Hicks. “But when it comes to finances, it’s the same game no matter what industry you’re in.”
Start with these websites to understand finances and the lingo that surrounds them:
AllBusiness.com operates one of the Web's best business sites. It aims to help business professionals address real-world business issues and find solutions. It also offers resources including how-to articles, expert advice, news, business guides, as well as standard business forms, contracts and agreements.
Investorwords.com has built a comprehensive glossary of more than 8,000 definitions of business terms and financial words since its inception in 1999. Cross-referencing and links between terms help readers achieve a comprehensive understanding of the financial world.
Outdoor Industries Women's Coalition is a membership community of professionals in the outdoor industries united to provide power, influence and opportunity for women in outdoor-related businesses and to generate champions to inspire other women. For more information, visit www.oiwc.org.
This monthly column, a partnership between OIWC and SNEWS®, aims to address the issues that concern women in the industry most -- anything that is controversial, topical or newsworthy relating to women and the outdoors. The goal is to help, educate, inspire and grow. We welcome your ideas, gripes, thoughts and comments. Bring it on. E-mail us at firstname.lastname@example.org.