open book accounting

Replies to This Discussion

Permalink Reply by Langdon Stevenson on January 13, 2009 at 7:55pm

Hi Sarah,

The practice of open book accounting is fairly simple: you make your financial records available for some form of external scrutiny (like showing them to your suppliers). The point being that people can see what you spend your money on and what profit you take. You are then forced to justify your actions. If people think that you are ripping them off by paying peanuts for beans and reaping huge profits, then they can are in a stronger position to negotiate with you.

Langdon

• ▶ Reply

Permalink Reply by Clay Gordon on January 14, 2009 at 10:08am

Sarah:

This is a very good question and I will ask Shawn to join TheChocolateLife and comment on his take. Before then, however, Shawn tells me that he uses this accounting practice in all aspects of his business, not just with growers.

In fact, Shawn practices it weekly in his factory. Everyone in the company meets and they learn about where the company stands, financially. This helps them better understand some of the decisions that get made, and it also shows everyone how their actions affect the company's finances. People can see the direct effect their jobs have on the bottom line. Shawn told me that knowing this information makes his employees more responsible workers with more of a stake in the business.

In fact, you may wish to look up A Stake in the Outcome by Jack Stack, a business philosophy book that inspired some of Shawn's thinking.

• ▶ Reply