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Developing and Importance of Business Acumen, Oleksiy Nesterenko

by Marc T. Romero Business Consultant, Marketing

In our work with senior managers and leaders over the past 15 years one comment we often hear is 'I want my people to think more like a business owner'. When we probe further and clarify what they mean we usually discover they want their employees and managers to demonstrate important business acumen skills.

What is business acumen? Business acumen skills and competencies encompass many specific skills just like leadership has many different components. However some of the broader themes include:

·         Creating value

·         Growing the business

·         Growing profits

However, some of the themes listed above can work against each other. For example you can grow the business without growing profits. Therefore the skill of knowing how to grow profitably is of greater value to the organization than simply the ability to grow the business. When you demonstrate business acumen skills like these you're better aligned with senior management and can help the organization achieve important goals.

The art of understanding your business from a financial perspective is a critical step for any entrepreneur. Knowing your business - financially - will provide the business owner the avenue for achieving both their short and long term goals. Today's cash flows are met, and solid financial acumen positions tomorrows potential exit more effectively. While we would all like to be at the top of our game on day one, it is crucial to walk before you run when whipping your company in order.

 

The key is to know your numbers. Knowing your numbers will make decision-making all that more easy. Developing key financial reports that offer insights into your P & L, ROI on capital investments, cash flows and the like will make you a stronger operator today and position your company for achieving maximum value in the future.

 

The end game - creating value in your enterprise for the potential of its eventual sale - should always be kept on target in order to dovetail all of your decisions. The litmus test for any owner with each of their operational decisions should be measuring the accretive nature each decision makes to the improving the overall value of the business. Short term gains that add future long term value is the ultimate goal. Throughout the process, one will hone their financial acumen along the way.

 

Strategic Financial Planning Benefits: Short term financial business planning provides precise clarification of your vision to not only employees, but indirectly to customers as well. In addition, it provides a mechanism to gauge results of the business by establishing a foundation for future growth plans ultimately leading to developing a long-term company valuation.

 

Create A Financial Accountability System: Beginning with your prior year baseline, enhance this baseline with accretive product development and improved sales & margin targets. New initiatives should be developed and managed to achieve both incremental and capital-induced sales. Instill a process management system that rolls up financial activity to be reviewed monthly and re-forecast quarterly.

 

Quarterly Forecasting: Breaking the plan into "chunkables" enables you to better manage your plan and it essentially becomes a rolling quarterly forecast financial model. Whether your tasks are for revenue enhancement or expense control, managing by quarter and segmenting tactical initiatives allows for your financial plan to stay on course.

 

Company Valuation: Company valuation assesses the economic worth of an organization and in a situation where a company is going to be sold, ultimately what the price of the sale will be. If the company is public, a rule of thumb estimate is based on the stock price of that company. The number of outstanding shares times the value of the shares provides the market capitalization of the organization.

 

Be Accountable: Ultimately, it is all about understanding your numbers and accountability. You need to walk the walk by establishing prudent practices and routines that arrive at a common theme: Knowing your numbers. Your financial accountability metrics should include, but not limited to the following:

·         Creating balance sheets for the organization

·         Calculating income and cash flow statements

·         Knowing your income, expense and monthly run rates

·         Staying in tune with average sales and margin trends

Oleksiy Nesterenko Startup Finance is assisting enterpreneur in developing business strategy and for their startups

Get more info about Mr. Oleksiy please visit: https://angel.co/oleksiy-nesterenko




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About Marc T. Romero Advanced   Business Consultant, Marketing

38 connections, 0 recommendations, 162 honor points.
Joined APSense since, February 5th, 2016, From Dubai, United Arab Emirates.

Created on Dec 31st 1969 18:00. Viewed 0 times.

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