Developing and Importance of Business Acumen, Oleksiy Nesterenko
by Marc T. Romero Business Consultant, MarketingIn
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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Created on Dec 31st 1969 18:00. Viewed 0 times.