Business Acumen

Module One: Getting Don’t be afraid

to get creative
Started and experiment
with your
Many people believe you are born marketing.

Mike Volpe
with business acumen, which is
loosely defined as the ability to
assess an external market and make
effective decisions. Knowing what is
necessary to navigate and create a
successful business seems innate for
certain people.
 Workshop Objectives

Develop a
Practice
risk Key financial
financial
management levers
literacy
strategy
 Module Two: Seeing the Details create
the big picture.
Big Picture Sanford I. Weill

Business acumen requires an

understanding of finance, strategy,
and decision making. Most managers
and employees, however, are
responsible for specific areas, and
they have little understanding of the
impact their decisions have on other
areas.
Short and Long Term Interactions

Build Use
relationships feedback

Offer value
Recognize Growth Opportunities

Identify market trends:

Actively research customer needs

Pay attention to competitors

 Mindfulness of Decisions

Be in the moment

Be Clear

Make a choice
 Everything is Related

Be Comprehensive

Be Balanced

Be Incorporated
 Case Study
Angela had to decide which direction to take
the company to improve the profit margins

She could invest in employee training or cut labor

She learned that sales dipped when customer service

complaints increased

Her intuition told her that implementing a training

program would increase long term profits
 Module Three: KPIs (Key The price of
light is less than
Performance Indicators) the cost of
darkness.
Understanding when goals are Arthur C.
Nielson
reached is a necessary aspect of
business acumen. Key performance
indicators (KPIs) are metrics that
show when goals are met. Each
company will have a different set of
KPIs, depending on individual
business needs.
 Decisiveness

Define areas to monitor

Identify criteria

Define the measurements

 Flexible

Change as goals change

Review and alter

Employee buy in is essential

 Strong Initiative
Recognize spots for improvement

Show some confidence

Look for solutions, not problems

Offer to fill in when gaps occur

Learn from mistakes

 Being Intuitive

Which
Who is
questions
affected?
need answers?

Actions
needed?
 Case Study

Lee needed to increase customer satisfaction

He planned a customer survey initiative to improve

service

The metric established was total complaints to

customer service

Customer complaints to customer service dropped 7%

 Module Four: Risk The first step in
the risk
Management Strategies management
process is to
Risk management involves different acknowledge
the reality of the
strategies. The purpose is to identify risk.
and assess risks and prioritize them Charles
in order to monitor and reduce Tremper
threats to the company.
Implementing risk management
requires looking at the big picture in
the future and taking the proper
steps for the good of the
organization.
 Continuous Assessment

Recognize objectives

Identify potential events

Determine the probability and impact of risks

Determine the impact and possibility

Internal and External Factors

Internal External

Cash flow Taxes

Employees Suppliers
Making Adjustments and
Corrections

Constant monitoring

Improve performance

Risks change
Knowing When to Pull the Trigger
or Plug
Not every
Opportunity
program will
Costs
succeed

Selected action -
Alternative decision
 Case Study
Kay created a financial risk strategy for her
young company

Her objective was to increase profits

She created a strategy based cash flow and liquidity

After careful monitoring, she realized that the strategy

was unsuccessful
 Module Five: Recognizing Live as if you
were to die
Learning Events tomorrow.
Learn as if you
Every day is an opportunity to learn were to live
forever.
something new. Individuals with
Mahatma
business acumen are able to recognize
Gandhi
learning events and take advantage of
these opportunities. To be successful,
you must always be learning. As you
gather knowledge, you will find yourself
learning from your mistakes and
improving your decision making
process.
 Develop a Sense of Always
Learning
• We learn from observing
Imitation
• Practice create learning
Exercise experiences

• Different possible outcomes

Experiment
• Interactions with others
Debate
 Evaluate Past Decisions

What was the outcome?

Did it meet expectations?

Would you repeat the same

decision?
 Problems Are Learning
Opportunities

Identify the Previous

problem solutions

Make a
decision
Recognize Your Blind Spots

Request
Reflect Study
Feedback
 Case Study
Craig felt like he was running in circles at
work

He was always putting out fires that came from his

past decisions

The first 2-3 hours of the workday were unproductive

Craig chose to learn from this mistake and alter the

pattern
 Module Six: You Need to Know Without
knowledge
These Answers and More action is useless
and knowledge
Running a business is a complex without action
is futile.
enterprise. In order to look at the big
picture in your business, you need to Abu Bakr

know the answers to some basic

financial questions. It is not enough for
your accountant to know this
information. Business acumen requires
you to be aware of these answers so
that you will be able to guide your
company to success.
 What Makes My Company Money?

Examine Influence
your Services the
products future
 What Were Sales Last Year?

Identify growth

Essential information

Current status of company

 What is Our Profit Margin?
How well is the
company running?

13% net profit margin

Gross and net

 What Were Our Costs?

Operating
COGS
expenses
Costs
Interest
Taxes
and other
 Case Study
Shelly’s company profit margin of 7%, was
2% lower than last year

She decided to improve her finances by cutting costs

She cut labor in half

Customers complained about longer wait times

 Module Seven: Financial To succeed, you
will soon learn,
Literacy (I) as I did, the
importance of a
Financial literacy is essential to business solid foundation
in the basics of
acumen. In order to see the big picture, education –
you have to understand every aspect of literacy both
the company’s finances. Fortunately, verbal and
anyone can improve financial literacy numerical, and
communication
with some basic instruction and skills.
practice. This module and the next will Alan
provide you with information to Greenspan
improve your understanding of financial
literacy.
 Assets

Anything of value

Creates a profit

Use cash to invest in other assets

 Financial Ratios

ROA • Net income/Total assets x 10

Inventory • Cost of Goods Sold/

turnover Inventories
Revenue
• This year’s revenue/ last year’s
sales
revenue -1 x 100
growth
 Liabilities

Money
Debt
owed

Financial Short or
health long term
 Equity

Assets Liabilities Equity

 Case Study
Tim is considering a small business loan to
purchase some new equipment

He estimates that the equipment will improve

productivity by 10%

Liquid assets are$100,000. Liabilities are $85,000

The loan amount that he applies for is $25,000

 Module Eight: Financial Knowledge is
the
Literacy (II) fundamental
factor – the
Financial literacy requires you to read major enabler –
of enterprise
and understand different reports performance.
such as the income statement, Karl M. Wiig

balance sheet, and cash flow

statement. These internal reports
along with external information that
you gather, will help you lead a
financially stable business.
 Income Statement

Gross
Revenue COGS
profit

Operating Net
EPS
expenses income
 Balance Sheet
Current assets
Total assets

Current liabilities

Total liabilities

Stockholders’ equity
 Cash Flow Statement

Cash generated

How it is used

Operating, investing, and

financing expenses
 Read, Read, and Read

Periodicals

Trade publications

Blogs
 Case Study
Brie prepared her balance sheet at the end
of the quarter

She had $10,000 in equity and considered it healthy

She did not compare it to previous statements

Brie realized that her equity had been falling. It was

currently $8,500.
 Module Nine: Business Good managing
consists of
Acumen in Management showing
average people
Business acumen requires careful how to do the
work of
cultivation of resources, specifically superior people.
one of the most important resources, John D.
Rockefeller
employees. Managing people is a
complex process, but developing
your management skills will help you
become an effective manager who
achieves significant results.
 Talent Management

Mentor Invest

Communicate Evaluate
 Change Management

Prepare Manage Reinforce

Define Plan Analyze

Sponsor Act Praise

 Asset Management

Involve the departments

Create a list

Identify assets to manage

Develop a plan
 Organizational Management

Unique to each company

Requires planning

Structured

Linked together
 Case Study
Angela decided to update the IT system for
her company

She was sure that her employees would be thrilled

No one seemed excited, and some employees vocally

complained

One month after the change was made, productivity

dropped by 7%
 Module Ten: Critical The essence of
the independent
Thinking in Business mind lies not in
what it thinks
In business, you are constantly but how it
thinks.
bombarded with information. You Christopher
rely on this information to make Hitchens

important decisions. Business

acumen requires that you do more
than absorb information. You need to
think critically to about information
and make your decisions accordingly.
Ask the Right Questions

Identify assumptions
Explore perspectives

Examine evidence

Consider different implications

 Organize Data

Makes it See trends

easier emerge

Group
similar data
 Evaluate the Information

Evaluate before deciding

Is it facts or opinion?

Is there bias?
 Make the Decision
The effects of your
decision

Options

Your feelings
 Case Study
Doug was considering joining forces with a
startup

The preliminary data and financial statements were

positive

One day he read a negative exposé

He decided that he would not go through with the

business deal.
 Module Eleven: Key Many small
businesses
Financial Levers would rather
face an angry
There are key financial levers that barbarian
horde than
drive any business. These financial tackle their cash
flow statement
levers may be overlooked, but you do or price a new
so to the detriment of the business. product.

Identifying the levers is the first step Nicole Fende

to addressing them correctly. Once

you understand these key levers, you
will increase your business acumen.
 Investing in People

Employees Customers

Training Products

Salary Experience
Effective Communication

Honest Clear

Polite Friendly
 Process Improvement

Identify
Measure

Support

Implement
 Goal Alignment

All employees
Individuals and teams

Cascade down from the top

 Case Study
The board of directors of Market Chain
approved a plan to decrease labor

The company initially saved $5 million

After six months, however, turnover increased and

sales began to fall

Turnover cost the company $3 million, and the

estimated sales loss was also $3 million
 Module Twelve: There’s no such
thing as
Wrapping Up knowledge
management;
Although this workshop is coming to a there are only
close, we hope that your journey to knowledgeable
people.
improve your Business Acumen skills is
just beginning. Peter Drucker

Please take a moment to review and

update your action plan. This will be a
key tool to guide your progress in the
days, weeks, months, and years to
come.
We wish you the best of luck on the rest
of your travels!
 Words from the Wise

Sven Goran • The greatest barrier to success is the

Eriksson fear of failure.
• If you did not look after today’s
Isaac
business then you might as well forget
Mophatlane
about tomorrow.
William
• If you do not know how to ask the
Edwards
right question, you discover nothing.
Deming