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[Audiobook] Workplace Essentials | Business Acumen
Ever wondered how mastering business acumen can transform your company’s profitability? This episode promises to equip you with essential skills in finance, strategy, and decision-making, all while keeping an eye on the big picture. We kick things off with Angela's inspiring story of prioritizing employee training over labor cuts, showcasing a delicate balance between immediate fixes and long-term strategies. You'll also find actionable advice on maintaining relationships and recognizing growth opportunities by understanding market trends and customer needs.
Next, we delve into Kay's challenging yet rewarding journey as a young entrepreneur crafting a financial risk strategy. Her story underscores the importance of incorporating both external and internal factors, and recognizing learning events to overcome decision-making blind spots. Craig's breakthrough in addressing communication issues illustrates how identifying key financial questions and pinpointing profitable products can drive your business forward. This segment is a must-listen for anyone looking to enhance their financial acumen and refine their problem-solving skills.
Finally, we discuss the vital role of financial literacy and asset management in business success. Learn about balancing liquid assets with long-term investments, and how to use financial ratios to assess your company's health. Through the practical cases of Tim and Bree, we illustrate the significance of income statements, balance sheets, and cash flow statements. We wrap up with Market Chain's story, emphasizing the need for goal alignment and the courage to overcome the fear of failure. By the end of this episode, you'll be armed with the knowledge to make informed decisions and secure long-term business success.
Sign up for our self-paced courses or instructor-led workshops at www.ht-a.solutions
Sign up for our self-paced courses or instructor-led workshops at www.ht-a.solutions
Sign up for our self-paced courses or instructor-led workshops at www.ht-a.solutions
Ever wondered how mastering business acumen can transform your company’s profitability? This episode promises to equip you with essential skills in finance, strategy, and decision-making, all while keeping an eye on the big picture. We kick things off with Angela's inspiring story of prioritizing employee training over labor cuts, showcasing a delicate balance between immediate fixes and long-term strategies. You'll also find actionable advice on maintaining relationships and recognizing growth opportunities by understanding market trends and customer needs.
Next, we delve into Kay's challenging yet rewarding journey as a young entrepreneur crafting a financial risk strategy. Her story underscores the importance of incorporating both external and internal factors, and recognizing learning events to overcome decision-making blind spots. Craig's breakthrough in addressing communication issues illustrates how identifying key financial questions and pinpointing profitable products can drive your business forward. This segment is a must-listen for anyone looking to enhance their financial acumen and refine their problem-solving skills.
Finally, we discuss the vital role of financial literacy and asset management in business success. Learn about balancing liquid assets with long-term investments, and how to use financial ratios to assess your company's health. Through the practical cases of Tim and Bree, we illustrate the significance of income statements, balance sheets, and cash flow statements. We wrap up with Market Chain's story, emphasizing the need for goal alignment and the courage to overcome the fear of failure. By the end of this episode, you'll be armed with the knowledge to make informed decisions and secure long-term business success.
Sign up for our self-paced courses or instructor-led workshops at www.ht-a.solutions
Sign up for our self-paced courses or instructor-led workshops at www.ht-a.solutions
Sign up for our self-paced courses or instructor-led workshops at www.ht-a.solutions
Business Acumen Module 1. Getting Started. Business acumen 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. Steve Jobs demonstrated great business acumen. Fortunately, it is possible for the rest of us to improve business acumen. The right training combined with experience will improve your business savvy.
Speaker 1:Module 2. Seeing the Big Picture. 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. When too much focus is placed on one aspect of the business, it is difficult to make decisions for the good of the company. In order to make effective decisions, it is necessary for you to examine the big picture.
Speaker 1:When looking at the big picture, it is necessary to consider long-term as well as short-term interactions. Short-term interactions are immediate, single exchanges and they are necessary for the company to survive. Without looking at the big picture, however, short-term interactions may hinder long-term success. For example, you may damage a business relationship by using aggressive sales techniques, costing you sales in the future. Long-term interactions are processes or relationships that are essential to growth. Long-term business success requires the long-term interactions. The relationships with customers, vendors and employees need to be carefully cultivated. Failure to cultivate relationships occurs when there is a lack of communication or communication is not respectful. Long-term relationships help guide the future of the business. Improving long-term interactions Build relationships. Relationships must be based on mutual trust, respect and support. Use feedback, request feedback and listen to complaints. Offer value. Provide value in product, services and compensation.
Speaker 1:It is essential for every organization to recognize growth opportunities to ensure long-term success. An opportunity is any project or investment that will create growth. Opportunities, however, can be overlooked when we do not pay attention to the big picture. Individuals with business acumen are constantly recognizing opportunities for growth. If recognizing opportunities does not come easily for you, there are steps to take that will ensure that you do not overlook growth opportunities. Identify market trends. Monitor changes in the market, such as technological advancements. Actively research customer needs. Conduct market research and anticipate customer needs, which you will fulfill. Pay attention to competitors. Take advantage of a competitor's weakness and learn from their strengths. Monitor demographic changes Changes in demographics indicate potential shift in customer base or needs. Consult employees. Do not overlook employee ideas. Encourage brainstorming. Monitor abilities of the workforce. Pay attention to employee skills. Offer training or hire new employees in response to growth opportunities.
Speaker 1:Decisions need to be made carefully and mindfully. In stressful situations, it is easy to make decisions based on emotions or external pressure. Recognize these events, which increase the risk of making a poor decision and can have long-term consequences. Mindful decision-making combines reason with intuition to come up with decisions that are based in the present Decision-making steps 1. Be in the moment. Pay attention to how you feel physically and emotionally. This allows you to reach your intuition and understand any feelings of conflict and their source. The source of the conflict may evolve as you become mindful. For example, conflict over the cost of change may shift to conflict that the change goes against company values. Naming the conflict will help you make the decision without fear. 2. Be clear. Investigate for clarity. Begin by investigating your feelings and identifying the type of decision you are making. A neutral decision, for example, should not create a great deal of stress. Once you identify the decision, make sure you have collected the necessary information to make the decision. Additionally, you should consult the people who will be affected by your decision. 3. Make a choice Once you have all the information. Listen to your intuition and write down your decision. Take some time to consider this decision. If you are still comfortable with the decision, take some time to consider this decision. If you are still comfortable with the decision after a few days, act on it.
Speaker 1:In business, it is necessary for each person to perform specific roles and functions. Every business role is related to each other. For example, poor production and poor customer service will affect sales. Too many sales returns cost the company money, damaging the profits. Each aspect of the business relies on the others. Most people only focus on their specific roles without considering how they affect the other departments. Looking at the big picture allows you to see how everything is related, and it begins with the leadership. The leadership of the company is responsible for the culture and values. These guide the other aspects of business, which are operations and marketing, finance and governance and information and people. How to relate. Be comprehensive. Monitor every area of the business to make sure each one is reaching their goals. Be balanced. Make sure that each area of the company is sustainable and make adjustments as necessary. Be incorporated. Integrate every aspect of the company is sustainable and make adjustments as necessary. Be incorporated. Integrate every aspect of the business with the others. Show employees how they affect each other and the company as a whole.
Speaker 1:Angela had to decide which direction to take the company to improve the profit margins over time. She could invest in employee training to improve customer service, or she could cut labor further to save money. Cutting labor would fix the problem immediately, but she was not sure it was the right decision. Every time she thought about cutting labor she became nauseated. After careful consideration, angela realized that she felt cutting the labor went against her mission to treat all employees as valued team members. After gathering data, she learned that sales began to dip when customer service complaints increased. Additionally, there was employee interest in a training program. Her intuition told her that implementing a training program would increase long-term profits.
Speaker 1:Module 3. Kpis Key Performance Indicators. Understanding when goals are 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. Creating and managing KPIs will improve the success of your business as well as your own business acumen. Kpis need to be developed decisively. This requires an understanding of which performances need to be measured and how they should be measured. Creating random metrics will not help gauge the effectiveness of your organization.
Speaker 1:Decisive KPIs. Define areas to monitor. Determine which areas are successful and which ones need improvement. Identify criteria. Brainstorm ideas and use them to create criteria that need to be monitored. For example, criteria would include customer conversion or units per transaction. Define the measurements. Create specific, smart goals to monitor. An example would be an average of three units per transaction. Once you have decided the type of KPIs you want, you need the buy-in of the stakeholders. Communicate the information decisively and make sure that everyone understands the purpose.
Speaker 1:While it is necessary to be decisive with KPIs, they must not be static. Flexibility is necessary in every aspect of business, including KPIs. They must change as the goals change. It is important to remember that KPIs can be improved even when they are successful, which means that they need to be reviewed and altered accordingly. Kpis are often driven from the top down and they are less effective when the initiative is inflexible. Allow the different departments to adjust KPIs according to their needs and give them the authority to time implementing the KPIs so that their employees understand and embrace them. Employee buy-in is essential to the KPI success. Additionally, coordinating the KPIs on a large scale can cause confusion. It is better to allow different rollout times to avoid mistakes.
Speaker 1:Showing initiative is having the ability to take charge of a new or unknown situation. Having initiative is a way for employees to be more automatous in their day-to-day tasks. It will lead to and produce better problem-solving skills. Mistakes will happen, but do not treat them as mistakes or errors. Use them as learning events. Taking the responsibility to look after an issue or event by finding the answer is what having a strong initiative is about. Developing initiative, recognize areas for improvement. Show some confidence. If you have an idea, share it. Look for solutions, not problems. Offer to fill in when gaps occur. Don't focus on or get discouraged by mistakes. Learn from them.
Speaker 1:Key performance indicators can work from the top down or the bottom up. Kpis are created from the top down when they are used in dashboards. Because dashboards focus on operational goals rather than strategic goals, the dashboard provides intuitive and useful information to users. They require targets to be established for each KPI ahead of time. In order to use a dashboard, all business users need to be involved. Thus, you should interview users to determine the dashboard metrics. Which questions need answers? Who is affected by the question? Why do you believe the question is important? Which data do you use to answer the question? Will creating KPIs create more questions. What action needs to be taken? What metrics will you use? Once you determine metrics, use them to guide and coach employees. Individuals with business acumen understand that metrics should encourage employees to be successful rather than beat them down when the numbers are not met.
Speaker 1:Lee needed to increase customer satisfaction. He planned a customer survey initiative to improve service. He decided to start small and set the target for 10% improvement over the course of a month, without talking to stakeholders or consulting data. The metric established was total complaints to customer service. The KPI targets were inflexible and established without employee buy-in. After a month, customer complaints to customer service dropped 7%. However, the feedback on customer surveys indicated that many were still unsatisfied.
Speaker 1:Module 4. Risk Management Strategies. The purpose of risk management is to identify and assess risks to the company and prioritize them. Implementing risk management requires looking toward the future and taking the proper steps to reduce and monitor threats. Certain risks may be transformed into opportunities. Therefore, risk management is essential to business acumen. A risk assessment will identify dangers and opportunities. There are different types of risk assessments. You can implement strategic risk, internal audit, market risk and customer risk. A risk assessment needs to be a continuous part of the business cycle to be effective.
Speaker 1:Risk assessment steps 1. Recognize objectives. The scope of the assessment is based on specific objectives created using SMART goals. 2. Identify potential events. Use prior and possible events to determine risks. Identify external factors such as the economy, politics, technology and the environment, as well as internal data. This information identifies risks and opportunities. Identify risk tolerance. Determine the variation from the objective that is acceptable with risks. Determine the probability and impact of risks. Assign an impact and probability rating to risk based on data. 5. Outline responses for risks. Assign a response for each risk. These may be to accept, avoid, reduce or share the risk. 6. Determine the impact and possibility. Evaluate the controls and response. You should evaluate the assessment to determine what risks are connected between departments and to each other.
Speaker 1:Managing risk requires identifying the external and internal factors that affect the company. In certain cases, internal factors and external factors will overlap. In fact, many internal hazards are external hazards. These factors are essential to the risk assessment. The key risks that all business faces are financial, strategic, operational and hazard. You must determine which factors affect your business and how to address them. Internal factor examples Financial risk. Internal risks include liquidity and cash flow. Strategic risk Intellectual capital and R&D are examples of strategic risks. Operational risk, accounting and the supply chain are examples of internal operational risks. Hazard risk Employees and products are internal hazards. External factor examples Financial risk. External risks include taxes, interest rates and credit. Strategic risk, competition and customer demand are examples of strategic risks. Operational risk Regulations, culture and the supply chain are examples of external operational risks. Hazard risk Suppliers, natural risks and products are external hazards.
Speaker 1:Risk management requires constant monitoring and assessment. As you gather information using KPIs and other tools designated to monitor progress, you will determine which management strategies are successful and which are unsuccessful, correct and adjust the strategies to improve performance as necessary. Additionally, risks are subject to change. For example, a competitor who suddenly offers a similar product at a cheaper price changes your threat assessment. This will require adjustments and corrections in your objectives, strategies and actions. There are risks in every aspect of business and not every program will be successful. Risk management strategies help you determine when to go for a win and when it is necessary to cut your losses.
Speaker 1:Allocating your resources to an ineffective strategy is wasteful. However, pulling resources from potentially successful opportunities may equal a loss. Individuals with business acumen understand how to allocate resources. Sometimes, knowing where to invest is obvious. A program that hemorrhages money year after year despite adjustments needs to be cut. Similarly, rolling out a product that has consumer interest is probably a risk worth taking. Other answers are not so clear-cut, even when you have collected extensive data. In these cases, taking advantage of opportunity costs will help determine which risk is worth taking.
Speaker 1:Opportunity Costs Opportunity costs are defined as the value of an alternative decision. It is the actual monetary cost as well as the cost of value. In order to determine opportunity cost, however, it is useful to convert everything to dollar amounts. For example, the complete cost of employee training when sales are slipping could be calculated, and the alternative would be the complete cost of not training employees. When calculating opportunity costs, it is important to remember that it is based on projected costs, but it still provides useful information. Opportunity cost equals selected action minus the alternative decision.
Speaker 1:Kay created a financial risk strategy for her young company. Her objective was to increase profits and she examined the cash flow and liquidity of the organization in her assessment. She created a strategy based solely on this information, but after careful monitoring, she realized that the strategy was unsuccessful. The interest rate changed and her actions had not compensated for the difference. She chose to make adjustments using the external and internal factors to guide her assessment. After three months, her strategy began to pay off Module 5.
Speaker 1:Recognizing Learning Events Every day is an opportunity to learn something new. Individuals with business acumen are able to recognize 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. The ability to recognize learning events will benefit you as well as the organization. Every encounter offers a learning experience. The key to recognizing learning events is to develop a sense of always learning. Identifying the eight different ways that we learn will ensure that you do not overlook learning opportunities.
Speaker 1:1. Imitation we learn from observing and imitating others, such as instructors or respected mentors. 2. Reception and transmission Reception is the experience that requires you receive a transmitted message. It may be written or verbal, and it can include values as well as academic understanding. 3. Exercise Actions and practice create learning experiences.
Speaker 1:These can occur in any action that you practice, such as writing, meditation or computer programs. 4. Exploration Searching for answers or discovering information on websites, interviews, books, etc. Requires individual initiative. Interviews, books, etc. Requires individual initiative. 5. Experiment Experimenting or assessing the success of a project shows different possible outcomes and influences problem solving. 6. Creation the creative process is also a learning process. These can be individual or group projects. The process ranges from painting to developing a new survey. 7. Reflection Analysis before, during or after an action is a learning opportunity. This can be done on a personal level or with the help of friends and colleagues. 8. Debate Interactions with others cause us to defend or modify our perspectives. These are potential learning experiences.
Speaker 1:Our past decisions often guide our current actions. Successful and unsuccessful decisions need to be evaluated to identify errors in judgment as well as effective thought processes. Ask yourself a few questions after each decision and learn from your mistakes and achievements. Questions what was the outcome? Did the outcome meet expectations? Would you repeat the same decision? What information or advice can you take away from this decision? When you take the time to learn from all of your decisions, even your ineffective choices will bring you success.
Speaker 1:People prefer to avoid problems or mistakes. However, problems are not always avoidable. When problems arise, you have a chance to learn from them and turn them into opportunities. The first step to learning from problems is to correctly identify the problem. For example, a shortage in cash flow may be caused by loss of sales or unexpected expenses. Once the problem is identified, consider different solutions or opportunities. For example, a change in the market may provide you with an opportunity to introduce a new product you have been considering. If the problem is familiar, what were your past solutions? For example, did a price reduction help increase sales and improve cash flow? Once you consider the different opportunities associated with your problem, you must make a decision. If you make a mistake, embrace it. If you face the same problem again, you will know what to avoid.
Speaker 1:We all have blind spots in our lives and they can easily transfer to our business success. Blind spots are parts of our personalities that are hidden to us. They may be deep-seated fears, annoying habits or judgmental attitudes. Allowing blind spots to persist will cost your company and innovative ideas. Blind spots will also permit ineffective activities to continue. Recognizing your blind spots is not difficult, but it does require the courage to make necessary changes. Request feedback, ask trusted friends and colleagues for honest assessments. Reflect, take the time to reflect on your decisions, thought processes and actions. If you are honest with yourself, you will identify blind spots. Study, use books, courses, etc. To help you become more in tune with your views and potential blind spots. Figure out what you don't know and strive to learn.
Speaker 1:Craig felt like he was running in circles at work. He was always putting out fires that came from his past decisions. He was not sure why. He kept making mistake after mistake and faced problem after problem. As a result, the first two to three hours of the workday were unproductive. They were devoted to handling problems that should have already been addressed in the decision-making process. Finally, he decided to break the vicious cycle. He examined his past decisions and identified a repeated pattern of poor communication in his planning. Craig chose to learn from this mistake and alter the pattern. After taking advantage of his knowledge, he faced fewer difficulties and gained back precious hours in his workday.
Speaker 1:Module 6. You need to know these answers and more. Module 6. You need to know these answers and more. Running a business is a complex enterprise. In order to look at the big picture in your business, you need to 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. The purpose of every business is to make a profit. You need to make money in order to survive, but in order to do this, you must identify what makes your company money. You need to examine your products and services to determine which ones are actually making money for the company. For example, a bakery makes croissants, cookies and cakes. The croissants account for 80% of the sales and the cakes make up 15% of the sales. Cookies make up 5% and some days most of them are thrown out. Knowing what makes your company money will provide influence and help steer the future of the company.
Speaker 1:Companies need to grow to stay competitive. You are able to identify growth only when you see an increase in sales over time. Knowing last year's sales is essential to understanding the current status of your company. For example, you should use last year's sales to calculate the rate of change. Rate of change. Subtract the difference between last year's sales from this year's sales. Last year's sales were $90,000 and this year is $100,000. $100,000 minus $90,000 equals $10,000 increase. Divide, increase or decrease by the previous year. 10,000 divided by 90,000 equals 0.111. Multiply the rate by 100. 0.111 multiplied by 100 equals 11% increase.
Speaker 1:Every business needs to make a profit. The profit margin indicates how well the company is running. A large, successful company typically has a 13% net profit margin. The higher the profit margin, the more efficient the business is run. There are two types of profit margin gross profit margin and net profit margin. Both are found when the profit is divided by the total revenue. The difference between the two is that the net profit margin is profit after tax and operating costs. Example Revenue equals $150,000. Gross profit equals $50,000. Divided by $150,000 equals 33% gross profit margin. Net profit equals $10,000. Divided by $150,000 equals 33% gross profit margin. Net profit equals $10,000 divided by 150,000 equals 10% net profit margin.
Speaker 1:A company's costs affect other financial aspects, such as profits. This is why it is so important to control costs. Many companies choose to increase profits by cutting costs. However, this can backfire when the costs you cut directly affect the customer's experience. Basic Costs COGS Cost of goods sold is also called direct cost. This includes costs associated with production materials, labor, inventory, distribution and other expenses. The individual COGS must stay below the sale price to make a profit. Operating Exp Overhead expenses are included in operating expenses, which is any expense necessary to keep the company running. That is not COGS. Examples include support function salaries, rent, marketing, r&d, utilities, equipment, travel, etc. Interest and other expenses, interest on loans or investment losses are not part of running the business from day to day, but they affect the bottom line. Other expenses include lawsuits and selling an asset. Taxes Federal, state and local taxes are unavoidable costs of doing business.
Speaker 1:Shelley's printing company had a profit margin of 7%, down 2% from the previous year. She decided to improve her finances by cutting costs. She began by negotiating with her vendors, which saved her a decent amount of money. She also cut labor in half. Customers complained about longer wait times and her long-term employees soon found jobs elsewhere. This required her to hire and train new employees. By the next year, her profit margin was unchanged. Hire and train new employees by the next year. Her profit margin was unchanged.
Speaker 1:Module 7. Financial Literacy Part 1. Financial literacy is essential to business acumen. In order to see the big picture, you have to understand every aspect of the company's finances. Fortunately, anyone can improve financial literacy with some basic instruction and practice. This module and the next will provide you with information to improve your understanding of financial literacy.
Speaker 1:Assets are anything of value that the company has that will create a profit or improve revenue. Many assets, such as a building or product, are listed on a balance sheet. Assets such as customers and employees are not listed, but they are the most valuable assets companies have. A company's financial stability depends on its assets and its ability to liquefy those assets. Businesses are not supposed to hoard cash. They are supposed to invest in other assets and use those to increase the return and productivity, perhaps by purchasing a machine that increases production. The key is balancing liquid assets with those you use.
Speaker 1:Financial ratios are formulas that provide information about the company's status. The information used to find financial ratios is typically taken from the financial statement. Ratios are used to find a variety of information, including trends, liquidity, profitability, assets and financial leverage. We have already examined some ratios in the previous module. The following are some more basic ratios you will need to navigate your finances Ratio formulas. Roa return on assets equals net income divided by total assets multiplied by 100. Inventory turnover equals cost of goods sold divided by inventories. Revenue sales growth equals this year's revenue divided by last year's revenue, minus 1, multiplied by 100. Earnings per share growth equals this year's EPAs divided by last year's EPAs minus 1, multiplied by 100.
Speaker 1:Liabilities are money that you owe. Mortgages or credit balances are liabilities. Liabilities are a measure of financial health. Too many liabilities are an indication that the company is in trouble, particularly if the liabilities exceed the assets. Liabilities may be short-term or long-term. Short-term liabilities are considered mature within a year and they typically have lower interest rates. Long-term liabilities last longer than a year. They are a greater risk and have higher interest rates.
Speaker 1:Assets and liabilities are used to determine equity. Your equity, in turn, will determine what type of business risk you are Lending. Institutions and investors examine your equity carefully. Good equity is associated with being a low-risk investment and it makes you a low-risk borrower. Equity equation Assets minus liabilities equals equity. Essentially, equity is what you have left after paying off all of the debts that you owe. Issuing stocks to shareholders can create equity. For stockholders, equity is what they would have after liquidation. A higher equity ratio indicates that they will earn more money. Equity ratio equals shareholder equity divided by assets multiplied by 100. Understanding equity and what it influences is necessary to improve your business acumen. Tim is considering a small business loan to purchase some new equipment for his company. He estimates that the equipment will improve productivity by 10%. His total liquid assets equal $100,000. His total liabilities are $85,000. He is not sure if he has the equity for the five-year loan that he is hoping for, but he fills out the application. The loan amount that he applies for is $25,000.
Speaker 1:Module 8. Financial Literacy, part 2. Financial literacy requires you to read and understand income statements, balance sheets and cash flow statements. These internal reports, along with external information that you gather, will help you lead a financially stable business. Although it is not glamorous, financial literacy is a necessary part of business acumen. The income statement allows you to see what money the company made. It is also called a profit and loss statement because it shows the profits or losses for a period, typically a quarter or a year. An income statement shows information from the two previous reports, allowing you to determine growth. Each income statement is unique, but there are six measures to be included.
Speaker 1:Parts of an income statement Revenue, sales or gross revenue. Cost of goods sold. Cogs or the cost of sales. Gross profit, revenue minus cost of goods sold. Operating expenses and income of goods sold. Operating expenses and income Itemize each expense to calculate income. Net income, net profit, EPS Earnings per share is for public companies. Other expenses and income may also be included if necessary.
Speaker 1:A balance sheet indicates where your company stands at any given time by showing assets, liability and equity. Balance sheets are prepared the last day of the month, quarter or year. The balance sheet allows you to determine the financial health of an organization. While balance sheets are created based on the needs of each company, there are specific topics that need to be addressed. Items on a balance sheet Current assets, specifically liquid assets. Total assets Includes long-term assets such as investments. Current liabilities Liabilities paid within a year. Total liabilities Includes liabilities to be paid past 12 months. Stockholders' equity Stockholders' equity is used in public trading. If the company is private, equity is the difference between total liabilities and assets.
Speaker 1:A cash flow statement provides information about the cash generated and how it was used. It is also called a sources and uses of cash statement. Cash flow statements are usually generated every quarter or year and contain the three most recent reports. You can use the information in the cash flow statement to define the net increase or decrease in cash equivalents. Equation Cash from operations plus or minus cash from investments plus or minus cash from financing equals net increase or decrease. Each cash flow statement is unique, but there are specific items that should be included on the report. Items on a cash flow statement Net cash used or provided by operating activities. Net cash used or provided by investing activities. Net cash used or provided by investing activities. Net cash used or provided by financing expenses. You begin the cash flow statement with the net income from the income statement and it ends with the cash equivalent, the beginning of the balance sheet.
Speaker 1:Continuing education of financial literacy will boost your financial literacy. Do not become complacent in your learning. Read everything that you find concerning financial literacy. Do not become complacent in your learning. Read everything that you find concerning financial literacy. Read relevant trade publications and periodicals to keep up with current information. Once you find pertinent information, consider how to integrate it into your company's financial strategies. Sources of information Books, periodicals, trade publications, government publications, Blogs or websites, databases. Bree prepared her balance sheet at the end of the quarter. Looking at current information, she had $10,000 in equity. She considered the equity healthy, but she did not compare it to previous statements. The following quarter, her accountant prepared a balance sheet statement that included balance sheets from the previous two quarters. Brie realized that her equity had been falling. It was currently $8,500.
Speaker 1:Module 9. Business Acumen in Management. Business acumen requires careful cultivation of resources, specifically employees. Managing people is a complex process, but developing your management skills will help you become an effective manager who achieves significant results. Pay careful attention to talent management, change management, asset management and organizational management. Talent management differs from employee management in the development process. Rather than abandoning employees to tasks, managers develop employee talent to benefit the organization. Studies have shown that talent management can increase productivity and decrease turnover. There are many different strategies involved in talent management. Below you will find a few strategies that will improve employee development and increase productivity. Strategies Mentor Develop mentorship programs and team up new employees with more experienced ones. Invest Invest in effective training programs that develop individuals and make them feel valued. Communicate Communicate effectively, which involves active listening and being open and honest. Evaluate Choose tools and measures to evaluate the effectiveness of your strategies, such as surveys, employee feedback, productivity, etc.
Speaker 1:Change is inevitable in any organization. Unfortunately, we are not wired to accept change easily, so tensions may run high as people resist. You can help alleviate the stress associated with change with effective change management. Smoothly implementing change will reduce lost productivity as well as improve workplace culture. The process One prepare Define the change, identify the change, communicate with employees and assess the needs as well as potential resistance. Choose a team. Find team members to lead the change. Sponsor Determine how leadership will actively sponsor the change. Two manage Develop plans. Create a change management plan and communicate the details. Act. Implement the change management plan and continue to communicate the expectations. Three reinforce Analyze change, use surveys and feedback to determine success. Manage resistance. Understand the causes, look for gaps and communicate the need for acceptance. Correct or praise. Praise individuals who implement change effectively and give corrective actions for resistance.
Speaker 1:Asset management is a plan implemented to define your assets and how they are used. Mismanaged assets will affect your equity, credit and reputation. Implementing asset management may be easier with the help of various software programs available. Steps Involve the departments. Determine which departments have assets that need management and coordinate with them. The individual departments are responsible for their assets. Create a list. Create a list of assets along with the price paid, maintenance, devaluation and disposal costs. Each department should create its own list. Identify assets to manage. Choose the assets that require management. They may be physical, intellectual, etc. Develop a plan. Use a separate plan for each of the following Facilities management, maintenance plan, capital development.
Speaker 1:Organizational management is unique to each company. There may be regional managers, divisional managers and departmental managers who oversee different employees. The organizational structure should reflect the distinct divisions. When planned and executed correctly, all employees will understand what is expected and how they each contribute to the success of the company. Angela decided to update the IT system for her company. She was sure that her employees would be thrilled with an easier-to-manage point-of-sale system and other technological advances. Angela sent out a memo with the date of the change and she was surprised by the reaction. No one seemed excited and some employees vocally complained. Still, she was certain that they would embrace the change quickly. One month after the change was made, productivity dropped by 7%.
Speaker 1:Module 10. Critical Thinking in Business. In business, you are constantly bombarded with information that you rely on to make important decisions. A good business leader will think critically about information and make decisions accordingly To avoid costly mistakes. Business leaders use critical thinking in all aspects of workplace operations, from who to hire to how to sell products. Top-down decisions should emphasize critical thinking in the workplace.
Speaker 1:Critical thinking requires you to ask questions continually. You should question people, information plans, etc. The key to critical thinking is asking the right questions. The questions should identify assumptions. Is it verified? Explore perspectives. What is another point of view? Examine evidence. Why did this occur? Attempt to understand. What do you mean. Consider different implications. Is this important? For example, a critical thinking question about statistics would be is this source credible. By asking the right questions, you will weed out useless or harmful information and utilize the information that will help you in your endeavors.
Speaker 1:Critical thinking and decision-making require you to analyze data. Organizing your data will make it easier for you to analyze. There are programs that can help you get organized. Data can be grouped together for specific reasons or follow certain patterns. For example, you would want to group financial statements together. Once you organize your data, you will see trends emerge as you draw conclusions. For example, market trends will become apparent once you organize your research on external business factors. The trends that you see in the data will help guide and shape your business.
Speaker 1:You must always evaluate information and conclusions before making any decisions. You should differentiate between a fact and an opinion by using one of the right questions. You also need to identify information and conclusions for any signs of bias. For example, does a conclusion you are reading consider all of the information available? Even when information is factually based, it may not be relevant to the argument which indicates possible bias. For example, the fact that it was cold one night does not provide information about the lunar cycle. You need to identify facts that are relevant, substantial and applicable before you draw your own conclusion from the information presented.
Speaker 1:Critical thinking is useful in the decision-making process. You already know how to ask questions and evaluate information. Once you have done both, you have a few more considerations before you make the decision. Once you have evaluated everything, make the decision and act on it, you can feel secure, knowing that you based your decision on accurate and relevant information. The effects of your decision how will the decision affect you, your business and others? Is the effect long-term or short-term Options? Do you have more than one option? Your feelings Are you comfortable with the decision?
Speaker 1:Doug was considering joining forces with a startup. The company was exciting and there was a good chance that it would be profitable. The preliminary data and financial statements were positive and Doug was leaning toward accepting the offer. One day, he read a negative expose of the startup written by the startup's competitor. The article made Doug nervous and he decided that he would not go through with the business deal.
Speaker 1:Module 11. Key Financial Levers. There are key financial levers that drive any business. These financial levers may be overlooked, but you do so to the detriment of the business. Identifying the levers is the first step to addressing them correctly. Once you understand these key levers, you will increase your business acumen.
Speaker 1:People are a key financial lever in any business. People are your greatest asset. The people associated with your business are your customers and your employees. If you do not invest in your people, you are making a disastrous mistake. Employees Many companies cut back on expenses related to employees to save money. However, this can backfire and cost you qualified people. Consider investing in employees the following ways Training, bonus, fair salary, relationships, opportunity for advancement. Customers your job is to anticipate customer needs and wants. You invest in your customers when you offer them what they need. Consider the following customer investments Create new products. Develop a customer experience, improve relationships.
Speaker 1:Business knowledge and acumen are not useful if you are incapable of communicating effectively. Communicating is a key to the success of any business and it begins with listening. You must actively listen to people so that you can answer their questions accurately. Before you begin a conversation, you should also become familiar with the topic. Communication techniques Be honest and concise. Communicate honestly and quickly with people. Be clear. Use clear, concise language to avoid confusion. Be polite. Always answer questions and never interrupt. Be friendly, use a conversational tone and avoid confrontation.
Speaker 1:Process improvement is used to analyze business processes. It is also used to introduce a new process or changes to existing ones. Benefiting from process improvement requires you to follow some basic steps Steps to Improvement. Identify Identify processes to change and prioritize the order of the change process. Establish measures. Determine objectives and measures used to determine the performance. Determine and validate. Determine if there are obstacles and the exact path necessary to reach objectives. Support Get buy-in from leadership. Data Collect and analyze data from surveys, metrics, etc. Options Provide different change options. Revise Revise the project based on the options chosen. Implement Use change management strategies to implement a plan. Approval Gain acceptance from stakeholders. Evaluate Evaluate the success of the process.
Speaker 1:Part of looking at the big picture of business is goal alignment. Goal alignment is aligning the goals of all managers and employees with the goals of the business. Aligning individual goals is done at the team level. For example, a team goal to increase production 10% over the next month will affect the individual goals. Team goals are based on the information from cascading goals. These start with goals at the top of the company and change as they cascade down to the different employee levels. Once you have team goals, you can identify your individual goals. Remember they must be based on company goals. It is also wise to create smart goals that are specific, measurable, attainable, relevant and timely.
Speaker 1:The Board of Directors of Market Chain approved a plan to decrease labor spending and cut back on customer rewards. To increase profit and liquidity. 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. The results of the information caused the board to reconsider their decision. Module 12. Wrapping Up. Although this workshop is coming to a close, we hope that your journey to improve your business Module 12. Wrapping Up I look for people who obviously have a level of business savvy and acumen, because this is a show where it's about business. Sven-joran Eriksson the greatest barrier to success is the fear of failure. Isaac Moffatlan If you did not look after today's business, then you might as well forget about tomorrow. William Edwards Deming If you do not know how to ask the right question, you discover nothing.