Understanding business and financial acumen

group income statement on white background

I have been able to learn from some of the best in their fields either through direct witness or in the training I’ve received from the organizations I’ve worked for. Understanding the essence of how business works and how to find ways to match your talents and skills to improve the top or bottom line of a company is critical. As a prospective employee, it not only allows you to evaluate the strength of a company you are considering for employment, it also allows you to speak intelligently when you are interviewed.

Too often I have heard those assisting transitioning military that strategy is something they should list on their resume because “everyone in the military understands strategy”. This message is flawed because 1) military strategy and business strategy are not the same, and 2) not everyone in the military learns military strategy.

In his book, Seeing the big picture, Kevin Cope describes the five key drivers that are important to any business. These drivers are: Cash, Profit, Assets, Growth, and People. By understanding business acumen, you make sound decisions for your employment and you can find ways to show how your value to the organization is an asset. For private companies the financial information is not always easy to obtain as it is for non-profit and publicly traded companies. By researching the company you are considering applying for, you can make educated decisions about its future and whether or not your talents could be utilized. I’ve provided a brief breakdown of these key business drivers below:

Cash – This is the amount of money a company has at any single point of time because money flows in and out as receivables and payables. It’s fairly obvious that if a company is paying out more than it is receiving, you may be concerned about its ability to sustain itself over a long period. Why is this important to you? Well, it could help you decide if the company is headed for bankruptcy or will have a short shelf-life.

Profit – This is the amount of money a company makes after selling their goods or services (revenue) and after they’ve paid (expenses) all costs to create those goods and services and costs to operate the business. There are terms used such as “top-line profit” and “bottom line profit” that may be helpful to understand. Top-line profit is essentially the revenue or money that is coming in and before expenses. Bottom-line profit is what is left over after all expenses are paid. For you: depending upon your strengths, you may see an opportunity to help them grow either their top or bottom line.

Assets – Represent the equipment, facilities, or anything that creates revenue for a company and that can become cash when sold. This is the same as you in that it may be your home, life insurance policies, 401(k) accounts, stock accounts, etc. or other items in your personal life that would be your assets.

Growth – An understanding of a company (strengths and weaknesses) and its capabilities to make improvements and navigate through changing markets while also being able to stay ahead of the competition or outside forces (opportunities and threats) that may hinder from improving revenue or bottom-line profits. A company may grow organically (new products or services) or through acquisitions at different times. During your interview, it’s good to find out how a company has been growing and what they see in their future. It’s not necessarily a bad thing to grow constantly through acquisition, but that may also be an indicator that they have a culture where they aren’t allowing a free flow of ideas to surface.

People – Often mentioned as a company’s greatest asset. A company cannot grow or sustain for any length of time without hiring and retaining the best talent. The culture of a company is important and it should fit with the type of culture you’d want to work at. Prior to an interview you can discover a lot about how a company takes care of its people through an internet search. When you attend your interview, ask questions to probe whether they are a cultural fit for you.

In Summary:

From these basic descriptions and drivers, you need to understand how all of it fits within the big picture of a company and the outside forces (politics, laws, trends, etc.) that may play a part in the long-term success of a company. Take some time to evaluate the company leadership team and their ability to lead their company in the future. Past performance is not always a good indicator of future capabilities, but you can learn a lot about those that are making the decisions at the top and whether they are qualified to lead the company forward.

Understanding business and financial acumen will help you learn more about the companies you are considering applying for and in possibly determining where your skills and talents could help them to add value.

Robert Gowin is a retired Army Master Sergeant that began his career as a Armor Crewmember before becoming a recruiter and career counselor. Robert’s experience in the private sector includes business and human resources consulting, project management, corporate operational strategy and integration, and most recently as Vice President of Pharmacy Operations, Analytics, and Compliance for Anthem, Inc.’s pharmacy solutions. He is the author of the book, Master the Transition, that provides advice to military on how to plan for a successful transition that is available at Lulu.com, Barnes & Noble, and Amazon.