Streamline Training & Documentation: Business Acumen I: A Pretest

Tuesday, May 09, 2006

Business Acumen I: A Pretest

In the business world there is increasing recognition of the power of getting everyone in an organization aligned with the organization's goals and strategies. Promoting alignment involves a number of activities, notably regular communication concerning mission and strategic direction, and a system for performance management that sets individuals' goals so that they directly support business-unit and company-wide goals.

Another key element for achieving alignment is ensuring that everyone in the organization has basic business acumen. Naturally, the depth of an employee's understanding of financial, logistical, and other practical details of keeping a business going can vary depending on the employee's responsibilities.

To make sure everyone has at least a basic understanding of how your company makes money, you can offer one or more workshops (2-4 hours) for employees who need to close a knowledge gap in this area.

In designing such workshops, I've found it effective to start with an informal quiz. Participants team up in groups of three or four and answer as many of the following questions (or similar questions) as they can. (Note that some of the answers depend on the particular details of what your company does.)

How long can a company operate without cash?

Which of the following items are on our company income statement? dollar amount of profits; dollar amount of sales; dollar amount of debt; dollar amount of inventory

What are fixed costs?

What is the "margin" on a sale?

Does letting customers pay with credit cards — rather than sending them invoices — tend to increase or decrease a company's liquidity?

What is the difference between revenue and profit?

Which of the following are assets? a loan from a bank; accounts receivable; profits; office supplies in our supply room; our employees' expertise; leased warehouse space

When does a sale get recorded on our books?

How much were our sales last year? How much were our profits?

How much did our biggest competitor sell last year? How profitable were they?

By starting the workshop with this interactive quiz, participants get into a groove of talking with and learning from each other. When it comes time for full-group discussion, the training leader invites answers from volunteers. If nobody is sure of a particular answer, the leader can ask for a guess, or just go ahead and provide the answer, placing it in the context of the learning objectives for the workshop.

In sum, the goal of launching the basic business acumen workshop with a group quiz is to get people talking about some of the concepts they will be dealing with more systematically in the rest of the workshop, and to provide a natural bridge to the first segment of the training.

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Labels: Business acumen

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