Demonstrate Financial Acumen & Improve as a Business Leader

 Read time: 5 mins

Today, I’m going to show you how you can improve your financial acumen and be viewed by your stakeholders as an experienced, competent and trustworthy business leader for your team or department.

Developing and demonstrating a high degree of financial acumen is critical for professionals who are looking to progress their careers. Over the past ten years I have seen many professionals struggle to breakthrough into leadership roles due to a lack of understanding of fundamental financial concepts that are critical in the success of their team/department/division etc.

Many business managers struggle as they enter this stage of their career because the activities and tasks that were previously the primary focus are no longer. A fundamental shift in thinking is required: What are the items I need to complete today and are my direct reports on track also? > Is what we are completing and achieving in line with the boarder strategic and budgetary requirements and what do I need to do to correct course if needed?

Strong performing operators don't become great business leaders overnight

This is what I recommend you focus on to demonstrate your financial acumen and improve as a business leader:

1. Develop an understanding of your fundamental business performance drivers and the broader strategic plan
2. Understand how your team's budget was formulated and ask finance for support
3. Ensure you translate the budget in an easy / tangible way for your team
4. Bring your team on the journey
5. Conduct variance analysis regularly
6. Flag issues as they arise, not at the end of the period
7. Summarize your results

1. Develop an understanding of your fundamental business performance drivers and the broader strategic plan
   • Make clear connections between what your team is doing on a daily basis to how this translates to financial results. What levers do you have to increase / decline your revenue?
   • What factors are driving costs and what levers do you have available to control these?
2. Understand how your team's budget was formulated and ask finance for support
   • There are many ways budgets are formulated and I will save this detail for a future newsletter, however, make sure you understand how the components of your budget were formulated and what you can do to influence the results.
   • Leverage your finance team!
3. Ensure you translate the budget in an easy / tangible way for your team
   • In order for your team to succeed they need to have clarity of what is being expected of them, critically, that the sum of their effort should equal the budgeted results being asked of you as the business leader.
4. Bring your team on the journey
   • Providing context and an opportunity for your team to buy into the ambitions of the organization is critical in any high performing team.
   • They don't need to be across every detail, however, an understanding of how their performance goals link with the originations ambitions is important. This will make staff performance discussions easier too.
5. Conduct variance analysis regularly
   • Be proactive, don't wait for month end to check if you team is on track.
   • What worked over the last period? What needs to be improved on? What do you anticipate next periods’ results will be if these improvements are completed and why? What are you doing to ensure you are not in the same position next month?
6. Flag issues as they arise, not at the end of the period
   • Raise issues early and propose solutions.
   • While your solutions may not be the actions ultimately taken, from experience, nothing is worse than someone that shoots across problems without any point of view on how the issue is to be tackled.
7. Summarize your results
   • Being prepared to discuss your team’s results, either at the end of each week, month, quarter etc is significant to how you will be viewed as a leader.
   • I strongly recommend that you pre-prepare a view prior to speaking with your stakeholders regarding performance: What worked, Didn't work, What went in your favour and didn't, what you expect next month and what are the key risks. Tailor the comms for the different stakeholders you meet with.

I hope you found this helpful, we will be covering several of these topics in further detail across the coming weeks. If you haven't already, feel free to subscribe and follow me on LinkedIn for daily actionable tips.