Financial concepts that every business leader must master
Sangeeta Shankaran Sumesh ??The Gain Enabler??
CFO turned Business, Leadership & Team Coach for maximizing Potential, Performance & Profits ?? Independent Director on Corporate Boards ?? Global Speaker ?? Bestselling Author
Raj, the Vice President in a multinational was smart, diligent and dynamic. He had grown the corporate rungs rather fast. However, there was an obstacle for Raj to move as a C-suite leader.
Why?
Because Raj was not familiar with the basic financial concepts and that did not help him take the right financial decisions for business growth.
During our coaching conversation, the below were some of the concepts that demystified for him.
Sharing them here.
How many of these are you familiar with??
1.???? Reading the three big statements - Learn how the P&L, balance sheet, and cash flow statements interconnect to provide a complete financial picture of the business.
?2.???? Cash is king - Distinguish between cash flow and profit, and understand how liquidity impacts day-to-day operations and long-term decisions.
?3.???? Breakeven point - Master the calculation of when a project or product starts generating profit and how it impacts pricing and cost decisions.
?4.???? Gross margin and net profit - Understand these profitability metrics to assess how well your business converts revenue into profit.
?5.???? Working capital management - Learn the importance of managing receivables, payables, and inventory for operational efficiency.
?6.???? Budgeting and variance analysis - Explore the basics of setting budgets and analyzing variances to stay on track financially.
?7.???? Return on Investment (ROI) – Understand ROI calculations to evaluate the financial impact of new initiatives, purchases, or investments.
?8.???? Fixed vs. variable costs - Recognize the difference between fixed and variable costs and their implications for scaling and profitability.
?9.???? Debt vs. equity - Understand the basics of funding options and their long-term impact on financial health.
?10.? Key Performance Indicators (KPIs) - Focus on critical metrics like EBITDA, operating margin, and revenue growth to monitor business performance effectively.
This list equips non-finance leaders with financial knowledge to actively participate in strategic decision-making.
If you would like to understand each of these concepts more, you have three options.
1.???? You can read the bestseller “What The Finance” (link in the comments)
2.???? Subscribe to “The Gain Enabler” on YouTube and watch the Finance mantra playlist. (link in the comments)
3.???? Engage with the author for customized finance workshops for your organisation. (link in the comments)
Best wishes in your financial growth journey.
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#finance #leadership #coaching
Working with Leaders to Turn Challenges into Their Leadership Edge with my Setback SOP Framework | Leadership Challenges Strategist | Two Times Author | Global Keynote Speaker | Creator of the Setback SOP Framework
3 个月Super helpful points, Sangeeta Shankaran Sumesh ??The Gain Enabler??. There is no question that senior leaders must understand finances if they are contesting for the highest positions. Keep doing the essential work and make WTF a phenomenon.
Proactivity Coach | NLP Trainer | Global Speaker | Helping companies and individuals unlock potential through Proactivity and NLP
3 个月It is so imperative for a business leader to understand where the money is coming from, where it is going and everything between these two. The whole aspect of business is the flow of money. If you have leaks, you should know. If the inflow is slow, you should know why. If the flow is outflowing fast, you must know where when what.... Excellent share Sangeeta Shankaran Sumesh ??The Gain Enabler?? your book "What The Finance" is indeed the game changer.
Charizmatic Communication Coach, TEDx Speaker, Multi-Award-Winning Celebrity Emcee, Cofounder OrangeTalks, TV Host, and Real Life Influencer.
3 个月Very insightful! Key Performing Indicators are very essential in learning if you are heading in the right direction or no and if you need to invest more. Good feedback also assists in the same! ??????
CFO turned Business, Leadership & Team Coach for maximizing Potential, Performance & Profits ?? Independent Director on Corporate Boards ?? Global Speaker ?? Bestselling Author
3 个月Engage and connect with the author for customised workshops at [email protected]