Do You Understand Your Business?

By January 23, 2020 Evolve Insights

As it appeared in the Daily Nation on January 21st 2020
Dr. Lucy Kiruthu

Every day, millions of employees show up at work across the globe. They do what needs to be done. A new day dawns and the cycle of being at work continues. At the end of the pay period, employees receive a reward for their work. Unfortunately, some of these employees have very little understanding of the business in which they work. Many have no idea about the purpose of their business. Others cannot even state the main challenges their business faces or whether their business is likely to survive in the future or not. Others cannot identify who their key customers are or describe their products or services in full. In most cases, having an understanding of the business is left to the leadership.

It is obvious that employees at all levels are key stakeholders in any business. They are the ones that run the business. Besides, the business is a major source of their livelihood. The success or failure of the business affects them. Understanding our businesses is important. It goes beyond having an understanding of our job. It is about understanding what goes on in the life of the business. Employees should therefore, have an interest in what goes on in their business. A good starting point is to understand your industry. In what industry is your business? What is unique about the industry? How many players are in the industry? Is it an overly competitive industry? What are the challenges that the industry faces? What position does your company hold in the industry? What is your company’s market share? How does your business differentiate itself from others in the industry?

Another way to understand our business is to study its financial data. In some companies, financial data is public. Such data is posted on the company’s website, is made available to shareholders during the Annual General Meeting or can be accessed internally. Financial data speaks volumes. From the audited financial statements, one can have an idea about the revenues the company is generating as well as its profitability. The financials can tell a story about the cash position of the business as well as its asset base. To some extent, any employee will little knowledge of numbers can pick up something of interest from the financial data. Of utmost interest is to understand the financial health of your business. Does the business seem profitable? Are the revenues growing or dwindling? Does the business seem to have access to working capital? How much debt is the business servicing?

There is a lot of other useful knowledge buried in our companies. From everyday conversations with colleagues, one can tell who their largest customer is. By reviewing information in the public domain, one can learn of battles that our companies are fighting. Employees have an opportunity every day to uncover useful information about their companies. The leadership has an opportunity to make this information readily accessible. With a good understanding of our businesses, we are better placed to appreciate how our roles fit into the overall business strategy. At the very basic minimum, employees should understand how a business in general works.

Dr. Lucy Kiruthu is a Management Consultant and Trainer. Connect via twitter @KiruthuLucy

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