Example: A client is spinning off a division into a separate entity. Why? Is the division unprofitable? Is it to avoid antitrust concerns? Have they been made a very good offer that the board is required to accept, despite management's desire to hold on to the divsion? Let's be clear, on some level yours is not to question why, yours is but to do and bill accordingly. But understanding the context will help you understand what the client is really trying to accomplish.
Here is a framework for getting to know a business, fast. The more time you can devote to this, the less time you will waste on work that is not commercially or strategically relevant. It's not always easy to carve out this time, but even spending a few minutes on this at the outset will help you stay on track.
1. Understand the relevant market demand by thinking like a Chief Marketing Officer. Businesses exist to provide goods and services. So start by asking: “What does the business sell, and to whom?” If the business sells directly to consumers, create an archetypal buyer in your mind, and trace their journey from the moment their need arises, to the point of purchase. If the business sells to other businesses, ask whether the product or service helps the customer raise revenues or decrease expenses. This will help you understand your client’s value proposition.
2. Understand the organisation, by thinking like a Chief Operating Officer. A company is a machine with many moving parts, but each part serves a purpose. Map out how the business’s products and services are created and delivered, and identify the activities and resources required at each step. This will help you understand the company’s operating model.
3. Understand profitability, by thinking like a Chief Financial Officer. Financial accounting is the formal, universal language of business, but managerial accounting represents the dialect that companies use “at home” to measure and manage their performance. You need to be fluent in the first, and quick to pick up the second. Pay close attention to cash flows and margins. These will give you important insights into the health of the company, and its future prospects.
4. Tie it all together by thinking like a Chief Executive Officer. Running a successful business requires balancing risk and opportunity, and making the right tradeoffs between tactical needs and long-term strategy. No matter how complex their business, CEOs rely on a handful of critical metrics to drive their decisions. If you can figure out what is on the CEO's dashboard, you will be able to provide advice that is relevant, timely and practical.
But the most important thing you can do when you are assigned a new client, is to “kick the tyres” of their business. Talk to people in the industry. Try the product for yourself if you can. Better still, visit a factory or showroom to see how the goods are made and sold, or watch a demonstration of the service being delivered. The information you obtain by using your own eyes and ears will make the numbers come alive. Business exists in the real world, and so do you - so get out there!