How do build business instinct?
Junior in college that will work in IB this upcoming summer - I have decent foundational knowledge of finance, but I'm really hoping to pick up my business instinct skills. Rather than just looking at numbers and spin off models, I'm hoping to get to the point where I can look at a business or industry on a broader level and be able to form a qualitative coherent thesis as to why it's positioned to either succeed or fail. I'm wondering how many of you were able to build your business analysis and instinct skills, if that makes sense. Are there any resources you recommend? Thank you!
I used to play this game with my kids (they didn't always enjoy it); figure out the economics of a restaurant or some other business just by thinking your way through it. I think this is a great way to get reps in. Kind of like this; think through the transaction from initial interception to completion. Then think through the structure of each function. Then how many people doing what. Who are the most important employees? Then how's working capital work in the business? AR, INV, Capex. What's the BS look like? 3 key things you would measure in this business? How could we make the cash cycle work better?Can we raise prices 10%? How fast can we increase throughput 20%? Can you leverage the business in a transaction? 5-15 minutes of mental exploration on any one business - done 50 different times - will really help you develop business instinct.
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