A person needs many skills and qualities to be successful at business, including good organization, communication, leadership, and negation.
Business acumen is another necessary skill for those who are driven to succeed. But what is it? And how can you develop it?
Keep reading to learn everything you need to know about business acumen.
What is Business Acumen?
Business acumen may also be known as business sense, a good head for business and business savviness.
Breaking the phrase down into its two component words, business refers to excellent knowledge of your particular business, including your business model and how your organization operates. The definition of acumen is being able to make sound judgments and quick decisions.
Essentially, therefore, business acumen refers to the ability to rapidly understand business-related matters, including opportunities, risks, and threats, and act quickly in a way that will likely produce a good result.
It also encompasses knowing how strategies and decisions can affect a business, both positively and negatively, and also having the ability to quickly recover from setbacks and find ways to move forward.
It combines knowledge, skills, and confidence.
Who Needs Business Acumen?
While in the past, good business sense was often seen as only being relevant to senior people within a company, nowadays people in leadership roles of all levels are expected to have at least a degree of business acumen.
In essence, anybody within a company who has decision-making responsibilities should be business savvy. This includes:
- Managers, supervisors, and team leaders
- Human resources personnel
- Salespeople
- IT staff
Elements of Business Acumen
Those with business acumen typically have well-rounded skills and knowledge. These include:
Problem Solving
To have business sense, you should be able to use existing knowledge to analyze problems and come up with a workable solution. It may not be possible to always have completely favorable outcomes, but a person with business acumen will choose the path that has the most favorable, or least undesirable, result.
You should also be able to think on your feet so as to be flexible when dealing with new situations. Understanding the consequences of decisions and actions is a major part of being an effective problem solver, and a big element of business acumen.
Focus
You should be able to ignore distractions and maintain focus on particular tasks needed to make a difference to your business. You should get more done on a day-to-day basis because you can spend more time on the things that matter rather than being bogged down in matters that don’t help your business to thrive.
Contextual Understanding
You should be able to look at the bigger picture and understand how things outside of your immediate situation can have an impact on your business or team.
Financial Skills
You need to be able to understand how your business or company uses funds or other resources to reach its goals. Many businesses consider this in terms of revenue, looking at profits and losses, although for some organizations success may be measured in another way, such as better social benefits.
Stakeholder Needs
You should always consider how customers, clients, investors, and other stakeholders can be affected by business decisions. You should aim to balance the interests of all stakeholders when making business-related decisions or implementing operational changes.
How to Develop Business Acumen
While for some people good business sense seems to be instinctive, there are definitely ways that you can develop your business acumen skills.
Increase Your Knowledge about Your Organization
Knowing as much as you can about your organization will naturally help you to make better business decisions.
Get an in-depth understanding of the business model, beyond simply how the company operates on a day-to-day basis and how it makes a profit. Consider all aspects of your particular area of business.
For example, in the retail industry you should learn about where and how goods are manufactured, the supply chain, how the company markets itself and advertises products, staffing, website, the layout of a physical store, and similar.
Essentially, aim to develop exhaustive knowledge about all elements of the business model, big and small; all aspects are relevant to how the business makes money and, ultimately, any decisions can impact various areas and thus impact revenue possibilities.
A top tip for increasing knowledge of your company’s business model is to begin learning about the areas that you are most unfamiliar with.
Read company reports regularly and learn about the organization’s strategies for growth and its business objectives. Understand key performance indications (KPIs) and learn how to analyze the figures.
Understand the Numbers
From finance-related details to the number of staff members, figures and statistics are everywhere throughout a business. Understanding the various numbers in detail helps you to develop business acumen skills.
Examples include:
- Budgets
- Profits
- Losses
- Salaries
- Cash flows
- Customer lifetime value
- Number of employees
- Performance reviews
- Insurance costs
- Marketing costs
- Sales targets
Learn the meanings of the major metrics and track key metrics over a period and discover how they fluctuate.
Look Outside the Business
Sometimes, developing all vital business acumen skills is difficult when considering work alone. Looking outside for education from diverse sources can bolster relevant skills and understanding.
Read books on business acumen and listen to business acumen podcasts. Sign up for business courses, both wide and specialized for your industry. Research business leaders and follow them on social media. Keep up to date with industry-related news. Research competitors in your business area.
Keep abreast with current affairs and global news; many outside factors can have an effect on a business. Increase your current knowledge about the world economy, political matters, global health concerns, environmental considerations, social issues, and so on.
You can also learn a lot from a suitable mentor, which can be someone from inside or outside of your company.
Learn from Customers
Discover what attracts customers and learn key challenges related to customers. Know your main customer demographics. Find out what motivates your customers. Essentially, good customer insight is vital for those with a good head for business.
Quantitative research allows you to gain unbiased data about your customer set. Qualitative research provides personal insights. Analyze information gained using each type of research and understand how your company could perform better to surpass current customer satisfaction.
