Learning how to run a business is a difficult task. Even working in a corporate position does not guarantee expertise that leads to business success. People work for years in a post with no prospects for development. So, how do you acquire skills that will lead to success?
Demonstrating business acumen is a strong way to promote your business or advance your career. This isn’t about ephemeral concepts like gut intuition or having good business sense, but rather a set of tangible skills and a business approach that boosts your chances of success. And hey, there’s good news, anyone can learn the skills necessary to develop strong business acumen.
Definition of Business Acumen
Business acumen, often known as business sense or business smart, is a person’s capacity to recognize and deal with diverse business issues. Individuals with strong business acumen skills can better understand business difficulties, adapt and remain adaptable during times of change, comprehend business operations, and provide great insight into how to attain goals and assure business success.
In brief, a person with strong business acumen understands many facets of a business and how it operates and can make informed judgments based on this understanding. Employers value business acumen skills, especially when employing candidates for leadership positions.
Business Acumen Skills Examples
The following are some examples of business acumen skills that individuals can concentrate on to develop and help them stand out from other candidates throughout the job search:
#1. Leadership Skills
Leadership and management skills are part of business acumen and enable individuals to be better leaders within their organizations. While these skills are vital for persons in positions of leadership, they are also valuable to every employee and something that employers actively seek in candidates. Strong leadership skills enable a person to inspire, encourage, and establish respect among colleagues, as well as to recognize employee requirements and work to address those needs to create a more unified and efficient work environment.
The following are skills of common leadership skills that complement a person’s business acumen:
- Commitment
- Trustworthiness
- Time administration
- Organizational abilities
- Positive outlook
- Self-motivation
- Innovation
- Integrity
- Honesty
- Delegating Skills
- Motivational abilities
#2. Financial Skills
Financial acumen refers to a person’s financial literacy and understanding of processes such as reporting, budgeting, forecasting, and other financial skills. Leaders must understand what drives cash flow into and out of their organizations, as well as how to optimize profit and prevent loss. So, financial acumen encompasses all facets of a company’s monetary transactions and economic worth, and it enables executives to better comprehend and manage financial indicators related to stakeholders, resources, goals, and market success.
Leaders and other staff must have the following financial acumen skills:
- Skills in financial report analysis
- Understanding of financial performance metrics
- Budget preparation and execution
- Tools for financial statement analysis
#3. Strategic Thinking
Strategic thinking is another important skill that falls under the category of business acumen. So, this refers to a person’s capacity to establish successful plans for dealing with business circumstances and strategies for achieving company goals. Prioritization skills, adaptability, flexibility, and the development of strategic action plans are all examples of good strategic thinking skills.
#4. Marketing Orientation
People in positions of leadership must have a strong awareness of the marketplace in the industry in which they work. Market orientation and market perspective allude to understanding who their ideal target customer is, what they require, where they spend their time, as well as their purchasing behaviors and power. It also entails knowing who their competitors are and what they have that their firm does not. Market-oriented individuals can make more effective judgments, which eventually attract customers and boost the company’s bottom line.
#5. Analytical skills
Analytical skills and analytical thinking are important components of business acumen. So, analytical skills are defined as a person’s capacity to gather, collect, and evaluate data as well as make connections between disparate bits of information. These skills also enable individuals to view problems or scenarios from several viewpoints, allowing them to better create methods to deal with these situations or concerns. Analytical skills eventually ensure that a professional is capable of solving complicated challenges through analytical thinking and strong decision-making skills.
The following are examples of good analytical skills related to business acumen:
- Technical skills
- Research abilities
- Numeracy skills
- Paying close attention to detail
- Decision-making skills
#6. Marketing skills
Many skills necessitate at least some level of marketing knowledge. These skills are especially crucial for those in positions of leadership and management since they support their general business acumen. Marketing skills are defined as a person’s ability to study a target audience and define their requirements and preferences, determine the most significant characteristics of a marketing campaign to attract customers, and public speaking and writing skills to effectively explain marketing plans.
The following are examples of good marketing skills that complement strong business acumen:
- Communication skills
- Creativity skills
- Public speaking skills
- Knowledge of technology
- The Internet of Things
- Negotiation skills
- Marketing via email
- Critical thinking skills
#7. Problem-solving skills
Problem-solving skills are another crucial aspect of strong business acumen. So, these skills refer to a person’s capacity to deal with unexpected or difficult situations effectively. Individuals with strong problem-solving skills can identify the root cause of a problem and devise a suitable solution. Employers favor problem-solving skills in the majority of their employees, and individuals in any position can benefit from strong problem-solving skills.
The following are some examples of problem-solving skills that aid in business acumen:
- Teamwork skills
- Abilities in research
- Communication skills
- Dependability
- Active listening skills
- Analytical skills
- Thinking outside the box
#8. Communication Skills
Strong business acumen is also strongly tied to a person’s ability to communicate successfully. Employees at all levels benefit from effective communication skills, which allow them to function more effectively in their skills. In terms of business acumen, the following are some of the most crucial skills:
- Listening skills
- Clarity
- Friendliness
- Concision
- Communication through nonverbal means
- Empathy
- Social and emotional intelligence
- Respect
- Open-mindedness
- Feedback
Workplace Business Acumen Skills
Here are a few examples of how you can put your business acumen to use in the workplace:
#1. Conduct Research
Conducting both qualitative and quantitative research is an excellent method to put your business acumen skills to use at work and better understand your company’s clients. So, collecting feedback from consumers provides you with a deeper grasp of market orientation and helps you to use your business acumen to successfully and profitably address the needs of these clients. Collecting consumer data, sending out customer surveys, and speaking directly with customers are all excellent ways to conduct customer research and gain useful knowledge.
#2. Pay Attention to Your Customers or Clients.
Listening to your company’s customers and executing ideas to improve on tough areas brought up is another crucial component of demonstrating business acumen. The more you understand about your customers, the more you will be able to identify a successful strategy for your organization to produce products and services that attract people. Listening to clients increases other business acumen skills, such as communication and marketing.
#3. Keep Up to Date
Staying up to speed on industry news and applying this knowledge when making business decisions is a wonderful way to put your business acumen skills to use in the workplace. Keep up with business news and investigate how other companies in your field are dealing with developments.
Who Benefits from Strong Business Acumen?
Everyone! Business acumen is a core ability that is often lacking in many organizations. Individuals who lack a strong business acumen skill set are unable to recognize how their activities affect the profitability of the organization. They frequently struggle to articulate and implement the strategy.
Here are some of the advantages of having superior business acumen for various types of employees.
#1. Technology Professionals
Business acumen provides technical staff with a broader perspective and allows them to make better decisions. For example, an engineer with strong business acumen could assess the economic benefits and drawbacks of choosing one material over another. Also, IT professionals may leverage their business acumen to better understand the needs of their internal customers, how customer service affects efficiency, and how efficiency affects profitability.
#2. Sales Professionals
Financial literacy can help a business-savvy salesman grasp their customers’ business objectives, strategic priorities, and pain concerns. During these early interactions, sales professionals can establish credibility and rapport while also learning about their customers’ company.
Over 70% of these purchasers rank a salesperson’s understanding of their business as the single most essential quality they look for in a salesperson.
Forrester Research
Buyers desire a salesperson who understands their clients’ strategic business dynamics and can connect their product/service to the organization’s financial well-being and profitability.
#3. Human Resource Managers
HR professionals can advance to the leadership table by demonstrating business acumen and financial expertise, as well as effectively communicating the value of the professional development programs they provide to their constituents.
Eighty-seven percent of human resource professionals say that having business acumen as a core competence is vital or critical.
AT&T
HR professionals are frequently asked to explain the ROI of their projects to management. This should be expressed through a value and application lens. They can establish and develop programs and activities that are aligned with company strategy if they can think critically and apply a business acumen attitude.
#4. Managers
A frontline manager might use their business acumen to link their actions with the budgetary strategy of the corporation. Managers can also instill in their teams’ big-picture thinking and an entrepreneurial spirit.
#5. Executives and Directors
This demographic has the most clout and decision-making accountability at any level in an organization. Some organizations believe their directors and executives are completely adept in business acumen and financial literacy. Contrary to popular belief, most directors and executives could from a refresher on some of these ideas, particularly if they are new to the role or organization.
So, an expensive skill gap is the lack of expertise required to correctly alter the business levers that impact the top and bottom lines.
Which are the Areas where Business Acumen has an Impact?
Everywhere! The fundamental ideas of business acumen highlight the need to go beyond individual acts, walled departmental decisions, and short-term rewards. So, keeping an eye on the broad picture at all times alters how people think and behave, which in turn alters how the organization runs.
#1. Everyday Operations
Organizations that promote business acumen provide a clearer vision and a broader framework for employees to work in, while also generating an environment that is more likely to break down internal boundaries. There is less waste and ambiguity. There is also more innovation. Employees are more engaged, they understand their position and how it affects business performance, and they are more inclined to believe that their efforts are worthwhile. They are more likely to consider themselves to be business owners.
#2. Forecasting and budgeting
When a person understands their organization’s goals, KPIs such as Return on Sales (ROS), and how to budget and predict within those boundaries, they will be able to make well-informed business decisions.
Return on sales (ROS) is a financial statistic that measures profit with sales (net profit divided by net sales) (how much profit is generated by each dollar of sales).
#3. Purchasing and Selling
Understanding the Cost of Goods Sold (COGS) and Gross Profit Margin (GPM) will have a significant impact on how organizations negotiate with vendors and how their sales professionals interact with customers.
Understanding desired GPM will assist sales professionals to leverage their price-setting latitude and shape their customer discussion. The ability to pitch their product or service as having the potential to increase their client’s GPM shifts the dynamic away from simply buying and selling. They are enabling their clients to make well-informed, business-savvy judgments.
Only 13% of consumers believe salespeople can demonstrate a grasp of their business difficulties and solutions. Forrester Research
When Should People Exercise Their Business Acumen Skills?
Honing business acumen skills is beneficial at all stages of a career. Although the depth of knowledge varies depending on seniority and familiarity with the business, smarter business decisions benefit the organization at any level. The added benefit is that business acumen training is now more accessible than ever thanks to virtual services and asynchronous training.
#1. Onboarding New Employees
New hires can contribute more quickly to an organization if they are educated early on about how the business produces money, how they fit into the big picture of the business, and how they can add to the organization’s financial success. Understanding these issues not only orients new hires to the business but also connects them to the organization’s mission.
Onboarding programs have been demonstrated to boost employee retention by 25% and improve employee performance by up to 11%.
SHARP
#2. Developing High-Potential Employees (HiPOs) into Leaders
Many high-potential individuals in an organization are promoted without improving their present skill set or thinking strategically. Some of them even start managing P&Ls without even knowing what a P&L is!
Sixty-nine percent of the more than 300 executives and supervisors polled failed to identify the definition of “free cash flow.”
Business Week Magazine
Nothing will better equip a HiPO for their trip than an awareness of how their decisions affect bottom-line performance. With strong business acumen as a foundation, everything else on their quest to becoming a future leaders will fall into place.
#3. Finance for Non-Financial Managers
A nonfinancial manager will benefit from understanding the dynamics of how their business works, regardless of the area he or she works in. And it makes complete sense. A manager cannot help lead a business if they do not grasp how money flows across their organization, what their gross margins are, and the overall consequence of their department’s decisions.
Teaching these managers the main criteria used to determine whether or not an organization is making sound business decisions will result in more business-savvy leaders.
Why Should a Company Create a Business-Savvy Workforce?
Employees, managers, and leaders must be able to accurately assess the competitive landscape and integrate day-to-day decisions and actions with key financial, functional, and business performance indicators and goals for organizations today, regardless of how successful they are.
Although most corporate goals will be centered on profitability, expansion, and sustainability, cultivating a culture of strong business acumen will have far-reaching, organizational-wide implications.
#1. Culture
Instilling a culture of ownership, accountability, and entrepreneurial thinking enables individuals to connect their business actions, the impact of those decisions, and the enterprise’s performance.
Individuals on teams with strong business acumen skills will begin to represent values such as accountability, integrity, fiscal responsibility, entrepreneurship, and others (through their decisions and behaviors). This will foster an environment and culture of ownership, which will eventually lead to a culture in which individuals accept responsibility and ownership for positively influencing business performance.
#2. Profitability
Strong business acumen skills foster a data-driven decision-making atmosphere. The ability to convey the story behind the data leads to employees at all levels of an organization taking action and making decisions that affect the bottom line, whether through cost management, process improvement, waste elimination, or doing more with less.
- Profit: An absolute number established by the amount of income or revenue received more than a company’s costs or expenses. It is calculated as total revenue minus total expenses and appears on a company’s income statement.
- Profitability: Profitability is a metric used to estimate the breadth of a company’s profit with its size; it is a gauge of efficiency – and, ultimately, its success or failure.
Giving employees an in-depth understanding of the financial indicators that their firm uses to assess performance will provide them with the knowledge they need to create better efficiency and boost profitability across their organization.
#3. Growth
Managing a corporation’s day-to-day decisions and guiding a business with a big-picture grasp of leading and lagging indicators, working capital management, and creating returns on investments can pave the path for long-term, organic growth.
#4. Recruiting Talent
Teams are better positioned to make excellent hiring decisions when they understand the financial impact of attrition and the costs of poor hires. A successful corporation that promotes a culture of strong business acumen is also a company that people want to work for.
#5. Marketability
Being a financially aware firm makes you a company that clients want to work with, in addition to being a company that people want to work for.
#6. Project Management
Ensuring that individuals understand how scope creep or key stakeholder influence might affect the possible outcome of a project helps project team members succeed. Even enormous organizations can be brought to their knees by poor project management.
The average project cost overrun was 27%, while one in every six projects had a cost overrun of 200 percent – and a schedule overrun of nearly 70%.
Harvard Business Review (HBR)
#7. Competitive Advantage in the Market
Sales teams with strong business acumen can better position the value of their products and services to generate effective customer solutions by aligning the value of their products and services with customer pain areas. Individuals who have an ownership mindset accept responsibility for contributing to the business in a fiscally prudent manner. Employees with business acumen can build a competitive edge both internally and externally by increasing their top line and streamlining their cost structure to boost profitability.
How to Develop a Strong Business Acumen
Now that we’ve looked at some of the skills that are indicative of high business acumen, let’s look at some particular techniques to help you develop them.
#1. Recognize the Business Model
A thorough understanding of your company’s business model is essential for building strong business acumen. This goes beyond a simple understanding of how the firm produces money and must go into many parts of the business such as the company’s supplier chain and business life cycle.
A dentist’s business model, for example, is based on providing dentistry services to patients. However, to develop business acumen in the dental industry, you must go into specifics such as how the insurance procedure works.
Understanding the importance of talent acquisition and the types of skills that enable a person to flourish in their profession is another component of the business model.
This is a type of HR business acumen that you use to ensure that team member recruited into the organization have the skills that will help them succeed. Some HR software will analyze resumes to identify applicants with the necessary skills and assist with staff planning.
A business’s marketing component is also an important part of the business model that should be studied. Understanding the company’s marketing objectives, as well as essential marketing concepts such as positioning strategy, customer segmentation, and the four marketing principles will help you improve your marketing knowledge.
The more you can go into understanding the business elements that influence your company’s potential to generate money, the more it will help you with all aspects of growing your business acumen, such as comprehending the business ramifications of your decisions.
Suggestions for Comprehending the Business Model:
It’s difficult to tell if someone has a thorough understanding of a company’s business plan. Here are some pointers to get you started.
Learn new things:
Make an effort to learn everything there is to know about the business. This entails learning about topics to which you may not have had much exposure, such as the elements that contribute to the manufacturing costs of supplying products and services. You don’t have to know every minor detail, but you should have a general idea and be able to delve deeper into specific areas that are critical to how the business produces income and manages expenditures.
Understand the strategies:
It’s also critical to grasp the company’s present business goals. What are the company’s expansion plans? How will its products and services evolve? Why is the business pursuing some revenue sources but not others? Understanding the strategies and the aim of each contributes to a complete picture of your company’s business model.
#2. Understand the Financials
Financial measurements are used in every business. To develop business acumen, you must comprehend the important figures and financial processes that determine your company’s economic health.
This is because these data points assist you in focusing on what is important and serve as a means of measuring the success of your decisions.
Some of these measures, such as net income and customer lifetime value, are shared by all businesses. Others may be specific to your business strategy.
When I worked at an advertising agency, for example, one crucial data item was traffic acquisition cost (TAC), which reflected the amount of money spent to drive consumer online traffic to a client’s website.
Others may be important just to a particular department. Sales analytics, for example, is a collection of metrics relevant to the sales team, such as average deal size. You may grasp the ramifications for your business by knowing these KPIs.
Tips for mastering the financials include:
It can be difficult to learn your company’s financials if you don’t already have a background in finance. Here are some ideas to help you learn this information.
Keep track of key statistics:
Determine the most critical financial KPIs for your business and track them over time. This provides you with quantifiable data to make informed judgments as well as a tool to measure the outcome to learn from the experience. One strategy is to go into the company’s business intelligence to acquire insight into the types of data and related analysis that your organization is interested in.
Find assistance:
If you don’t grasp the significance of metrics used by your organization, you can learn about typical business financials on a website like Fool.com, or for company-specific metrics, ask coworkers who are familiar with those data points. Finding a mentor within the organization is another excellent technique to improve your understanding of the company’s finances.
#3. Pursue Education
Education is important in building business acumen. The reality is that you can’t always develop the necessary business acumen skills on the job, and if you’re an entrepreneur, there’s a larger organization to learn from.
You must search out information on your own. Signing up for a business class about your sector or trade, as well as reading business books like John Doerr’s “Measure What Matters,” are frequent approaches to obtaining that expertise.
The type of study you seek will be determined by your level of business acumen. If you’re just starting, it’s a good idea to check into classes or books that provide general business management advice.
If you’re over that point, you can concentrate on schooling linked to your specialized industry, or you can target certain skills that need to be improved.
Tips for Pursuing an Education:
Here are some ideas to get you started on the path of obtaining business acumen through education.
Stay informed:
Paying attention to business news, particularly events that occur in your field, is an easy approach to gaining information crucial to business acumen. This helps you to stay up to date on events that may affect your business and learn from how other organizations deal with similar difficulties as yours. To stay informed, you can also subscribe to industry newsletters or visit industry websites.
Follow business leaders:
Following renowned business leaders in your sector is another approach to expanding your business knowledge. Find their blogs or follow them on social media to learn about their thoughts and thought processes.
#4. Pay Attention to Your Customers
The final thing on this list is the most crucial. Find out what motivates your clients to buy from your business. You want to understand their problems so you can analyze how your company’s services can help.
The more you know about your customers, the more you will be able to discover the best way for your organization to produce attractive products and services.
This is vital for increasing business acumen since you are acquiring insight into the most important stakeholder, and it helps with all other business acumen skills, such as focusing on the products that are most important to your clients.
For example, Steve Jobs constantly concentrated on the consumer experience for each of Apple’s technological innovations. Jobs was able to develop legendary products such as the Mac, iPod, and iPhone by understanding what constitutes a fantastic solution for his customers.
Suggestions for Listening to Customers:
When it comes to gathering customer insights, there are two approaches. I recommend that you do both.
Qualitative Research
This is speaking directly with your customers to learn their thoughts on your business’s services. There are a few issues with this method. To obtain a significant sample size, you must speak with a large number of clients. Customers also submit feedback that is pertinent to their current circumstances and whatever is on their minds. Because these two factors can bias the outcomes of your research, you should combine this method with quantitative research.
Quantitative Research
This entails gathering information about your clients. Using CRM software is one of the greatest methods to accomplish this. Data provides two advantages that compensate for the drawbacks of qualitative research. It gives you a larger client sample set and is unbiased. If a client tells you they don’t like a certain product, but your data reveals it’s a best-seller, you know the customer you spoke with isn’t indicative of the majority, and you need to speak with others.
Read Also: List of Fortune 1000 Companies in 2022, Updated!!! (How to Invest Guide)
How to Demonstrate Business Acumen Skills
The following are some strategies to emphasize your business acumen skills in your CV, cover letter, and job interviews:
In both your CV and cover letter
On your CV, there are a few crucial strategies to highlight your business acumen skills. One method is to add a skills section on your resume that includes two of the five most significant business acumen skills you have as they relate to the position you’re looking for. For example, if you’re seeking the position of marketing manager, you’d mention both leadership and marketing skills. In this part, you can also provide an example of how you’ve used each talent.
In your employment history section, you can also include your business acumen skills. When describing your past job responsibilities, including the business acumen skills that helped you excel in that role, as well as a measurable example of how you utilized each.
Choose one or two business acumen skills that are relevant to the position you’re applying for and include them in your cover letter. In the body of your cover letter, emphasize these skills by providing one or two examples of how you’ve successfully employed each.
During a Job Interview
During a job interview, you can exhibit a variety of business acumen skills. You can display strong communication skills, for example, by communicating in a brief and easy-to-understand manner. You can also bring up any business acumen skills you believe are relevant to the job and tell the interviewer how you’ve used these skills in the past to advance your career.
Final Words
It takes time to develop your business acumen, but once you start, you can instantly start applying what you’ve learned. You’ll become an expert in essential business concepts such as pricing tactics and business development over time.
When your decision-making is speedier, you’re able to pivot efficiently when things don’t go as planned, and the outcomes of your decisions are frequently spot-on, you’ll know you’re on the right track.
So, if you approach your personal development while aiming to develop a disciplined, consistent approach to assessing business situations and making informed judgments, you will obtain strong business acumen.
Business Acumen FAQs
What are the key indicators of business acumen?
Four key elements are central to business acumen: the ability to plan through strategic thinking; an understanding of all aspects of a business’s operations and how they are interconnected; recognition of the financial elements of the business; and decision-making to maneuver a business through appropriate strategy.
Why do we need business acumen?
Business acumen allows you to grasp what it takes for your advancement shop to properly contribute to your institution’s financial stability. It enables you to comprehend and predict the financial and legal ramifications of your actions.
What is financial business acumen?
Financial acumen is the knowledge and comprehension of fundamental financial and accounting concepts required to make effective business choices. Those with financial acumen can recognize how a choice may affect the financial health of a team, department, or company.
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