I am sure, even if you do not know the exact business acumen definition, you already want to know how to develop strong business acumen skills and competency.
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Because the most successful people have it! It helps them to achieve their desired outcome! You might not be a leader, manager or CEO of a company. However, this doesn’t mean you do not need business-savvy/business-sense. Many people think that it is an intuitive ability. And they are partly right. Some business acumen skills are intuitive and given by nature but all of them can be learned and can be developed.
Business Acumen Definition
Business acumen (also known as a business savvy and business sense) is an ability that allows you to understand and cope with different business situations. We have to make clear that business acumen skills is not a single skill, but a wide complex of competencies, knowledge, and awareness of multiple aspects of a business.
To make it easier, let’s list the main characteristics of competencies that individuals with strong business acumen competency have:
- A very good understanding of the extent and importance of business issues.
- Strong management mindset.
- Financial acumen, awareness, and knowledge.
- Decisive and self-confident.
- Flexible and adaptive to further changes in the future.
- Understanding the business operations within the organization and the industry competitive environment.
- The quality of insight – being able to visualize what should be done to achieve particular goals and a successful future.
- Always keep in mind consequences of a choice for all the affected parties.
- Focus on the key objectives.
To summarize it in one sentence, we can say that a person with strong business acumen skills can “see the whole picture.” If you have business acumen competency, it means you understand how the business works! It’s not just about knowing your product, service or business field.
You have to know about financial metrics (and how to speak the language of finance), do thoughtful analysis, effective verbal and non-verbal communication, have deep insight into the marketplace and so many other things related to the broader needs of the business.
Business Acumen Skills and Competencies: List and Explanation
Growing your career or your business fundamentally requires you to prove and demonstrate your business acumen skills. These skills and competencies give you so many advantages such as: you are able to obtain and analyze essential information about a problem, recognize the possible options and solutions, select effective actions and more.
To develop your business sense, prepare to learn what are financial metrics like profit margin, cash flow, stock price, etc. If it is still not clear to you, let’s say it – business acumen is a large and challenging topic. The skills related to business savvy are really endless. However here we will list the most needed and essential:
Financial Acumen Skills:
If you don’t know the numbers and don’t understand financial metrics, it is really impossible to build a business. It is important for you as a leader or an employee to have an extensive understanding of what drives cash flow and profits. You need to understand the company’s financial statements, some core performance measures, and how your actions will impact the financial results.
Financial acumen skills include developing key financial literacy and understanding processes such as budgeting, reporting, forecasting, and etc. Financial acumen is a complex topic. To contribute an economic value to your company you must understand and/or manage financial indicators related to goals, products, stakeholders, resources, market effectiveness etc. Most common financial skills include:
- Understanding of financial statements.
- Using financial statement analysis tools.
- Understanding core financial performance metrics.
- Budget preparation abilities.
- The ability to analyze the variances against the budget or forecast.
- The ability to analyze financial reports. Here are your company and competitor’s reports.
- Knowing and understanding which are the drivers of creating shareholder value.
- Financial analysis of capital investments and other strategic initiatives.
- A formal accounting qualification.
- Understanding economic profit etc.
Maybe when you are reading the previous sentences it is kind of mind boggling. However, the depth of your financial knowledge depends on your position and management level. If you are an employee, you need a basic finance acumen and understanding how your actions contribute to the financial results of the company.
On the other hand, if you are a manager or leader, things are different for you. Being able to understand not only the numbers, but also to manage your limited resources, risks, compliance requirements, meeting deadlines, implementing new technologies, improving the level of customer satisfaction and so on, is a part of your day.
Every day, managers make decisions that impact their company’s financial results, whether it is hiring personnel, preparing a budget, managing a project, negotiating with clients, approving a capital investment, etc.
If you lack financial skills, you are not able to understand the financial implications of your decisions. The results can be real disasters – wasted resources, wrong decisions, missed opportunities and a decrease in financial performance of your organization.
Nowadays, making business without a clear understanding of marketing concepts, sounds like a joke! Marketing orientation is a must for leaders and employees too! Having a deep understanding of the customer’s profiles and purchasing criteria make a big difference! To satisfy the needs of your customers better than the competitors is a core goal for every company.
Things like marketing and sales advantages, developing a strong brand, handling social media, digital marketing, are concepts that must be part of developed business acumen skills. Market orientation is a crucial understanding and skill for every employee because it focuses on discovering and meeting the needs of the customers.
- Some of the core skills needed for better market orientation:
- Verbal and non-verbal communication skills. Communicating to different groups of people is a must.
- Knowledge about research methods and analysis to determine what the audience wants and needs.
- The ability to evaluate data and create solutions based on the research.
- Creativity – the ability to think of new and exciting ideas.
- Negotiating – for example with clients on timelines, and expectations.
- Technology skills such as using client management software, etc.
- Media skills
- Digital marketing skills.
Here as the previous financial acumen skills, the depth of your knowledge and competencies depends on your position and management level. However, market orientation is a must for every employee!
As we mentioned above, business sense means an overall big picture and understanding of the business. And strategic thinking contributes greatly to this. Furthermore, strategic thinking goes far beyond looking at the whole picture, it involves imagining what could be. Strategic thinking is the ability to come up with effective plans to resolve particular business situations or company goals.
It is the ability to know what you want to achieve and how to achieve it. Strategic thinking helps managers and employees review and set goals and priorities, identify potential risks and opportunities, doing long-term planning.
Basic strategic thinking skills list:
- Clear vision about what you want to achieve.
- Understand and analyze your current position and resources.
- The ability to develop a strategic action plan.
- Flexibility and adaptability.
Strategic thinking needs to be everyone’s skill, not just that of a CEO or leaders.
Because strategic thinkers are future-based, creative, long-term focused, adaptable, life-long learners. These abilities lead to success in whatever business field and company you’re involved in.
What are leadership skills? Are leadership skills learned or innate? These are some of the most interesting questions in the business.
Management and effective leadership skills are a combination of many abilities that allow you to lead, to motivate, to inspire, to create and to build respect. And yes. They can be learned! Please, don’t think that the ability to lead effectively is only for leaders. These skills should be a part of every employee’s competency, as they involve dealing with people, enthuse and build respect.
Let’s list the core leadership skills:
- Organizing skills
- Decision-making and problem-solving
- Time management
- Positive attitude
- High integrity and honesty
- Drivenness for results
- Innovation skills
- The ability to develop others
To be business savvier, you have to aim to understand and develop yourself as much as you aim to understand the business.
Analytical and Logical Thinking:
You probably already know that strong analytical skills and analytical thinking are among the most required business abilities. And it is true because analytical skills are the ability to collect, gather, visualize and analyze information in detail. They also include the ability to see a problem or situation from different points of view.
And if you want to have strong business acumen skills, you should be able to do that! Analytical skills allow you to solve complex problems by making decisions in the most effective way. That is why analytical thinking became one of the crucial skills in the workplace with a vital role in every type of business field and every level of management.
Business acumen examples of good analytical skills are:
- The ability to collect the right Information.
- Numeracy skills
- Attention to detail skills
- Technical skills
If you really want to achieve business sense, examine your thinking practices and find out if there isn’t something you need to develop.
Although perseverance is related to any of the above skills, it has a huge importance and deserves great attention.
- Because business acumen examples are not only about seeing the big picture and understanding how the money is made.
- It’s not only about dealing with hard business situations. It’s not even about achieving desired success and glory.
- More than anything, it needs to be constantly maintained and developed.
- It’s about having discipline, and perseverance.
- It’s about not giving up!
The goal is growing sales, and making money, …… And achieving these goals mean every day fighting, every day learning, every day developing! Every day! It is perseverance.
Why Is Business Acumen Important?
As we mentioned above, it is about understanding how the business works! And how the business works means to know how the business makes money! You need a deep and true understanding of what it takes for a business to make money and how every individual’s actions change the financials. It is the key to being successful!
For an organization, to know how to make money is essential, right! So, it is not only important, it is crucial! Companies today, more than ever in these challenging economic ages, need leaders and employees who can add value and provide financial success for their business. While it is obvious why managers need a high level of business sense, the importance of business acumen skills for employees is not so clear!
Nowadays no one thinks that business savvy is only for managers, leaders, and CEO of the company. It counts for every employee!
Why are business acumen skills very important for employees?
Let’s list the main benefits:
- Having a good understanding of how business operates enables employees of all levels to be more productive!
- Real business success happens when employees make smart decisions and try to see the big picture without losing view of the details.
- Employees understand better their roles in providing success to the company.
- The staff has a wider focus on their job functions.
- Companies need employees who act as part of the team, taking responsibility for their own results as well as the results of the entire company.
- Organizations are able to develop a company of people who understand the business and who are more engaged.
- Promote the individual growth of every employee.
Are you an employee?
If so, could you explain the core role of each department? Do you know what makes your company profitable and why your customers buy from you? I hope the answer is YES. If NOT, you can do a better job as you develop your business acumen skills and competency!
When you continually improve your understanding of how businesses run, you improve your ability to make effective and quick decisions each day. If you want to be a real professional and want to contribute to the company’s success, then you know business sense is for you too. Never forget that you are a part of something bigger!
On the management level, the benefits of business sense look much more obvious. Let’s quickly list them too.
Why are business acumen skills crucial for managers and leaders?
- Developing business acumen is fundamental to business success.
- Leaders who have strong business savvy make much more effective decisions about employees, processes, customers, etc. These decisions have a much more positive impact on large organizational results.
- Managers have a quicker mind that can assimilate and analyze information from a lot of different sources and come up with strategic alternatives.
- Managers are often promoted to their positions.
- A higher level of overall managerial competency and skills.
- Managers with a strong sense of business knowledge surely increase the opportunities of the company and give it a competitive edge and raise profitability.
When managers and employees have business acumen skills, the company has a very powerful asset — knowledgeable and motivated employees.
How To Develop Your Business Acumen Skills?
Business acumen development requires your time, dedication and attention! Developing business sense has to be an important element of your ongoing development plan. And also, improving your business savvy has to be constant. So, let’s see what you can do and what are the main ways to improve your business acumen skills and competencies:
Read Business Books, Magazines, Websites, Blogs….
The well-known evergreen way for learning is reading and you have to read business topics. You can gain your knowledge by reading books. It will help you understand business acumen and all the related information you need to know. Here are 4 business acumen examples of resources you definitely want to read on a regular basis:
- Business Insider
- Business Week
When searching the websites and books, focus on the industry you are working in. For example, if you are in the banking industry, you will read The Economist. If you are in the retail area, you will read The Wall St Journal. Other examples are the business content on social media sources such as LinkedIn and Facebook.
Reading the business press and media provide so many benefits to you. One of them is that you will learn about leaders in the business world. Their stories can motivate you, can teach you and change your perception of the business.
Book topics ideas:
Business practices, Marketing, Leadership, Financial Skills, Entrepreneurship, Career development.
Participating on Different Company Committees, Projects, and Events
No doubt, this is one of the best ways to understand your company’s processes and way of function. Many organizations have projects and events such as quality or process improvement, charity campaigns etc? These events can really change your thoughts and your understanding of how the company operates and makes money.
Also, participating in committees is a great way to build connections with other specialists in the organization. It is a valuable experience.
Professional or Industry Associations
There are numerous important reasons why to join an industry association. Industry associations provide a range of opportunities that can lead to developing business acumen skills, building relationships and success. Here are some top benefits and reasons why joining an industry-related association is important.
- Networking – potential contacts and chances to connect and create relationships.
- Access to education and training – many memberships provide the opportunity to attend education and training programs.
- Events– Industry and trade associations usually organize events and seminars. These events can help you stay up-to-date on industry developments and continuing with industry education.
- Access to certification and licensing programs.
- Information– associations often offer news feeds and informative resources in order to bring additional value to the membership.
- Professional and business development with the help of workshops, seminars, and classes, learning from other members, etc.
- Inside access to innovations and new developments.
- Learning best practices, etc.
Staying up to date with the latest business industry news and trends is a key factor for maintaining your business sense and savvy.
Of course, this is one of the greatest ways to develop your business acumen skills and competency. And here the opportunities also are endless. You can find:
- adult classes on your chosen business topics by searching in Google.
- a huge number of free and premium online courses from resources like Coursera and Udemy.
- courses from consulting firms that specialize in business acumen, strategic thinking, leadership skills.
- what your local community colleges provide and etc.
Business education courses provide learning solutions that are relevant and result in a positive impact on your business performance. In addition to that, some courses help you to develop business savvy with innovative, fun, and creative learning experiences.
Nowadays, the business acumen courses have expanded far beyond classroom-based learning into digital learning, measurement, and evaluation approaches.
Learn From Your Colleagues
There are free hidden development resources right within your company. These resources are your co-workers in your or in other departments.
Try to build and maintain relationships with people in other departments and learn more about their challenges and strengths. Active listening skills can make this process easier for you. A useful tip here is to ask for a copy of research reports developed by the different departments.
Want to understand what financial reports consist of? Easy.
Go to your finance department and find someone to explain to you. Ask them to teach you about what they do and to give you something to read that will help you understand their work.
Find Experts in a Business Area
So, you have friends, family members, neighbors, community members. Some of them might be experts in a business area. If you ask them, these people will be happy to share their knowledge of their business with you. They will be flattered and excited.
Take notes on their experiences, their ideas, and business acumen skills. Ask them to help you understand their job position, their company’s values and processes. Sometimes the resources of your knowledge are closer than you think.
As the above post makes clear, business acumen skills is a large topic. Developing strong business acumen skills takes time, effort and the learning never stops. However, it is worth it! These abilities are a great power! In today’s complex and unpredictable business world, organizations can succeed or fail, and people’s careers can develop or stick, based on the level of business acumen skills and sense within their company.
An individual who possesses business savvy has the power to understand how the elements of a company work together to make it successful. Nowadays, organizations must make sure that every employee understands how the company makes money.
Only when employees see how their decisions and actions make a difference, will they start to work as a real part of a team. This is the beginning of providing great services and products to your customers. This is where the profile of your organization starts to rise and your competitive edge starts to grow.
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