Business Acumen is a term concerned with understanding how business works, makes money and attains its goals and objectives. In simple terms, business acumen refers to quickness and keenness in knowing and dealing with the business situations in manner such that good outcome can be yielded. Business acumen is also called as business sense, business understanding and business savviness. It comprises of two components: ‘Business literacy’ and ‘Acumen’. The business literacy is knowledge and understanding of distinct functions within the business enterprise, and acumen is ability to arrive at good judgements and make quick decisions. A strong business acumen collectively serves as means of improving business performance and developing leaders.
At the times of industrial age, business acumen was skill meant for only senior leadership responsible for key decision making and strategy building within organization. But in today’s digital age, it is increasingly used at all levels of business enterprise in order to enhance the financials and improving leadership pattern of organization. Also, the skillset of business acumen is not limited to only one single skill but incorporates different types of skills needed for building a strong business acumen competency. These skills can include leadership skills, analytical skills, marketing skills, communication skills, problem-solving skills, financial knowledge, strategic thinking and many more.
Elements of Business Acumen
There are 5 key elements of business acumen that are well-explained in points given below: –
- Business strategy development and application– A proper learning of business acumen begins with the development of overall business strategy. There is a famous old quotation that ‘If you are unaware about where to go then any road is going to take you there’. Therefore, the formation of all-round business strategy facilitates easy learning. In addition to this, the goal is to provide learners with data, frameworks, model as well as tools of planning and strategic thinking. All of these enables the effective implementation of business strategy.
- Clear understanding on financial acumen– Financial acumen is the next element in learning journey of a strong business acumen. It begins once all team players got better understanding of business strategy. This element comprises of presenting the participants with content and application of full-cycle processes. A cash flow report, balance sheet, income statements and business performance metrics are utilized to gauge the success.
- Tools, skills and concepts of marketing– It is well known to everyone that marketing has evolved on dramatical level in recent years. Due to this evolution, the demand for automated tools such as HubSpot and Search engine optimisation Platforms has increased to a greater level.
There are standard strategies of marketing nowadays that were never before such as account-based marketing, content based marketing and social media-based communications. A proper learning engagement on business acumen will provide participants with key elements required for understanding and participating in today’s ecosystem of complex marketing.
- Well understanding of operations, supply chain and manufacturing- Nowadays, there is a stiff competition going on all over the globe that has directly or indirectly forced every business enterprise to rethink about their operational strategy. Organizations are working towards enhancing their ability to be operationally efficient in market. A process of good business acumen learning involves presenting each participant with every information and tools required for seeing as well as understanding the operational system. All of this focuses on driving expenses out of system along with increasing the quality and customer focus.
- Business Simulations- An inclusion of computer-based business simulation into the learning process serves as key element of best business acumen learning journey. Presence of business simulation facilitates learning of business acumen in risk free, error and trial environment by all participants. They will get better understanding with regard to strategy, marketing, finance and operations by running a case study that comes to life and all of this get facilitated through business acumen simulation design. The participants using simulation are able to properly understand the business system and develop tools and skills needed for making best decisions related to business for taking them back on this job roles.
Ways of Improving the Business Acumen Skills
Different strategies for enhancing the business acumen skills are as follows:
- Proper understanding of Business model– Having a deep understanding of your business model is key essential for developing strong business acumen. It includes much more than the basic understanding of organization of how it makes money, and should dive into distinct aspects of business enterprise such as how its supply chain and business life cycle works. The more person gets to know about all these business factors, then more he/she will be able to enhance their business decision making and develop the business acumen skills.
In order to get better understanding on business model, there are some tips:
- Learning the unfamiliar areas and Knowing about strategies– Learning of unfamiliar areas relates to knowing about areas on which person is not aware that may be factors adding to manufacturing costs of delivering products and services. It is not necessary to know each and every small detail but should have good understanding about business fundamentals including how revenue is generated and costs are managed. On the other hand, knowing of strategies means having good knowledge of company’s growth strategies, how it evolves its products and why business is choosing to follow particular revenue opportunities over others. All this will assist in filling up complete picture regarding the business model of company.
- Get to know the financial side of business– Financial metrics are key to every business that directly influences their economic health. These metrics reflect the focus areas of business organization and are largely taken into consideration by decision makers. A person need not to be necessarily from financial background for learning about all this financial side of business. The ways for acquiring knowledge on financial metrics include tracking key metrics of business organization and then analysing them to know how they affect the functioning of business. One can also take help from well-known business financial resources available online for developing understanding on business metrics, in case if he/she don’t understand them.
- Invest in education– Education plays a key role in development of business acumen skills of person. It is not always possible to acquire all necessary skills on job and therefore you need to make efforts to seek knowledge on your own. There are number of online courses and certification that can be pursued for broadening business acumen skills and become more efficient at your work role. The kind of education to be pursued is determined by your level of business acumen. Reading books and taking classes providing general guidance on business management would be sufficient for the one looking for just developing their skills set.
The ways for seeking education on business acumen involves keeping yourself updated with business news, especially the one that occurred within your relevant industry. This will help you in staying informed on all happenings that can affect business. And another way is to follow prominent business leaders from your industry that assists in growing the business knowledge. You should read their blogs and follow them on social media for knowing their business insights and therefore learn from their thought process.
- Listen to customers- It is the last item on list and regarded as most crucial element for enhancing the business acumen skills. More focus should be made on finding out the factor motivating customers to buy from your organization. A proper understanding should be gathered on challenges faced by customers so that right assessment can made how company’s offerings provide a solution. More the information you have about your customers, better you will be able to identify the path for your organization to deliver its competitive goods and services. Customer knowledge serve as key to advancing business acumen as they are the most important stakeholders of organization. It also helps in other business acumen skills such as paying attention on items that matters most to your customers.
There are basically 2 important tips when it comes to gaining insights about your customers:
Qualitative Research and Quantitative Research
Qualitative research involves talking directly with customers for gaining their perspective regarding your business offerings. A discussion needs to be done with large number of customers for collecting an appropriate size of sample. Here, customers also share their feedback relevant to current business situation. Whereas, quantitative research relates to acquiring data on customers via utilizing a CRM software. Such data offers two advantages that offset disadvantages of qualitative research. Firstly, it provides with wider set on customer data, and secondly the collected data is unbiased.