To be successful in the business world, one needs more than just a great idea or product.
A person also needs business acumen – a clear understanding of how businesses work and what it takes to succeed.
Although this may be true for startups, it’s even more crucial for established businesses, which often face their greatest challenges when operating within an environment that isn’t conducive to innovation or new ideas.
But what is business acumen, and what makes it so important?
What Is Business Acumen?
Business acumen, also called business savviness and business sense, is a term used to describe a set of skills and knowledge that allow a person to assess a business situation and make intelligent, timely decisions about it.
It includes understanding how businesses work, what it takes to be successful in them, and how to make sound decisions in a business context.
In other words, it is the ability to recognise important patterns in business situations and the knowledge of how those patterns apply to the given situation.
People who have this ability are sometimes called “business smart.”
Why Is Business Acumen Important?
Business acumen is the ability to take a ‘big picture’ view of a situation. It is what allows someone to understand the impact of each business decision on their company’s success in the long run.
People who have this ability manage risk, recognise opportunities and see obstacles before they occur.
That means that most people with business acumen can plan their actions to avoid obstacles and take advantage of opportunities when they arise.
Here is why business acumen is an important soft skill:
It Helps a Person Make Informed Decisions relating to business:
People with good business acumen are able to make informed decisions that can have a positive impact on their business.
They understand the key factors that influence success in a business, and they know how to apply this knowledge to make wise choices.
Good business acumen helps a person understand how to work with the different aspects of business, including people, finances, markets, and processes.
This means that people who have this ability are better equipped to deal with complex situations than those who do not.
It Can Help Improve an Organisation’s Performance:
People with good business acumen understand what makes an organisation work.
As a result, they are able to figure out how to improve an organisation’s performance in different areas when necessary.
The difference it makes is often quite significant but difficult to quantify.
Business Acumen Skills
Acquiring business acumen is very much like acquiring any other skill.
It requires knowledge, experience and practice. Unfortunately, it also requires patience because the process doesn’t happen overnight.
The following are some of the skills that are necessary to develop business acumen:
People with good business acumen know how to plan their actions so as to achieve their desired outcome.
They understand the different factors that influence success in a business, and they know how to apply this knowledge to make wise choices.
This includes understanding what resources are available to them and what needs to be done in order to reach their goals.
People with good business acumen are able to think on their feet and come up with creative solutions to problems that arise in a business setting.
They understand the business context, so they know how to apply relevant knowledge and skills to solve the problem.
This often includes thinking outside the box and coming up with ideas that other people may not have considered.
One of the most important skills that people with business acumen possess is the ability to assess a situation.
This means they are able to determine if different actions or strategies will be beneficial for their company in the long run, given the particular circumstances.
They also know how to use information about past performance to make this assessment.
Long Term Vision
People with good business acumen are often able to see the big picture.
They understand the impact of each business decision on their company’s success in the long run.
This includes understanding how different decisions can affect the company’s short-term and long-term goals.
People with good business acumen are able to manage their emotions, as well as the emotions of others.
This is important because it allows them to stay calm and focused in difficult situations, and it also enables them to build better relationships with colleagues and clients.
People with good business acumen know how to work with others to achieve a common goal.
They understand the importance of teamwork, and they are able to communicate effectively with team members to get the job done.
This often includes being able to compromise in order to find a solution that everyone is happy with.
Business Acumen Examples:
The following are some examples of business acumen in action:
An employee sees that her company’s sales have been dropping for the past few months. She understands that this has to do with their competitor offering a better product at a lower price.
She comes up with a plan to improve the company’s product by researching her competitor’s product and then creating a similar product with better features and even lower price.
A manager understands that the team he is responsible for has been experiencing some difficulties.
He realises that this is due to them working too much, so he discusses the situation with his team, and they are able to come up with a solution where they will have more time to relax.
He also knows that when people are under a lot of stress, they are less productive, so he offers his team members help in dealing with the stress they are experiencing outside of work.
A product manager notices more than usual customer complaints about a particular product.
Now, instead of finding just a short-term fix to the problem, he decides to investigate the root cause of the issue.
He conducts customer interviews and looks at sales data to better understand what has led to these complaints.
By learning more about the customers, he is able to make changes to his product that address their main issues.
A business owner realises that two of her employees are no longer working together well, and this is affecting their productivity.
She knows that she needs to find a way to resolve this problem, so she attempts to understand the situation from both of her employees’ perspectives.
She doesn’t solve the disagreement for them, but instead offers each of them advice on how they can approach the other person and resolve their issues together.
How to Develop Business Acumen
Business acumen isn’t something that one can develop overnight.
It is something that comes from experience.
Here are a few steps that one can take to improve their business acumen:
Read About Business And Economics
Reading about business and economics will help one understand the concepts that are involved in running a company.
It will also give a better understanding of how the world economy works.
Pay Attention To Business News
Business news outlets such as The Wall Street Journal, Forbes and CNBC provide timely information about the business.
By paying attention to the latest happenings in business, one will be able to stay up-to-date on what is happening in the world of work.
Learn To Be A Team Player
No person can succeed alone.
Being a team player will allow one to work with their peers and get more done in the process.
This is because people with good business acumen understand the importance of teamwork, and they know how to contribute to a group effort.
Network With Professionals
Networking with professionals will give one the opportunity to learn from their experiences.
It will also help them build relationships with people who can help them in their careers.
Attend Business Workshops And Events
There are many business workshops and events that are available for people to attend.
By attending these events, one will be able to learn more about business and network with professionals.
Business acumen is important for anyone who wants to have a successful career.
It is the ability to understand and make decisions that are in the best interest of a company.
People with good business acumen can think strategically and understand the importance of teamwork. Moreover, they are able to communicate effectively.
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A startup consultant, digital marketer, traveller, and philomath. Aashish has worked with over 20 startups and successfully helped them ideate, raise money, and succeed. When not working, he can be found hiking, camping, and stargazing.