The definition of Business acumen is the process by which others view you as knowledgable, engaged, and thoughtful about business.
At a high level, having business acumen means that you can speak the language of business. Business means different things in different contexts but I believe that business is about offering products or services that help people and in return you are paid for this assistance.
How To Develop Business Acumen
To develop business acumen you need to first be aware of the foundations of business:
- Economics: how scarcity impacts supply and demand;
- Strategy: when to enter markets and how to operate;
- Data Analytics: how to count (clients, customers, inputs, outputs);
- Accounting: how to measure and count your costs;
- Finance: how to project future earnings and the time value of money;
- Sales and marketing: how to bring a product to market and earn customer trust;
- Leadership: empowering your teams and partners to best serve your clients and business needs.
After reading through this list you should be able to understand what you know well and where your gaps are. In order to develop acumen you need to educate yourself and fix your gaps. Then you need to communicate these improvements to others.
Business Acumen: What Are The Essential Topics To Cover?
Here are questions you should be able to answer about each aspect of the business lifecycle from above.
- How do firms allocate scarce resources?
- How does supply and demand work?
- Who gets what in a negotiation and why?
- When do firms enter markets, or leave them?
- What is buyer or supplier power?
- How does the threat of competition or substitutes impact a firm’s behavior?
- Data Analytics:
- What metrics matter most in your business (i.e. sales, profit margins, units shipped, lines of code written, phone calls made, etc)?
- How are these metrics trending over time?
- What can you study or review within the data to make better informed decisions?
- How much money did you earn?
- Has this money been recorded or is it a future promise of payment?
- Do you owe money?
- What percentage of the firm or business do you own vs. shareholders own?
- What is your revenue or profit growth rate?
- How much does it cost you to borrow money?
- Are you better off entering or exiting a market based on the rates you can access capital?
- Sales and marketing:
- How do you get customers today?
- What is your net promoter scale?
- Are your customers happy with your product? Why or why not?
- How do you influence how people think about your product?
- Are you a leader of teams or people?
- If so, are you respected and admired? Feared? Beloved?
- Do you communicate openly or often?
Apply this framework to improve your business acumen. You will learn, think more critically, and be able to add more value to your business, customers, and peers. If you struggle with any of these concepts, take time to think about your own presence and how and why others view you the way that they do.
Imagine a business leader sitting with a powerful position in an executive chair.
What is he or she saying? What words are they using? Up to 93% of communication is non-verbal. So even if you are struggling to convey certain business topics (or acumen) you can still project confidence and strength.