Organizations need employees and managers to contribute their best to ensure business success. Executives expect employees to act and think like business owners, understanding how resources are converted into value, how finances work, and how stakeholders view their long-term investment. These topics and many more comprise the concept of business acumen. Business acumen is fundamentally about understanding how companies make money and the impact cash and credit have on pursuing ongoing business.
Let’s unpack this concept a little more. Since business acumen refers to the speed of effectively understanding and deciding in a business situation, it includes understanding the strategies, actions, and decisions impacting the numbers. What numbers? Financial numbers, like the numbers found on the balance sheet, income statement, or revenue numbers.
To gain more business acumen, you will likely need to understand various different situations and interpret those situations. More importantly, the initiatives you are involved in must impact those numbers positively. Knowing the business rules, the rhythm of the business, and how your company makes money will help you understand how executives and leaders keep score. It also enables you to balance the short-term decisions you must make with the long-term strategic decisions required by your company’s strategy.
Learn how to become a champion in business.
Tips for Increasing Your Business Acumen
Tip 1: Learn to think like a CEO. Set aside a specific month to think through how your company works. Start with the balance sheet and make sure you understand how it’s built and how the business cadence contributes to creating that balance sheet. You may have to reach out to someone in finance to help you. You should also understand the income statement and how it’s built. This step requires thoughtful analysis, learning the business, and embracing the strategy. You should also listen to your company’s earnings call, paying particular attention to the Q&A section at the end. Note: If your company is privately held, find a publicly traded competitor and use their info for this exercise. To access publicly available earnings calls, try these links www.morningstar.com, www.seekingalpha.com.
Tip 2: Build the skills that contribute to higher business acumen. When you think like a CEO, you will spend more time in the numbers and thinking about the value of time and money. If you think about it, the CEO is in his or her role to grow the company and sell sometime in the future. A key skill required to build business acumen is understanding and learning to communicate the pursuit of the future state. To do that, they will live in the future. In other words, they are thinking about the market, the industry, and your company’s products and services' role in helping your clients succeed down the road. In short, the role of the CEO is to ensure long-term value. To acquire the skills you need, you will likely need sales training. To sell your company's value, you must focus on driving business outcomes while concentrating on the viewpoints of your customers.
Tip 3: Draw a picture of your business. Your business is a system. It’s designed and organized to convert resources into some sort of value. Even mundane areas like creating job descriptions and execution processes are critical to making the system work. Thinking like a CEO means understanding expenses and revenue. Can you show how costs are categorized in your picture? Can you show the company’s revenue streams in the picture? What about the internal infrastructure and how that plays out? Is your picture a circle, or is it more like an inputoutput model? Why?
Tip 4: Embrace a Growth Mindset. Focus on thinking about, learning about, and talking about business growth. Who are you going to do that with? Since the sales team drives business growth, they would be an excellent place to start. Do you have someone you can talk to in the sales team? Engaging with people in the sales organization is often easier than with your CEO. Selling has become complex (CEOs deal with complexity every day). Buyers have become highly sophisticated (so have CEOs). Buyers regularly check the Internet and revisit their internal processes while benchmarking with others (so do CEOs). Consider viewing the sales leadership team as CEO proxies. How would that affect your approach?
Tip 5: Change your perspective. What if you were to look in the mirror and say;, “I am a salesperson!”? How does that make you feel? Can you significantly explore sellers' realities if it would help you build your business acumen? Remember, for your sales team to be successful, they must possess business acumen in even the simplest business business sale.
Business acumen is the minimum acceptable behavior your buyers expect from your sales team. For your sales team to be successful, they need the ability to navigate internally and build relevant business relationships. Sound like a similar problem that you face? Can you engage and converse with them regularly to understand recent wins, recent sales pursuits, and how they view the market and industry?
If you find yourself saying, “I’m not a salesperson!” you’re running away from building business acumen. While the best possible scenario involves you talking to HR to solidify a rotation in the sales team, you may need to elevate your language. Why? Because thinking like a salesperson, acting like a salesperson, and engaging your leadership team like a salesperson will help you position your value contribution differently.
Here is a short list of topics you may want to consider increasing your business acumen in addition to these tips we have shared:
- Thinking through the multiple dimensions of business issues. There are always more sides than yours
- Engage in complexity and ambiguity without complaining
- Think through the implications of choice for all the affected parties
- Make conscious decisions to become the voice of those who need it
- Work on your ability to be flexible and anticipate further changes that are likely coming
- Improve your financial literacy
- Engage in healthy debates on business issues
- Create a point of view about something essential and back it up with business logic and numbers
