What is Business Acumen?
The world of business can sometimes be a chaotic, unpredictable, and cutthroat place. When entering this world, especially in a senior or management position, it pays to have an aptitude for business itself.
That’s why so many people talk about ‘business acumen’. It’s one of the desired and sought-after attributes of people running a business.
But what is business acumen? In this blog, we take you through everything you need to know about business acumen and what it means.
Business acumen definition
A consistent and solid definition of business acumen is hard to pin down. The definition has changed over time and can mean different things to different people in different contexts.
In general, business acumen is keenness and quickness in understanding and dealing with a business situation (risks and opportunities) in a manner that is likely to lead to a good outcome [1]. Even more broadly, business acumen can refer to a business savvy, where the individual is able to encounter a business situation and be able to see all aspects of it, and thereby act in an appropriate manner. This savvy is so ingrained in the person who has it that it can appear unconscious, almost like an intuition.
While this definition may make business acumen seem almost mystical and inborn, it can easily be learned. Like most things, business acumen can be broken down into constituent parts, analyzed, and assimilated.
Here are some of the best-known aspects of business acumen.
Big-picture thinking
One of the main attributes of someone with business acumen is their ability to see the “big picture” of a company or business situation. They are able to “zoom out”, so to speak. People with good business acumen can take in the totality of the business itself, the competitive context of a particular situation, the likely effects on a micro and macro level of particular decisions, and the likely future outcomes of future decisions.
This kind of thinking is vital for people in executive positions within a company, who is in charge of plotting the strategic direction of a company and making executive, company-wide decisions. They also understand the key drivers within a company and how the company’s different constituent parts interact with and affect each other. They are also able to effectively communicate their vision to the company and the public.
Leadership
Business acumen requires the subject to display certain leadership skills. They should know how to rally their workers, create buy-in from stakeholders, and be able to articulate a vision for the company that others will want to follow.
Having business acumen means spotting new opportunities for improvement and growth. Sometimes, it needs some leadership skills to convince people within your company to change course or adopt new modes of operation.
People with leadership skills often occupy management positions so they can use their skills to help their companies perform better.
Financial literacy
In order to make a company successful, it is vital to have a comprehensive understanding of the drivers of growth, profitability, and cash flow. However, financial literacy consists of more than just understanding particular documents. It means understanding how decisions and behaviours affect the financial outcomes of the company, both in a unit and a company-wide level [2]. Having business acumen also means understanding how financial literacy plays into and informs one’s vision of the state of the company in question.
Operational literacy
In addition to knowing the company’s books, someone who displays business acumen must have an intimate knowledge of the internal workings of a company. They must understand what each unit or department does, how it contributes to the larger operation of the company, and be able to identify areas where improvements can be made.
Awareness of external and internal influences
Business acumen, as stated above, requires big-picture thinking. Such big-picture thinking requires the person in question to be aware of influences both inside and outside the company that could affect the growth, integrity, and financial health of the company.
Internal influences could include:
- Corporate objectives
- Business culture
- Operational issues
- Human resources
External influences could include:
- Economic environment
- Competitor actions
- Market dynamics
- Technological change
- Social and political change
Someone with business acumen will display a knowledge of these influences and understand all the ways in which they can influence each other and contribute to different business outcomes.
Understanding stakeholders
Business is a relationship between people. The business world is made up of millions of people interacting with each other every day.
It’s not just customers and business partners that the person with business acumen considers in the operation of the company, it is all stakeholders at every level, from employees and suppliers to customers and investors. Every person who interacts with the company affects the company, and the company affects them in turn.
The person with business acumen will be able to understand how the company is affected by each stakeholder, and vice versa. They will also be able to understand how each stakeholder positively contributes to the financial health of the company, and which stakeholders may be hindering it as well.
Growth mindset
The function of any company is to solve a problem, grow, and make a profit. A person with business acumen will always have these requirements in the back of their mind. Whether it’s improving the company’s public image, increasing sales, or reducing waste, every action they take will be to increase the health, wealth, and stability of the company.
Curiosity
Business acumen comes from constant exposure to, and interaction with all aspects of business. Someone with business acumen will be incredibly curious about how their company works, what their customers think about their products and services, and constantly review the business’s reputation.
This curiosity should also extend to include the actions of competitors, market forces, social and political changes, and more. The more knowledge a person has about their current business context, the better prepared they will be to make business decisions that result in good outcomes.
Improve your business acumen with a state-of-the-art POS
If you feel like your business acumen could be improved, you’re not alone. Millions of business owners all over the world seek to improve their knowledge and skills every day.
But you don’t need to take a class or get an MBA to improve your business acumen. Sometimes, all you need to do is have an intimate knowledge of the inner workings of your business.
With an Epos Now point of sale system, you can get insight into every aspect of your business.
- Track single item performance so you can forecast with accuracy
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- Customise your reports to see what matters to you
- Access reports and data from anywhere
- Track sales, profit, and trends in real-time to understand more about your business
- Identify your top-performing products and staff members
- Integrate with Quickbook, Xero, or Sage and take the headache out of accounting
