Everyone thinks developing strong business acumen only applies to CEOs, corporate leaders, and entrepreneurs, but that couldn’t be further from the truth.  It doesn’t matter what position you hold in a company, understanding basic business acumen directly affects how well you perform. When you think about it, you will realize that every single person in the company is a part of the revenue-generating process. It would be challenging to increase a company’s bottom line without every team member working harmoniously together. 

But in order to do your part effectively, you need to understand how your skills and expertise fit in the greater scheme of things. And to do that, you need to develop strong business acumen. By the end of this article, we’ll debunk this concept and show you how you can develop this valuable skill yourself so you can communicate effectively in the world of business. Let’s get started. 

What Does It Mean To Have Strong Business Acumen?

Picture yourself as a computer engineer working at a tech company.  You’re called into a company meeting and they’re talking about business strategies and financial statements. Your mind goes blank as you try to process all the numbers and business jargon. Hoping no one notices your gap in knowledge, you smile, nod, and attempt to shy away from the meeting altogether. 

You go back to your office still struggling to understand how any of it applies to your work. Every day you clock in and clock out feeling disconnected from the company. And all the while, you have no idea if the business decisions you’re making in your team are actually relevant. So what’s the meaning of this confusion? 

You see, moments like this happen far too often. In fact, there is a pool of business people who struggle to understand the fundamental elements of a business and how it operates. They don’t know how all the moving parts work together to increase the company’s bottom line. And financial terminologies like cash flow, profit margin, and return on assets are foreign to them. In fact, according to the Harvard Business Review, 95% of employees are either unaware of or do not understand their company’s strategy. 

The best solution to this problem is developing strong business acumen – the ability to see the big picture of a business. In the words of Kevin Cope, “business acumen is the keen, fundamental, street-smart insight into how a business operates, how it makes money, and how it sustains profitable growth.”

Strong Business Acumen Doesn’t Have To Be Complicated

One time Dan was at an event and he was talking to one of the attendees. They struck up a conversation and he asked, “What do you do?” The guy tried to explain his business in simple terms but struggled and said, “There’s more to it. But I’ll need more than a minute to explain it.” To which Dan replied, “If you need more than a minute to tell me how your business works, then we have a problem.”

You’d be surprised to know how many people can’t articulate what they do or how their business model works. Even those holding executive positions or jobs that many people would consider to be complex define their business like it’s rocket science. They think it has to be full of complex business terminology, hard-to-understand numbers and formulas, and communication in a language that doesn’t even sound like English. But the truth is, it’s not supposed to be complicated. 

When you have strong business acumen and you understand your business inside and out, it actually has the opposite effect. You’ll find that it’s easier to explain how your business works without trying so hard to sound “smart”.  To put it simply, the more business acumen and experience you have, the easier it’ll be to explain. And the less you have, the harder it’ll be to explain. When you understand something so well, you can talk about it from many different angles, apply a variety of examples, and make it stupidly easy to comprehend. 

Complexity VS Simplicity: Tap Into The Mind Of A Medical Specialist

Here’s an example to help you understand. In healthcare, doctors train for years to learn the language of medicine. But depending on their level of medical expertise and experience, how they communicate with their patients is very different. 

Retinal ophthalmologists, for instance, are medical specialists that treat a number of complex eye diseases like age-related macular degeneration, retinal detachments, glaucoma, and many more. They treat mostly elderly patients. And a lot of the diseases are very complex and full of medical jargon the average person would not be able to understand. 

When they’re explaining these eye conditions to their patients, turning it into rocket science doesn’t help at all. But because they’re experts in their field and well-versed in medicine, they can strip away all the complexity and explain in a way that’s easy-to-understand. 

Let’s take glaucoma for example. There are two ways to explain this eye disease to a patient. 

Example #1: 

Glaucoma is a disease characterized by a particular pattern of progressive damage to the optic nerve that generally begins with the subtle loss of peripheral vision and eventually causes loss of vision. It’s associated with elevated pressure in the eye called intraocular pressure that damages the optic nerve…

Intraocular pressure increases when “Aqueous Humor” fluid rises in the eye’s anterior chamber (area between the cornea and iris). Aqueous Humor fluid will normally flow out through a channel in the front of the eye in an area called the anterior chamber angle, but if the channel becomes blocked, fluid builds up over time, leading to Glaucoma.

This is one way to explain it. Now let’s take a look at the second way. 

Example #2: 

Glaucoma is a silent eye disease that gradually steals sight without warning and without symptoms…

In a healthy eye, there’s a balance between the fluid produced and the fluid that leaves the eye. This balance keeps the eye pressure at a healthy level. To maintain this balance, the eye has a built-in drainage system that works a lot like a sink. Fluid flows from the faucet and exits through the drain…

If there’s a blockage in the drainage system, the fluid will overflow in the eye and force the eye pressure to go up. If the pressure pushes against the optic nerve at the back of the eye, where light signals are sent to the brain, it can lead to vision loss and even blindness.

Both examples detail what glaucoma is and how it occurs. But most people would probably agree that the second example is much easier to grasp. For one thing, we’ve removed unnecessary, complex words and medical jargon. And we related the disease to the way a sink works to make it easier for a patient to picture in their mind. 

The same principle applies to the development of strong business acumen. When you’re business savvy, you can transform concepts that most people would consider to be complex into something that’s super simple to understand. 

Why You Can’t Go Far Without Strong Business Acumen

Business acumen goes beyond knowing how to communicate well. You have to know how to make business decisions that align with the overall big picture strategy of the company. 

As Jeff Weiner, CEO of LinkedIn, said, “What all businesses need is business acumen and an understanding of how to balance the creative side with how businesses really work.” And the best way to explain this is with an example provided by Kevin Cope, Founder of Acumen Learning. 

In a Harvard Law School study, researchers compiled the most important skills for new lawyers to develop. At the top of the list were skills like accounting, financial literacy, understanding financial markets, business strategy and industry analysis. To sum it all up, they basically concluded that lawyers needed to develop strong business acumen. But why exactly are business skills more important than other skills?

Kevin asks us to imagine the following scenarios:

Scenario 1: 

“A tech company releases a brand new patented product that has been in development for several years. The next day, one of the company’s major competitors announces work on a similar product to be released soon. It’s clear that the competitor’s product is almost identical.

Lawyer A and Lawyer B are tasked to find a solution to this problem. 

Lawyer A opts to build a case and gather all the necessary paperwork to file a lawsuit against the competitor. Through a legal lens, Lawyer A’s action plan is plain and dry.

But Lawyer B looks at the problem through her business lens before coming up with a gameplan. She talks to the marketing, engineering, finance, and sales department. She takes into account the development of the product and the implications a lawsuit would have on all the different areas of the business. In an effort to put everything on the table, she also looks at the potential cost of a legal battle, and the effect a lawsuit would have on product sales and company image.”

From this scenario, both lawyers may conclude that legal action is necessary, but which one do you think will gain the trust of the executive level managers?

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Scenario 2:

“The same tech company is considering the purchase of a smaller company. The companies are both in the same industry and have complementary goals, so the merger makes sense. However, it’s still the beginning of the decision-making process, and company leaders want to bring legal in to identify the potential legal risks and ramifications of a merger.

Lawyer A compiles all the documentation to finish the deal and advises company leaders on the best deal structure, tax benefits and drawbacks, potential non-compete risks, and timing issues. 

Lawyer B does the same but dives a little bit deeper. She decides to study the smaller company’s financial statement history over the last several years and discovers a sharp drop in their assets over the past 3 years. She’s happy to help navigate the legal considerations, but she wonders if the purchase is in the best interest of the company’s goals. Because of the trust she has built with the management team, she brings up her concerns.” 

In this scenario, both lawyers are working on achieving the same end goal. But again, which lawyer easily stands out as a trustworthy advisor? From the looks of it, it’s fair to conclude that Lawyer B’s reputation for going above and beyond through both a legal and business lens makes her the go-to expert for the company. Whereas Lawyer A, on the other hand, falls short on figuring out how her legal decisions affect the company as a whole. 

You see, businesses make decisions based on a variety of different factors. But when they can work with a legal counsel that can provide advice from a big picture perspective, it’s extremely valuable. 

Not only can they make better business decisions, but they can effectively communicate the potential risks that would impact the company strategy and ultimately, revenue. This is the power of developing strong business acumen. 

Navigating The World Of Business: How To Build Strong Business Acumen

If you’ve read this far, hopefully, you can see that strong business acumen is more than just understanding business models and calculating line items on a profit and loss statement (P&L). It’s about challenging your ability to think like a CEO.

And luckily for you, business acumen is not an innate ability. Like any other great skill, it’s a skill you can learn and develop. Below are three ways you can start acquiring this valuable skill yourself.

1. Learn From Business Resources

The first way you can get started on your journey to mastering business acumen is by learning from yourself. This is one we’re all familiar with. People call this the school of hard knocks. 

It’s learning from your own mistakes through trial and error. This is how a lot of people learn new skills. But there are two big problems. It can get very costly and often takes a long time to learn a skill. Now, you might be wondering, “Are you saying I shouldn’t take this route?” No, absolutely not. 

Learning from yourself works well if you are persistent enough, determined enough, and resourceful enough. You can eventually figure things out on your own. It’s a great option if you enjoy learning this way. 

Now when you’re learning from yourself, remember quality output requires quality input. So here are some tools and resources to help you start building your business acumen:

Books

 

 

Websites / Magazines

2. Learn From Business Networking Events

The second way to start building strong business acumen is by learning from the right peers. We’re not talking about your family or your close friends. We’re talking about attending business networking events and mastermind groups.

There’s a saying that goes like this, “You can have ZERO special skill sets or talents, and still never go broke if your network is great.” This is an excellent way to practice practical business immersion. 

This means you can start getting your name out there and develop meaningful relationships with executive-level leaders and high-level business owners. 

Another good place to go build your business network is through LinkedIn. LinkedIn is currently the world’s top professional business to business social networking platform. So if you’re in the B2B or even B2C, LinkedIn is the place to be. 

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3. Learn From A Business Mentor

This is perhaps the most powerful way to learn how to build strong business acumen fast. And it’s learning from a business mentor. With this method, you’re learning from someone who has been there and done that and continues to do it. 

Let’s say you want to learn basketball. You can, of course, learn from yourself and you can learn from playing with your friends. But if you want to be a professional, you can’t do it alone. You need to get a coach or a mentor to show you exactly what drills you need to practice on a daily basis to get better. 

As you practice, your coach is watching you and correcting you. He’s shaping you, molding you, and helping you get to that next level.

With a mentor, you are getting a direct transfer of skills you can’t get from reading books and watching videos. Click To Tweet

Discover The Missing Link You Need To Master The Art Of Business Acumen

It would be great if business acumen was the be-all and end-all answer to ultimate success in business, but it’s not. Earlier we touched on how all team members at a company are in the revenue-generating business. They all must work together, harmoniously, towards the same goal. 

But in order to generate revenue, you would have to understand sales and marketing. Without it, learning business acumen would be pointless. However, sales techniques have changed so much that traditional sales methods are dead. They do not work today. They’re outdated.

The new school of sales now involves “closing”. Closing allows you to communicate your business and to help clients understand why your business is the best solution for them. Today, everyone craves for transparency, authenticity, and needs to be heard. The secret to closing is careful listening and asking powerful questions that satisfies these cravings in people, builds trust, and strong business relationships.

So when you combine closing with strong business acumen, you get a synergistic fusion of the ultimate business superpower to succeed in any business setting. If you’re very serious, coachable, willing to learn, and ready to do whatever it takes to take your income and business to the next level, then click here to join me on Day 1 of my upcoming training series where I’m going to teach you the fastest and easiest way to learn the High-Income Skill of Closing.