Business acumen is the capability leaders use to make successful decisions. A key skill in a good leader is business acumen – to be able to make informed and balanced decisions with confidence.
Acquiring acumen takes time, experience and training. Lots of skills go into having good business acumen, often called, financial or commercial acumen.
Knowing how to describe business acumen is useful, but what does it look like? Here, we’re going to explore what business acumen looks like within your leadership team. We’ve distilled it down into five vital characteristics so you can see how your leaders measure up and where they may need additional training.
1. Understand the foundations of business
A leader needs to know how your business ticks. They need to be able to talk with confidence about:
- How profits are generated
- Who leads different business areas
- How departments contribute to business success
- The market you operate in
You’ll recognise this on a day to day level when your leader can talk about how actions affect the bottom line of the business. Your leaders will know who to call to resolve issues and get work done.
2. Gather and analyse information
Reams of data will land on a leader’s desk each day. Being able to prioritise this information is paramount. Knowing what information is useful, and also where to source data, will aid a leader in making decisions. Once the data is in hand, being able to work with it to come to sound conclusions is another element of business acumen.
When you see your leaders requesting data and asking colleagues for their interpretations, you’ll know they can work with information well. Calling on information rather than “gut feelings” or “instinct” shows a leader is truly embedded in using information wisely.
3. Strategic awareness
Depending on the goals and aims of the department, your leaders may need commercial acumen to make good sales decisions, or financial acumen to choose investments wisely. The key here is that they understand how their work applies to the business as a whole. You will have clearly defined goals within your organisation and every decision taken must feed into that.
You can expect them to live and breathe their KPIs when they understand how they contribute to your goals. Each decision your leaders make will be able to clearly chart back to your business strategy.
4. Efficient working practices
You’ll know your leader has business acumen when their area works at productive capacity and hits and exceeds targets. Efficiency is driven by good decisions and an understanding of how to produce the results a business needs. This doesn’t mean acting in haste, but having good processes in place to get decisions made and implemented and outcomes realised.
Problems will be solved effectively when your leader has good business acumen. The team they lead will be engaged because they work under someone that they have confidence in.
5. Financial acumen
When it comes down to it, your business is about making money. You need your leaders to be able to make strong financial decisions relating to building your profits and minimising your losses. You want to see your leaders understand a range of financial measures and work to protect your margins.
You’ll know your leaders have strong financial acumen when they explain their decisions in terms of financial measures. They’ll engage in the money side of the business and learn how they can contribute to it.
How to develop business acumen
Having a team of leaders that embodies these attributes is a powerful goal to aim for. No one leader will have all skills at hand, but everyone on your team can learn and develop them.
Business acumen needs more than theory in a classroom, it needs practical exploration and opportunities to make mistakes and learn from them. Using business simulation training programs gives your leaders an environment that tracks progress but also permits mistakes.
Training that covers business, financial, and commercial acumen skills will produce strong results for your business. The outcomes we’ve discussed here will become much more evident and you should see positive changes to your bottom line as a result.