How to Know If You Have Business Acumen

Do you have what it takes to make it in business?

Let’s face it, not all who tried it, made it. 

Running a business takes a special quality in a person to start and grow a business to a sustainable level.

And it takes business acumen to make it.

Do you have it in you?

Here’s how to find out.  

First you need to know and understand what business acumen is all about. 

Dr. Raymond R. Reilly, Associate Dean and Professor at the University of Michigan, and an expert in the study of business acumen, says that “business acumen is keenness and quickness in understanding and dealing with a business situation in a manner that is likely to lead to a good outcome.”

Doing so requires basic understanding of some aspects of business such as marketing, finance and other business functions while having the ability to make good judgment and quick decisions.

People with business acumen:

• ·         Have deep understanding of the scope of business issues

• ·         Can simplify complex situations

• ·         Can see through an uncertain future

• ·         Are aware of the implications to other people of their decisions

• ·        Are decisive

• ·         Flexible to change if needed in the future

Business acumen operates in the mind and those with it are able to use it effectively without reliance on organizational support and even formal education.

It is the reason why we see the likes of Bill Gates, Steve Jobs, Mark Zuckerberg and many other business greats who, even without the benefits of a college education, achieved outstanding feats in enterprise development. 

They are instinctively aware that they possess business acumen and utilized it to their advantage.

What are the elements of business acumen? 

 

Dr. Reilly says that strengthening business acumen requires understanding and focus in four critical areas:

• Understanding one’s thought processes.  Business acumen provides frameworks and direction to organizing one’s thoughts and deciding how to allocate attention to the most important issues.

• Developing business knowledge.  One’s acumen is developed by constant exposure to business situation partly through case studies provided by business schools as well as actual experience in a real business environment.

• Effective use of management processes.  These are the tools, procedures and ideas that give shape to one’s ability to think, analyze and to communicate.

• Management and leadership skills.  This aspect of business acumen is the ability to manage the various people relationships essential to enterprise success.  This skill must also apply to managing relationships with customers, suppliers, bankers, investors and other key influences. 

Can business acumen be learned?

Certainly it s a learned skill.

There are those who are quick learners and are able to learn easily than others. 

You can learn the basics in school and also through experience working for others.  If you are lucky enough, you develop it by being exposed to it through your family business at an early age. 

Finally, you can work to improve on your business acumen with regular practice and training until it becomes just second nature to you.

Do you know the the 3 Ps of success of outstanding performers in sports, theater or music?

Practice! Practice! Practice!

It makes one perfect. 

Job Description of a Business Owner

So you think you can now run a business? 

Welcome to the club!  You are now a member of that unique brotherhood of start-up business owners who are jumping into the river called entrepreneurship and testing the water, seeing for themselves if they can swim and survive throughout the entire length of the often-tempestuous tributary.

You have great belief in yourself and you think that because you are the top salesman, accountant or manufacturing guy in your previous employment, you now have the license to run an enterprise.

Well I have good news and bad news for you.

Photo Credit:  www.dailyfinance.com

Yes, it is a great asset if you have an extensive background from a line of work that is key to the growth of your former employer. That’s the good news. Congratulations for a job well-done.

The bad news is, a business is not made-up of just one function like sales, nor finance, nor manufacturing neither human resources. It is made up of all of these and more and if you are merely a specialist in any of these and you think that you’ve got what it takes to run a business, you are probably courting trouble, my friend.

Now that you have assumed the role of somebody who’s supposed to be in-charge of several business functions, it would be to your best interest to be appreciate the value that each of these functions contribute to the overall operations of a business.

To do this you have to re-engineer and tweak yourself to the role of a manager of all the affairs of the business. Not one, not two, but all.

I spent my early years in business and “grew up” in the functional areas of sales and marketing. But when I decided to venture in a business of my own, I realized that I need to increase my appreciation of finance and accounting, all the more when I went into business consulting.

As a general manager, you now need to have a bird’s eye view when looking at the business forest, rather than your former level when all you see are the trees of business functions.

Now, you need to learn a new skill set, a new perspective.

To help you do this, you need to develop a job description that fits the new hat of a general manager. You need to write a job specification that will spell out your new duties and responsibilities to guide you in your day-to-day activities as a business owner.

To prepare for your business growth and expansion, here are 4 key areas where you need to spend most of your attention and time, if you are to be effective.

1. Strategic Planning

            Your first job is to be able to see the future of your business. Already, have you developed a mission vision statement for your business?  Have you written a business plan that details every aspect of the business from product development, to sales and marketing, to finance, manufacturing to manpower build-up and development? These are musts that you cannot do without.  The first rule in a journey is do not go without a map and directions.

            During your journey, there are hazards along the way, and the one of the most fatal in business is the hazard of your business being obsolete because of new technological advancements.  If you were making or selling CDs and paraphernalia before, you’ll understand what I mean.

            An important part of strategic planning is being able to spot hazards ahead along the road and make a detour when necessary.

2. Creating a Business Culture and Community

            Nowadays, we often hear of the word “community” in every facet of of business life.  Creating communities are now part of every company’s business strategy in order to have a first-hand feel of the shared values of the community of its customers.

            Likewise, you should create a unique culture in your business where your stakeholders such as employees, suppliers, marketers and investors have the same attachment to what your business stands for, what values they can share as one community so that each of the elements are connected to each other.

3.  Manage Through Others   

Before taking in your first employee and the next, until you build an organization of human beings interacting with you, with your other employees, your customers and your other various other public, you’ve got to be like a  human resource specialist with the aim of getting the best possible employee to fill up vacant positions in your company.

Since nobody but you is responsible and accountable for the performance of your people, one of your most important tasks as a general manager is your ability to recruit, hire, train and develop good people.

These people, especially your key team members, must be hand-selected by you in order to ensure that they will be productive and treat other people the way you would. You need to personally handle their training and development so they perform according to what you expect of them.  The quality of their performance rests on your shoulder.

This way you get results through others by managing, not by doing.


These key people are key pieces in creating the community and culture of your business to maintain its effectiveness.  They need to appreciate and be able to live by your values in order to operate in your stead.

4. You are the Company’s Best “Salesman”
The principles behind the lessons learn from business success, whether of a large or small enterprise are all the same.  Only the magnitude of an organization’s size like Procter and Gamble sometimes give us the idea: “That’s P&G, my situation is different because I am just a small struggling company”.

Reading on the story of A.G. Lafley, the superstar CEO of Procter and Gamble who’s instrumental to bringing the company to one of the world’s most valuable companies, makes me smile in amusement.

I cannot help but be amused by what he asked himself and his employees to do:  Stay close to the customer.     

Having been close to owners of small and medium business owners since 1989, I realized that he is just adopting what the start-up and developing business sector are doing all along. 

Being small and agile, start-up businesses have the greater advantage of keeping their ears on the ground all the time.

As the owner, never lose your grip on the customer.  Personally allocate some time to them, as what Lafley and his executives did, making sure that you continue what others like you in the small business sector are doing, listening and paying close attention to what the customer is saying. 

 

Do this and you’ll never go wrong.

Why Start-up Businesses Need to Have a Mission and Vision Statement Right From Day One

Start-up business owners may think that it is not that important to have a vision/mission statement since they’re just starting out.  To most of them, there are other more pressing issues to think about like how to have the money for payroll next week!

Having a vision/mission statement written or even kept in one’s head has a certain power in it that could drive one to have a renewed sense of purpose.

Photo Credt: www,careerealism.com

I believe that it is something that must be internalized and must serve as sort of a mantra not only for the owner but for the rest of the staff.

It is a kind of recipe or operating procedure that should dictate the daily decisions and actions of everyone in the business, from the owner down to the delivery guy.

What about the big guys like Steve Jobs who founded the most valuable company in the world today? Did he have a sense of vision and mission when he was just starting out as an unknown dreamer in 1976?

Of course he had.  His vision “a computer for the rest us” was so compelling that it sparked the PC revolution and changed the way we work, play and live today.  He said: "We started out to get a computer in the hands of everyday people, and we succeeded beyond our wildest dreams."

Your business may not become another Apple but with a sense of direction, it could be at least a leading company in your chosen industry.

To have a sense of direction, here are some bits of wisdom you may want to consider to help you to be on-course in steering your business towards its destination:

Know exactly where you want to go.  Don’t just utter motherhood statements such as “Company X shall be the leading provider of XYZ Widgets in the market”.  Be more specific. Since it’s supposed to be your guiding star in the wide ocean of widget manufacturers, you may want to say: “Company X shall be among the top 3 leading providers (if not number one) of Widgets in the market in 3 years.  This shall be your battle cry from day one and everyday thereafter until you reach the top 3 slots in 3 years. 

To secure the future, secure today.  Some philosophers say that there is no such thing as the future.  Only today matters. Maybe it’s true because today - the future of yesterday - is the result of actions and events that happened in the past.  Good or bad, the results speak for themselves. So to be among the top 3 widget manufacturers in your market tomorrow, do the activities that need to be done today. 

Create a road map.  You company mission is your road map, with which you’d take your business to your ultimate objective in the years ahead. It is the framework whereby you design the activities that you and your people need to undertake so everybody rows in the same direction.

Make everybody sing the same tune.  Imagine a concert of orchestra players each playing a different note while performing.  Imagine your sales people making delivery commitments which your production cannot fulfill. If this continues, do you think you can make it to your vision of being in the top 3 players in your industry in 3 years? 

Let everybody in the know right from day one. Starting from your first employee, it is critical that every employee you hire know that the company is making XYZ Widgets and what place does the company would want to be in widgets market. To align the entire team in the organization, you create a culture where everybody is aware of the company’s mission and vision.  When Honda was just starting out, a story was told that each and every employee was so committed to its mission of creating quality cars.  Some of them even went out of their way to fix the windshield wipers of Honda cars as they passed by at the parking lot! 

You cannot measure what you do not know.  Every now and then in your journey towards your objective, you need to measure how far you have gone from where you started.  If you have a well-defined mission statement, you will know precisely what to measure and how to measure it. This should apply on every other level of the organization.

Are you ready to sit down and take time to see where you are going and how you intend to go there?  If you haven’t done it yet, today could be your defining moment.

Should You Borrow Money When Starting a Business

Is it wise to borrow money as capital when starting a business?  Or would you rather use your savings instead?

People differ in this respect.  There are those who say that it is better that you absorb whatever cost you incur at the beginning rather than lose the opportunity your business idea offers.

Others believe that the cost of borrowing might only use up whatever you make from your business.

In her article in Chron, The Advantages of Borrowing Money to Start a Business, Sherrie Scott said: “For many start-ups, borrowing money ensures the company has enough capital to open the doors and stay afloat until realizing a profit.”

PHOTO CREDIT: www.awakeningbusiness.com

She added: “Borrowed funds help pay business start-up costs... it benefit business owners because they do not have to rely on personal credit, savings and credit cards to fund new business purchases. Borrowed funds eliminate personal financial risks business owners take on when starting a new operation.”

On the other hand, there are those who believe otherwise.

Microfinance Opportunities, in its Financial Education Library page, presented a more balanced view by showing both sides of the coin.  In a comparative table, it showed the pros and cons of borrowing against using one’s own money in financing a business.

	TAKING A LOAN	USING YOUR OWN MONEY
ADVANTAGES	You can get access to more money than you might have in your savings (e.g. for growing your business)	You avoid the costs of taking a loan
	You get more money quickly than if you rely on saving little by little (e.g. when you need money for emergencies)	You are free to use your money as you wish
		You face less risk when you finance your business in smaller increments based on what you can afford to invest
		You avoid the obligations of a loan, including repayments with interest.
DISADVANTAGES	You must pay the costs of loans (e.g. interest, and processing fees)	You have limited access to needed capital
	You are responsible for repaying your loans on time, and face penalties for late payment	Your business grows more slowly
		You have limited ability to respond to investment opportunities

You cannot escape the fact that when you decide to start your own business, it will affect your personal life financially. 

If you used to work and all your needs were supported by your salary to pay the bills, you must have some kind of financial fall back so you can continue meeting your personal financial obligations.  You should have a reserve equivalent to at least six months of your salary so you won’t be pressured to rely from the cash you can squeeze out of your struggling business.

It reminds me of Ray Kroc, founder of McDonald's.  During the early years of the company, he never drew salaries or charge for his expenses, according to his authorized biography, Grinding It Out,The Making of McDonald’s. The income he made from a previous business sustained him while he was in the process of building up the company.

The ball is in your hands.  It’s up to you now to figure out what’s the most viable financial strategy to pursue to fulfill your dream of being financially independent in a business of your own.