What does it take to be a successful entrepreneur? Of course, being an entrepreneur requires a lot of zeal, passion, and perseverance. However, there is a lot more to it than that. As an entrepreneur, the better part of whatever success you may experience will come from your skills and acumen.
In fact, as long as you have the acumen, you can keep adding to your skills and expertise. The foundation of an entrepreneur’s success remains business acumen. But what is so special about having business acumen? Why is business know-how indispensable for contemporary entrepreneurs?
Business acumen can be defined, roughly, as one's ability to make sensible, informed, smart decisions in a business setting.
Business acumen enables transformational leadership
We would all agree that the business environment is becoming increasingly competitive, and that there is indeed little margin for error. Since the stakes are high, so are the potential returns of agile risk-taking.
All in all, you need to embrace the virtues of transformational leadership. Transformational leaders are all about innovation and positive change. They aspire to bring massive transformations in their organizations to take their business to the top.
However, do you think risk-taking without acumen is worthwhile? Without effective acumen and know-how, a business risk can go unimaginably wrong. Having said that, business acumen is the very basis of transformational leadership.
PRO TIP: The best kinds of experimentation in business is that which is inspired and propelled by the risk taker's knowledge and curiosity.
Business acumen enhances decision-making
Decision-making is a litmus test that you need to pass on a daily basis. Eventually, it is all about the kind of decisions you make and how briskly you make them. From product launches to marketing, a lot depends on your effectiveness as a decision-maker.
An effective entrepreneur needs to make the most efficient decisions in the least possible time. That surely seems much easier said than done given how an ineffective decision can take your business downhill. What do you think is going to be your greatest asset in such scenarios? Well, it surely has to be your business acumen.
Let us try and understand this through a practical example. Let’s say you lead an IT company and are planning to launch a new HR Analytics software. Now, for successful product development and market penetration, you need to frame firm strategies. These strategies will only be impactful when you have exemplary business acumen.
You need to have a good knowledge of product development, target markets, as well as of your competitors. This knowledge is essential to every level of decision-making that takes place in the organization.
Paves the way for change management
Being a transformational leader is not the only ingredient of business advancement. You need to complement your vision with change management mechanisms you can rely on. A great change can fail if it is not backed by effective change management. The failure of Kodak, one of the most successful brands of the 20th century, is one illustrative example of a company that floundered as a result of its inability to implement proper change management strategies.
As an entrepreneur, it is your responsibility to understand the change, as well as to implement it and institutionalize it into your organization. In order to accomplish this, you need great knowledge. Your acumen here needs to take into account the examples of successful change management case studies. Also, your business acumen should be strong enough to know how you can set realistic business goals that align with your vision for change.
Without expertise and knowledge, the whole idea of change management may ring hollow. In many more severe (though surprisingly common) cases, it can be disastrous for your business.
Facilitates delegation of authority
For entrepreneurs, delegation is one of the best productivity hacks. Can you effectively delegate authority and responsibilities to others when you lack a great understanding of how business verticals work? Needless to say, as an entrepreneur, you need to delegate important tasks to others. This is where trust comes into the picture.
However, more than trust, your knowledge of tasks and business processes is also vital. Unless you have the right knowledge, it can be hard to decide the grounds for delegation.
PRO TIP: Delegating authority to the right person is as important as the very idea of delegation.
Delegating a vital task to an incompetent individual can translate into a massive loss. But again, how do you figure out whether an individual is competent or not? Your acumen is what will help you delegate in the most effective manner.
Lets you lead by example
For your employees and team, you are a role model they would love to learn from. However, to lead by example, you need exceptional business knowledge. Your employees would want to learn from you given your acumen and not just the fact that you lead them.
Let’s go back to Elon Musk’s example once again. His employees love to work for him and learn from him because of the kind of knowledge he has. People feel inspired by his knowledge as a businessman. They want to acquire that kind of knowledge and add value to their own journeys.
The fact of the matter is that business acumen helps you lead by example. You can inspire your employees with your knowledge and engage them in a more wholesome way. When you carry great knowledge, they will see you as a true leader.
Helps establish competitive advantages
To thrive in a competitive environment, your business needs to develop competitive advantages one after the other. This is exactly what the top companies in the world do. For instance, Apple has the competitive advantage of having its exclusive operating system. Similarly, Amazon has a competitive advantage of having a global shipment line.
So, as a leader, to make your business scalable, you need to develop certain competitive advantages. This is where your expertise and experience as a leader will be put to test. You need to have a clear vision based on great knowledge of how businesses flourish. This is what will facilitate the development of your competitive advantages.
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Try it For FreeLet us sum it up in a simple way for you. For your business to have a competitive advantage, you need to build an individual advantage in terms of your business acumen. Your competitive advantage is directly proportional to your company’s prospects of having unparalleled advantages.
Refines hiring & talent management perspectives
Your business acumen also has a massive role to play in your company’s hiring practices. To explain, when you have great knowledge of the intricacies of running a business, you know exactly the workforce composition you need. You will have a great idea of which skills and core competencies you need in your team.
Eventually, you will be able to refine your hiring perspectives and practices. With good business acumen, you can close the gap between what you need and what you hire. In this way, you can create a high-performance culture. All you need to do is find the best cultural fit for your business.
Having good business acumen also means that you acknowledge the latest corporate and hiring trends. When you know these trends well, you can optimize your hiring policies accordingly. Also, you can ensure that you can incorporate these trends in a successful way.
It is a well-known fact that modern organizations are hiring diversely. A diverse workforce indeed adds immense value to a business. To substantiate, as per McKinsey, diverse organizations have a 35 percent higher chance of winning new markets. However, hiring a diverse workforce and managing their performance are two different things.
When you have knowledge of performance management, you can get the best out of your workforce. You can then drive high employee engagement and ensure high retention in a diverse workforce. In fact, the lack of acumen is a major reason why organizations are unable to solve the complex challenge of disengagement and turnover.
Business acumen adds value to your entrepreneurial journey in multidimensional ways. From decision-making to delegating and building competitive advantages, you need a sharp business acumen for almost everything. Your success as an entrepreneur will depends on how much you know as well as how you communicate it to those around you.
