Business acumen refers to a person’s ability to understand and make sound decisions in business. Combining knowledge, skills, and experience enables an individual to understand how a business operates and make decisions that will positively impact the bottom line. Business acumen encompasses many areas, including finance, marketing, operations, and strategic planning.
It involves the ability to analyze and interpret financial data, understand market dynamics, and identify opportunities for growth and expansion. It also includes knowledge of industry trends, regulations, and competition. A person with strong business acumen can effectively manage and allocate resources, make informed decisions, and anticipate and respond to changes in the business environment.
Additionally, Business acumen is the ability to think and act like an owner, meaning that an individual with business acumen can balance short-term and long-term goals and make decisions that will benefit the company in the long run. In simple terms, the ability to understand the big picture and make strategic decisions will drive the business’s success.
VIDEO: The Importance of Business Fundamentals
To sell to executives and leaders in any business or industry, you need to think like an executive. It’s time to put your “business owner” hat on and take accountability for building a business.
With your business owner hat on, watch this video. Remember – it doesn’t matter how good your business idea is; if you don’t know the fundamentals, you can try to grow your business, but it just won’t work. Once you have the fundamentals, growing your business will be much easier.
VIDEO: Business Acumen 101
Good business acumen is about understanding how the company makes its choices to drive economic value and understanding how the company is trying to shift and move and innovate in the future to make the future better than the past. It’s about understanding growth.
VIDEO: Understanding Financial Statements
In this video, you will hear the primary sections and items in a balance sheet, income statement, and cash flow statement (using Tesla’s Q1 results as an example). This is the first step if you want to analyze a company’s financial health, and it will get you up and running for all the fun of reading 10Qs and 10Ks.
VIDEO: How To Read Annual Reports
In this Video, Warren Buffett explains his way of reading the annual reports. His emphasis is on not making investment decisions too complicated.
Please pay attention to his understanding of how a business works and how its core value is critical to understanding the number.
He mentions his decision to buy Petro-China. Charlie Munger insists that their Due Diligence expense is low because they don’t have to pay accountants considerable sums of money to make investment decisions.
Additional Resources
- Financial Statement Analysis (LinkedIn Learning Course)
- The Basics of Accounting (LinkedIn Learning Course)