Understanding the complexities of business is a highly sought-after skill. If you want to advance in finance, or any career, you need to start thinking like a business owner.
Looking beyond the balance sheet and considering the broader dynamics at play - how decisions impact long-term growth, profitability, and customer satisfaction - are all vital to developing a well-rounded business strategy that ensures sustainability, competitive advantage, and overall success.
So, how can you develop business and commercial acumen? 🤔
Read on for 15 quick-fire tips to help you do just that.
Commercial acumen vs business acumen
Both business acumen and commercial acumen are vital skills in the professional world, but they differ in scope and focus.
Business acumen refers to a broad understanding of how a business operates, including its financial, operational, and strategic aspects. It's the ability to make sound judgments and decisions that positively impact the overall business performance.
Examples of business acumen skills:
- Strategic thinking: Understanding long-term business goals and aligning actions to achieve them.
- Financial literacy: Knowing how to read and interpret financial statements like income statements, balance sheets, and cash flow.
- Operational knowledge: Awareness of how different parts of the business (e.g., HR, IT, production) work together.
- Problem-solving: Ability to identify, analyze, and solve complex business problems.
- Risk management: Understanding potential risks to the business and how to mitigate them.
- Leadership and people management: Managing teams, influencing stakeholders, and building organizational culture.
Commercial acumen, on the other hand, focuses on understanding the market and customers, and how to drive revenue, profits, and growth through commercially sound decisions. It’s more about the external environment like markets, customers, and competitors.
Some key commercial acumen examples:
- Customer insight: Deep understanding of customer needs, preferences, and behaviors.
- Market awareness: Keeping up with industry trends, competitors, and economic conditions that affect the business.
- Revenue generation: Identifying opportunities to increase sales, market share, or margins.
- Pricing and profitability: Knowledge of pricing strategies and how to maximize profitability.
- Sales and marketing strategies: Creating strategies to effectively position products/services in the market.
- Negotiation skills: Managing deals, partnerships, and supplier agreements for commercial advantage.
Richard King
15 tips to build business and commercial acumen
Here are 15 quick-fire tips to help you sharpen your business acumen skills as fast as possible. 🚀
1. Understand the big picture
Don't just focus on numbers in isolation. Ask yourself how they fit into the larger vision of the business and its overall goals.
If you can, attend strategy meetings. They’ll help clarify your company's mission and track progress toward goals. The more you know about the business's direction, the more you'll understand its financial decisions.
2. Follow the money
Track where revenue comes from and how it’s used. Knowing how money moves in and out will help you make smarter decisions.
It’s worth taking time to map out how revenue is generated and what drains cash (expenses, investments, etc.). Understanding the full journey of a dollar can help you forecast better and spot issues before they become problems.
3. Get to know your customers
Although you may work in finance rather than a customer-facing role, it’s still worth getting to know your customers.
Who are they? What are the pain points your product or service solves for them? If you don’t grasp these details, it becomes much harder to align financial decisions with what really drives value.
4. Learn the lingo
To be taken seriously and contribute, you must speak the same language. You’re probably familiar with a lot of ‘business jargon’ as it is. Terms like ROI (Return on Investment), EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), and others, often pop up in casual conversation in the office and meetings.
If you’re unsure about something, do a quick Google search and try to remember the key ones used by your colleagues and employer.
Sabrinthia Donnelly
5. Build relationships across departments
Finance touches every part of the business. So, it doesn't hurt to know how other departments work and gather intel on their processes and priorities.
The more you know, the better your decisions will be because you'll have a broader understanding of the business.
6. Keep an eye on competitors
What are your competitors doing differently? Analyze their financials and strategies to spot opportunities or risks for your own company.
You could try studying competitors' financial reports, press releases, or news articles. Are they launching new products? Cutting costs? Expanding into new markets? Compare their strategies to your company's performance. This will help you spot trends or gaps you can address.
7. Always think ROI
Whether it's a new project or an investment, always ask: What’s the return on this? Thinking like this helps align finance with business decisions.
Every dollar the company spends should drive some sort of value. Developing strong business and commercial acumen ensures you’re aligning financial resources with business outcomes. If the numbers don’t stack up, it’s time to challenge or rethink the decision.
8. Understand costs, not just revenue
Sure, revenue is exciting, but it’s not the full story. What really matters is the margin—what’s left after costs are covered. Dig into cost structures and identify areas where expenses can be optimized.
Knowing the difference between fixed and variable costs, and how to manage each, can help improve profitability. This will also help in pricing decisions, ensuring your company stays competitive.
9. Stay current on market trends
Markets change, and the best finance professionals know how to adapt. Keeping up with trends helps you forecast better and find new opportunities.
To help with this, read about market trends and follow industry news. Subscribe to business podcasts, or set up Google Alerts for your industry. Consider how trends, like tech advances or economic shifts, could impact your business model.
Shehryar Gilani
10. Dive into financial metrics that matter
Knowing which metrics matter most helps you focus on what drives performance. KPIs like profit margins, return on equity, and cash flow tell the real story. Master them to understand how finance drives the business.
11. Shadow a colleague
To understand how finance affects other parts of the business, step out of your comfort zone. Walk in someone else's shoes. Spend a day (or a few hours) with a non-finance colleague such as someone in sales or customer service.
This will give you a new perspective as you’ll see their unique challenges and decision-making process firsthand. In turn, you’ll be able to provide new solutions and ideas on how finance can support them further.
12. Simplify, don’t complicate
Great business and commercial acumen comes from explaining complex financial concepts so non-finance pros can understand.
So, what does this look like for you?
It's about turning numbers into stories that non-finance people can understand. To do this, you could use visuals like financial charts and graphs to break down concepts. Remember to connect the dots between the numbers and the business outcomes they represent.
13. Take calculated risks
Businesses often need to take risks to grow, and you can be the one who helps ensure those risks are smart.
Use financial analysis to weigh the pros and cons of risky projects or investments. Present scenarios, and don’t be afraid to recommend bold moves if the numbers support it. It’s about balancing caution with opportunity.
14. Know when to zoom in and out
Details are important but don’t get lost in them. Switch between high-level business strategy and nitty-gritty numbers when needed.
For example, in a financial report, know when to dig into specifics, like cost breakdowns. And, know when to give a high-level summary that ties it back to business strategy. Switching between both modes will make you a more agile and effective decision-maker.
15. Keep learning
Improving business and commercial acumen doesn’t happen overnight. You have to stay on top of it by continuously learning. Take online courses, attend workshops or network with other finance professionals. Even reading a few business books or blogs now and again can keep your skills sharp. The more you learn, the more valuable you become.
Common FAQs
What does acumen mean in business?
Acumen in business refers to the ability to make smart, quick decisions that drive business success. It involves understanding how a company operates, its financial health, and how to navigate challenges to achieve strategic goals.
What is an example of business acumen?
An example of business acumen is identifying a new market opportunity based on trends and strategically launching a product that boosts company revenue while staying ahead of competitors.
What is an example of commercial acumen?
An example of commercial acumen is negotiating a supplier deal that reduces costs without sacrificing quality, ensuring the business remains profitable and competitive in its industry.
How do you demonstrate commercial acumen?
You can demonstrate commercial acumen by making decisions that balance profitability with business strategy—such as optimizing budgets, identifying cost-saving opportunities, and driving revenue through innovative pricing or marketing tactics.
How do you describe business acumen on a CV?
On a CV, you can describe business acumen as your ability to drive strategic initiatives, optimize financial performance, and make informed decisions that contribute to business growth and profitability.
Want to build your business and commercial acumen further?
Struggling to turn your financial insights into real influence? Do you feel like your expertise isn’t making the impact it should?
It’s time to change that!
The Business Partnering and Storytelling Certified Masters course will teach you to be the ultimate finance business partner and a master storyteller.
This certification, by Christian Wattig of FP&A Prep, gives you instant access to five hours of video lessons, slides, and examples. They will teach you to build relationships, provide insights, and turn complex data into compelling stories.
So, the real question is - are you ready to claim your seat at the decision-making table?
