Many entrepreneurs and small business owners are really good at a particular trade, but they don’t necessarily understand business. For example, Paul is passionate about cooking so he decides to open a restaurant. While he’s an excellent chef, he really doesn’t understand how to run and operate the business. He struggles to turn a profit and ends up closing a year from opening.
This story isn’t an uncommon one. What most individuals lack is business acumen, which is understanding how your company makes money and acting to make really good decisions around the money making process.
So how do you build your business acumen and, ultimately, the ability to make better business decisions? Here are three ways to get you on the right track.
- Set Aside Time for Regular Study and Research
No matter how busy you are, find time to regularly study and become an expert in business, and more specifically, your industry. This is the single most important thing you can do to build your business acumen and begin making better decisions.
There are dozens of great publications such as The Wall Street Journal, Business Week, and Forbes, which can be accessed from just about anywhere. Make a habit of reading articles or business books at night, instead of watching TV – even if it’s just for 15 minutes. This regular study, whether it’s an hour a week or an hour a day, will expand your vocabulary and get you into a business mindset. The important thing is that you do it consistently.
One great tool that doesn’t get used much is Google Alerts, which allows you to receive email notifications on a search query of your choice. Use Google Alerts to set up alerts for your industry, such as specific businesses or key topics, so you are notified every time something comes up in the news. This will allow you to stay current with what’s happening around you and be ready to move when opportunities arise.
- Know How Your Company is Performing
How often do you spend time analyzing how your company is performing? Most people spend plenty of time working in the business, but hardly any time working on the business.
Create a dashboard of the 3 or 4 metrics that are most important for your business – these could be anything from profit growth to inventory turnover – and make it a goal to always know how your company is performing around those metrics. Having a finger constantly on your company’s pulse will inspire you to look for opportunities to improve your performance.
It’s also important to know how other companies in your industry are doing, and while you may not be able to find out much about local competitors, you should look at best in class companies. For example, let’s say you own small software business. You should pick a few public software companies and look at their financial statements, strategies, and business model. Understanding how other companies operate and what makes them successful will give you ideas that you can implement in your business.
Every day you have a great opportunity to network – lunch. Everyone has to eat, so why not take advantage of it! Make it a goal to take someone out to lunch every week. It’s as simple as reaching out to individuals you admire, whether they are local leaders in your industry or successful business owners, and seeing if you can buy them lunch as you ask them a few questions. There are people in your area that have probably gone through the same challenges that you are facing, and their insight can be invaluable as you learn the ins and outs of business. In my experience, most people are more than willing to give advice, and they’ll happily take a free lunch as they do.
As you take people out, keep an eye out for someone that you can ask to meet with more regularly. Finding a mentor that will follow up with you on short- and long-term goals is a great way to continually progress and keep you accountable.
These three steps aren’t meant to be all-inclusive, but if you work on turning them into habits, you will see your ability to make better business decisions greatly improve.
Kevin is the author of the #1 best seller, Seeing the Big Picture, and has dedicated his life to helping people build their business acumen. In 2002, Kevin founded Acumen Learning, which has gone on to provide business acumen training for some of the world’s most respected companies, including 18 of the Fortune 50. If you would like to learn more about his book or individual training, visit www.seeingthebigpicture.com.