Business Acumen – A CPA’s 360° View
CPA’s who possesses business acumen views the business with an “executive mentality” – they understand how the moving parts of a company work together to make it successful and how financial metrics like profit margin, cash flow, and stock price reflect how well each of those moving parts is doing its job.
A Certified Public Accountant that can see the “Big Picture” of your organization, how the key drivers of your business relate to each other, work together to produce profitable growth, and relate to the job you do each day. The CPA must understand and important data, including financial statements, and effectively communicate them to the client to make good decisions.
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. The term “business acumen” can be broken down literally as a composite of its two component words: Business literacy is as “the knowledge and understanding of the financial, accounting, marketing and operational functions of an organization. The Oxford English Dictionary defines acumen as “the ability to make good judgments and quick decisions”. Given these textbook definitions, a strictly literal definition would be “keenness and quickness in understanding and dealing with a business situation.”
Additionally, business acumen has emerged as a vehicle for improving financial performance and leadership development. Consequently, several different types of strategies have developed around improving business acumen.
Executive Level Thinking
- See the “big picture” of your clients organization—how the key drivers of the business relate to each other, work together to produce profitable growth, and relate to the role you do each day
- Understand important company communications and data, including financial statements
- Use your knowledge to make good decisions
- Understand how your actions and decisions impact key company measures and the objectives of your company’s leadership
- Effectively communicate your ideas to other employees, managers, executives, and the public
Business Savvy and Business Sense
“Business savvy” and “business sense” are often used as synonyms, but they don’t describe what accountants with business acumen do differently than those who are lacking the skill. An Accountant with traits of business acumen possess:
- Have an acute perception of the dimensions of business issues
- Can make sense out of complexity and an uncertain future
- Are mindful of the implications of a choice for all the affected parties
- Are decisive
- Are flexible if further change is warranted in the future
Thus, developing stronger business acumen means a more thoughtful analysis, clearer logic underlying business decisions, closer attention to key dimensions of implementation and operation, and more disciplined performance management.
Financial literacy is an important tenet of business acumen, but is not a synonym. Business acumen starts with the ability to understand how a company makes decisions, and that leaders must be financially literate and be able to understand numbers on company financial statements. But he says those demonstrating business acumen have the ability to take their knowledge of business fundamentals and use it to think strategically and then take appropriate action. It’s the ability to think and act. Not just crunch out tax returns.