[Blog] Business Acumen

Troy Korsgaden

It used to be that all you needed to succeed as an agency owner were strong sales skills. Finance, leadership and business management skills were nice to have, but you could get by without them. Those were simpler times.

The advent of the internet transformed this industry and shifted control to the consumer. People have access to more information than ever before. They can purchase what they want, when they want and how they want. In many consumers’ eyes, our products and services are widely available and completely interchangeable. With the click of a mouse, they can—and they will—replace us.

We are long past the point where agency owners can succeed through sales skills alone. Of course, sales are still essential for survival. But as a business owner and agency leader, you must have your finger on the pulse of the entire organization. You must monitor every aspect of the business, from sales and service to leadership and business operations and finance. This requires a much more diverse set of skills and knowledge. In short, you must possess business acumen.

I define business acumen as the entire arsenal of abilities agency owners need to reach their full potential as business leaders. It includes everything from small details such as how to dress for meetings to big-picture concepts like financial forecasting. That knowledge of every aspect of the business is what enables successful business owners to make effective decisions. They understand the interdependence of the different areas of their business and know how a change in one area may affect another.

My thirty years working in the industry as both an agency owner and consultant have led me to conclude that business acumen is now the single most important attribute for long-term success.

Specialist or generalist agency owners?

As many people know, I am an ardent advocate of specialization. I encourage the agency owners I work with to develop teams of specialists. The same is not true for agency owners. There’s nothing wrong with having specialized skills in certain areas. The problem arises when you continue to focus on some areas and neglect other aspects of the business.

I typically find that agency owners excel in one or two areas based on their education and prior experience. Most agency owners have strong skills in sales because that’s where they started in the business. Those with marketing degrees tend to be good at things like demographic analysis and advertising, while others require years of working in the industry to master those skills. Relying on specialized skills may be enough to keep you profitable in the near term. But over relying on these strengths can lead agency owners to ignore or underestimate weaknesses that can seriously hamper agency growth. They end up hobbling along when they could be sprinting to success.

As business owners, agency leaders must have general knowledge of every aspect of the business. You do not have to have the same level of knowledge as your accountant, for example, but you must understand enough about accounting and business finance to monitor the financial performance of your business, plan and allocate resources, detect financial discrepancies and make informed, strategic decisions.

The need for strong leadership skills has also intensified as sales teams become more and more common in the industry. Agency owners must be skilled in creating a high-performance culture and engaging their teams in agency growth.

As a leader and business owner, it is up to you to develop abilities in all areas of your business. Just as our brains must learn a motor pattern before our muscles can perform it, agency owners need strong business acumen to successfully manage and grow their organizations.

This obviously requires dedicating time and effort toward a goal that will benefit you in the long term but may not provide immediate results. As much as I’d like to deliver the recipe for quick results and rapid gains, it just doesn’t work that way. You can choose to focus on short-term results, which are usually not sustainable over time or build the skills and knowledge needed to succeed for decades.

Strategic decision-making requires business acumen

You may still be wondering, Why can’t I just outsource these skills? Why do I need to understand accounting when I already have an accountant? Or you may be asking yourself why you can’t simply double down on the skills that are working. If your ad campaigns are boosting your revenue quarter after quarter, why not stay focused on marketing?

First, I am not saying you should abandon your successful marketing campaign. I am saying that, as a leader and business owner, you have a responsibility to your clients, your team and your company to build and manage a sustainable, successful business. And that requires a broader approach.

Let me explain with a simple analogy. In the United States military and in most militaries around the world, commissioned officers train in the same skill sets as the enlisted troops. In addition to extensive training in leadership and strategy, they learn things like close-quarters combat, marksmanship, unit coordination and equipment maintenance. They need this comprehensive knowledge of what troops do and experience to develop and execute effective strategies.

This is the same reason why agency owners can’t afford to excel in only a few specialized areas. Specialization in one area may give you a leg up over the competition temporarily, but without a broader understanding of your business, you’ll eventually reach a plateau, one that won’t be easily overcome with such a narrow focus.

This is not to say that you must excel at everything. Rather, you need enough competence in all areas of the business to effectively serve your clients, lead your team and manage business operations. With a solid foundation in business acumen skills, you will be better prepared to diagnose and address business issues, make decisions for long-term growth and provide quality insights into ensuring business success. Business acumen is the difference between hoping and strategizing.

Where should I start?

Acquiring such a broad and diverse set of skills might seem overwhelming, but chances are you already possess some of them. I have also found that the mindset shift that comes with dedicating yourself to developing business acumen can be energizing. As agency owners I work with gain a better understanding of how their businesses operate, they are often excited by the possibilities they see for strengthening the business and providing better service to their clients. Here is a list of skills to consider in your development plan:

• Business financials and key performance indicators
• Communication, negotiation, and influence skills
• Data analytics
• Industry knowledge, including regulations, trends and emerging technologies
• Leadership skills, including recruiting, selecting and developing high-performance teams
• Sales and marketing, including building relationships with clients and prospects
• Strategic planning, decision-making and problem-solving, including identifying opportunities and threats and adapting to changes in the market
• Technology
• Workflows, systems and processes

Start by analyzing your strengths and weaknesses. Then prioritize your shortcomings based on how severely they impact your business. Another approach is to examine strengths and weaknesses within your business. Does your team struggle with scheduling enough appointments to maintain a consistent sales cycle? Then, prioritize building your skills in developing and executing appointment-setting strategies. Do expenses seem high compared to industry standards? Focus on developing financial acumen. The key is to let go of the few strengths you may be fervently attached to and open yourself up to the entire range of business acumen skills. This will not only reveal which areas of your organization may need attention, it will also help you formulate a plan.

Helping businesses succeed is my passion. That’s why this topic is so important to me.  Business acumen is essential for your success. By developing your business acumen skills, you will be better prepared to navigate the complexities of this ever-changing industry, make informed decisions and drive long-term success and profitability.

Watch for more on developing business acumen in future issues of Korsgaden Insights Magazine and on LinkedIn at linkedin.com/in/troykorsgaden. For more information on how we can help develop business acumen skills in your organization, contact [email protected].