Having the courage to start a business in the first place, is a huge step to take in your life, as I have talked about in a previous article, but actually operating the business when you have taken that step, takes you into a different territory.
But actually, understanding how the world of business works is, as my American friends would say…a totally different ballgame!
The Cambridge Business English Dictionary defines commercial awareness as, “the knowledge of how businesses make money, what customers want, and what problems there are in a particular area of business.”
Now, that’s a pretty wide-ranging definition for a business start-up to understand and I can tell you that looking back over my business and entrepreneurial career, I wish I had developed a much greater understanding of the term from the outset.
I am a pure entrepreneur, rather than someone who has gone through a formal business education process, such as gaining an MBA, or other business qualifications.
All of my business knowledge and expertise has come from real-world business experience and while there is no substitute for such learning, it is a hard slog.
Looking back, I could have made business life a lot easier.
The Language of Business
You can look at it this way – if you want to learn a foreign language, you need to understand the technical aspects…verbs, sentence structures, tenses and you have to think in the language you are trying to learn, rather than in your native language.
Then you have to make the transition from learning to doing!
When I had a business in Mexico, I decided to learn Spanish, but I simply could not make the transition from my academic learning, to being able to speak confidently when I was in the country.
I ended up with a beer, some wine and a local dish that almost blew me up – a stuffed chili pepper with Mexican cheese, beef and more chilies!
I took the language much more seriously after that experience.
I learned a similar lesson in business when my first recruitment agency went bust.
Unlike my language learning experience, where at least I understood some of the technical aspects, I had no such knowledge in business, and I was simply working from a huge desire, passion and determination to succeed.
But it wasn’t enough – those qualities got me to a certain point, but the knowledge gaps were too great.
I had one client in Europe who invited me over to present to the operational board one evening, and it was to be followed by dinner and drinks with him.
After the presentation, we had a very nice meal and I was relaxing…a little too much, because after the meal, came a few more drinks in the local bars, which ended at around 3 am.
As I was saying goodbye, I was suddenly asked the following questions:
- What were your last year’s revenues?
- What were your operating margins?
- How are you financed?
- What percentage of your turnover is with our company?
- What is your vision for the industry?
- Why should we consider putting you on our lead supplier list?
- Who are your key competitors?
- Who are our key competitors?
- What are the main threats to our industry?
These questions totally surprised me and even after the meal and a ton of alcohol, I was able to string something plausible together, because I ended up getting the deal, but it did expose my weaknesses.
The problem was twofold:
I hadn’t expected the level of questioning from my client and simply assumed that all was well because I was operating in the security of my own domain – why should I learn about anything else and as far as I was concerned, I was an expert.
The second problem was that it exposed my lack of knowledge of business in general.
I later found out that the person concerned, was a board advisor and a qualified accountant, practicing in the commercial world, so I was at a severe disadvantage from the outset.
Talking to him at a following meeting he explained that he expected his suppliers to be able to have discussions about world economics, geopolitical issues, the industry in general, the market they operated in… plus, for them to have a solid vision and mission for their companies.
So how does all of this fit into the world of a small business start-up?
The answer is that being more commercially aware, gives you the ability to talk confidently about business in general and it will give you a much greater understanding of your customer’s business, and more overall knowledge if you are selling directly to consumers.
Here are some tips:
Learn as much as you can about your industry, its dynamics, risks and the effect on your customers.
Understand the business model of your customers and the challenges they face, both right now and what they are likely to face in the future.
If you are selling directly to consumers, understand their motivation to buy, look at buying trends and again, look to the future.
Make sure you have an understanding of all business functions – sales, marketing, finance, technology, etc.
Make sure you understand the business models of your competitors.
Always strive to be better.
Finally, success in business is not always about being first to market with new ideas and inventions – it can simply come down to doing things better than your competitors and being more commercially aware, will sometimes help you uncover the obvious!