Having a practical understanding of the business world and the specific industry or sector that a company operates in all equates to commercial awareness. From staying on top of industry trends, marketing conditions and competitors to all of the micro influences that impact operations and strategy, commercial awareness is an all encompassing behaviour and skill that every business leader should possess.
From economic factors, to employment rate fluctuations, how politics and world issues can impact production and pricing locally, there are plenty of factors that combine to positively or negatively impact a company’s performance. Commercial awareness is basically developing your business knowledge as a business owner so you can be prepared for all the many challenges of the business world.
Read on for a deeper understanding of what commercial awareness is and how individuals can work to develop commercial understanding in business.
Table of Contents
Developing Commercial Awareness
Understanding industry, business operations, staying on top of economic and political developments, and building business acumen are all key areas of developing commercial awareness.
Demonstrating commercial awareness involves understanding all of these many factors and their influence on business. It affects everything from the recruitment process to managing established employees. Commercial awareness is vital if you want to be able to set business priorities whilst knowing how wider economic conditions can affect you.
Understanding Industry
Getting in the loop of how your businesses’ industry is structured, who the main players are, the regulations that govern it and the challenges it faces are vital to understanding the industry. Those looking to stay on top of things should stay ahead of emerging trends and technology and have a good understanding of how the organisation fits within the competitive landscape.
Take a law firm, for example. Starting a legal career is always going to be complicated, but law firms will find their jobs a lot more difficult if they don’t understand their industry inside and out. Understanding industry helps display commercial awareness of a particular sector, allowing the business to thrive in the environment it’s entering.
Business Operations
Understanding different business models, revenue streams and cost structures, learning about key areas of business such as finance, marketing, operations and HR, appreciating supply chain, customer relationships and strategic partnerships is all vital.
Knowing not only your own business operation, but the business operations of your competitors is key to surviving and thriving in the commercial world.
Economic And Political Developments
Keeping on top of political and economic changes that are likely to affect businesses is key. Political decisions can impact trade agreements and commercial activities and social, cultural and environment shifts can all have a knock on impact on business decisions.
One way of keeping up to date is checking business news. If you want SME news directly to your inbox then sign up to our FREE newsletter today.
Commercial Acumen
Being able to interpret financial statements, reports and market data, assessing risk and opportunity and being able to think critically about problems and come up with solutions are all examples of developing your commercial acumen.
The combined effort of these highly important areas will create excellent commercial awareness and a broader understanding of the business world.
What Makes Commercial Awareness Important?
Commercial awareness is a personal and business asset and essential for building a successful business career. If someone is commercially aware, they have a wider understanding of the business environment that they operate in, not just a narrow focus on the tasks at hand. This broader view point will enable them to make rational and well thought out decisions because they can see how the business operates within a wider context.
Being commercially aware isn’t a ‘nice-to-have’ in business. It’s essential. Without it, you’ll be unable to make any business move with confidence and could lead your business into disaster.
Examples Of Commercial Awareness
Understanding A Company’s Operations
Having a good understanding of a company’s operations outside of your specific role can aid commercial awareness. Being able to see how your role fits into the wider machine is important for collaboration and contribution to the business.
Research into the company through press releases, discussions, observing how things are done and how people interact with each other and their customers can all help to improvise understanding in this area, even if you’re the business owner.
If management is open to discussing performance and revenue streams, this can also widen your knowledge.
Marketplace Knowledge
The marketplace of a business refers to knowing who its customers are, where they are, what they need and how you can reach them. Without an understanding of these things, its incredibly hard to succeed.
To get a better understanding of the marketplace you operate in, you should work out the key players in the market. This can be customers, competitors, suppliers, intermediaries etc. Once identified, work out the needs and motivations of each through research and make sure your business is ready to meet those needs.
With this knowledge in hand, you are in a better position to develop strategies for business success.
Forecasting The Future
Being able to use data to make strategic decisions all helps forecasting in business. By reviewing past trends and data, you can make informed estimates of likely future trends which means you can make better decisions when it comes to getting the resources you need in place ahead of time.
By forecasting risks and opportunities, a business can then take steps to capitalise or minimise the impacts accordingly. Staying on top of market changes and adjusting strategies accordingly can all help you to stay ahead of your competition.
Business experts are specifically hired in consultation roles during key times for their client’s business – if you can do that for yourself, you put yourself ahead of your competition.
To hone forecasting skills, consider paying attention to data. This can be financial reports, customer surveys, website analytics. The more data you have, the more patterns you can spot to aid future predictions and decision making.
Analysis tools are also important for forecasting. These can range from basic trend spotting to complex statistical modelling – choose the right one for your needs and practice. Practice makes perfect when it comes to forecasting – the more you do it the better you will be.
The Role Of Critical Thinking In Commercial Awareness
Critical thinking is the process of analysing information objectively and making reasoned judgements and good commercial awareness requires this in spades.
It’s a skill that is key for commercial awareness because by being able to question assumptions and consider differing perspectives, you can adapt to new business environments effectively.
To be able to analyse information objectively you should:
- Check the source of information. Don’t believe everything that you’re told or read.
- Consider if information is biased in any way. Look for impartiality.
- Wonder if evidence is available. Use data and evidence to conclude if information is valuable or not.
- Look for a wide range of perspectives, not just one or two people. The more viewpoints you consider, the more rounded your decision will be.
A key part of critical thinking is being able to ask the right questions to get the information you need. The following questions can be useful in getting a deeper understanding of issues:
- What are the drivers behind this decision or trend?
- What implications are there for stakeholders involved?
- What other options are there?
- How might this evolve in the future and what can we do about it?
Critical thinking has plenty of business uses. From evaluating market trends, assessing investment opportunities and resolving conflicts. Being able to think in this way will support you in making accurate data analysis, support you with the use of metrics and data to make wise decisions and help you find underlying issues and solutions to resolve them.
Keeping Up With Industry News & Trends
Staying in the loop for industry news and trends can help you stay relevant and anticipate changes ready for emerging opportunities. Your up-to-date knowledge can facilitate engaging conversations with others, that can in turn lead to mutually beneficial business relationships and support networks.
Keep your finger on the pulse of industry publications, websites, social media and news aggregators to keep up with the latest comings and goings in the industry you work in.
Remember to verify information, fact check it and ensure it’s credible before making a rash business decision. Always question assumptions and find the rationale behind information.
A great way to keep on top of news is to set up alerts for keywords or topics that will be of interest to you and your business. Setting time aside to read and absorb the information can be a useful routine to get into.
FAQs About Commercial Awareness
Is commercial awareness only relevant to certain roles and industries?
No, commercial awareness is a valuable asset in all roles, industries and organisations. Everyone can benefit from a broad understanding of commercial activities and how they are impacted by wider concepts.
Why is networking important for commercial awareness?
Networking is important for commercial awareness because it helps people to build relationships with other people in the same and different industries. People can share valuable insights into market trends, challenges and opportunities which provides perspectives that may not have been considered otherwise.
Remember to be proactive, approach people, follow up on conversations held and offer value yourself.
How can attending industry events help?
Attending industry events gives a great opportunity for networking and learning. You can meet thought leaders, share ideas and stay up-to-date on the milestones and developments that matter to your business. By participating in these types of conversations and presentations, commercial knowledge can be built up.
You may also be able to find a mentor in your field who can help to steer your understanding of key issues relating to your area of business.
Final Thoughts
Commercial awareness is not only a good personal trait to have, but an important skill for anyone looking to thrive in the business world. These skills can help someone to make informed decisions, find opportunities and overcome challenges with confidence.
Commercial awareness can be developed through learning and staying open to new trends, market dynamics and economic shifts – it’s a mindset that needs to be constantly adapted and built upon and takes a proactive person to flourish here.
One of the biggest advantages of a commercial mindset and awareness is the ability to take a wider, more holistic view of the business operations. By being able to understand how it fits into the wider world and market, you can see how everything works together and make strategic decisions to adapt, grow, or scale back to mitigate risks and succeed.
Ultimately commercial awareness is a mindset, not just a skill. Having a thirst for knowledge and curiosity for how the business world works is a great way to get on the path of a successful business environment.
