Commercial Awareness
What is commercial awareness?
Commercial awareness means that while others might view money as taboo, you view it as an important metric of business success. You love poring over numbers, financial models, and budgets and you prioritize time and energy for those sorts of tasks.
You ground potential projects and business ideas in financial reality by viewing them through a commercial lens. You evaluate margins, profitability, opportunity costs, assets, and liabilities.
When other people and teams might not realize they’ve blown their budget until it’s happened, you implement careful tracking and monitoring to ensure you aren’t burning through your cash reserves. On your team, you’re frequently viewed as the go-to resource for managing anything related to finances.
We call it: Money
Your level of interest in working with money, finances, and the commercial side of products, services, and businesses.
I’m not afraid of wanting money at all. Money will give me more power to do things that are truer to my spirit than what I’m already doing.
Leaders who have commercial awareness
Warren Buffett
You don’t become one of the wealthiest people in the world without keeping a close eye on your money. Investor, Warren Buffett, made a series of financially-minded business decisions to reach billionaire status.
While he’s accumulated massive wealth, he’s also proof that commercial awareness and a focus on money doesn’t need to equal greed.
During the GreatRecession, he invested in a variety of businesses that were on the brink of financial collapse. He’s also notorious for living a modest life when compared with the fortune he possesses.
John D. Rockefeller
When you look at wealthy people in history, you can’t skip the founder of the Standard Oil Company, John D. Rockefeller.
He reportedly always had a love for numbers, and began keeping a detailed account book after earning some money on a farm at the age of seven years old.
That led him to an early career as an accountant and bookkeeper before starting Standard Oil, where he was intensely focused on the company’s economical operations. That contributed to the company’s rapid growth, eventually securing a near monopoly on the United States’ oil business.
Sara Blakely
As the founder of shapewear company, Spanx, Sara Blakely is worth an estimated $1 billion. In 2012, Forbes awarded her the title of youngest, self-made female billionaire.
Blakely doesn’t shy away from talking about money, and it’s a big part of the reason why her business has been so successful. But, she’s also established a reputation as being generous with her wealth.
“I always say it's so much fun to make money,” she’s been quoted. “It's fun to spend, it's fun to give away." And Blakely puts her money where her mouth is. In 2013, she was the first female billionaire to join The Giving Pledge, where she donates the majority of her wealth to philanthropic causes.
The benefits of commercial awareness
Planning
Money is a real-world concern in the business world. Having commercial awareness means you can hash out more financially-realistic plans.
Decision-making
There’s a time and place for emotion in business, but sometimes it can cloud your decision-making skills. A focus on money helps you to make choices that support business growth.
Entrepreneurship
Of course, a business won’t be financially viable if nobody is monitoring performance. Your careful forecasting and tracking will help you achieve success.
The blind spots of commercial awareness
Passion
Money is important, but a narrow focus on numbers can be perceived as lacking emotion and passion if not kept in check. Business isn’t always black and white—there’s heart involved too.
Risk
Some of the best business decisions happen when you take a risk. When you only go by digits, you could miss opportunities simply because they don’t look good on paper.
Tunnel vision
Not every decision can be financial. You need to balance that with other factors. Providing perks and positive working conditions for employees might not make sense financially in immediate terms, but it’s still an important aspect of your business’ long term success.
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How to have more commercial awareness
1) Start with the basics.
If you don’t consider yourself particularly money-minded, it’s easy to become overwhelmed with all of the digits there are to look at.
Don’t bite off more than you can chew and instead start paying attention to the building blocks like income and expenses. You’ll familiarize yourself with the models, reports, and concepts before you dig into more complex financial data.
2) Take time to review finances.
Whenever you plan out a new project or initiative, make sure you build in time to monitor the financial aspects. Set aside regular time to dig into spreadsheets and reports.
This will keep you accountable to actually dedicate the necessary time to review the numbers—something that you can lose track of in the hustle and bustle of your other work.
3) Implement what you learn.
People who have commercial awareness know it’s not just about reviewing the numbers—it’s about making decisions around it.
Challenge yourself to look for trends and other conclusions that you can use to inform and shape future decisions. This will help you learn to view those numbers in the context of your business, rather than just as digits on a sheet.
4) Find a mentor.
Nobody is saying you have to go it alone. Search for someone you trust who has a knack for commercial awareness. Ask them to be your resource.
You can approach them for advice and answers as you begin to build up your skills. When you foster any sort of expertise, it’s helpful to have someone knowledgeable in your corner.
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