Today I would like to touch upon an underrated aspect of effective management in startups and small companies. It is the development of business and legal awareness within the team. Companies that invest in developing their employees’ business awareness experience significant benefits. This includes improved profitability and better strategic decision-making.
But what does it mean to have business awareness, and why does it bring so many benefits to a company?
Business Awareness
Business awareness is understanding what impacts the costs and revenues of a company. This includes both direct and indirect factors. Example: When designing an offer for a client, it’s important to consider both his expectations and the company’s profit margin. A business-aware manager knows that, in addition to meeting customer needs, they must also ensure the company’s profits. Therefore, before offering a certain level of services, they check if the company has the necessary human and financial resources to deliver upon its’ promise.
Business awareness also involves understanding the complex business ecosystem, predicting market trends, and making strategic decisions that align with the company’s goals. This knowledge helps make decisions with a full understanding of their impact on the company’s performance.
Legal and Formal Awareness
Legal and formal awareness is the ability to act in accordance with legal regulations and formalities within a given sector. Given the frequent changes in regulatory environments in many industries, it’s necessary to continuously monitor these changes. Regulatory changes can present new opportunities but also new risks that need to be managed effectively.
Legal and formal awareness also includes the ability to effectively create contracts and manage the associated risks. Precisely defining the legal aspects of contracts is crucial for the stable operation of a business.
Negative Consequences of Lack of Awareness
Lack of business and legal awareness is like wandering in an unknown forest without a map. It can lead to financial losses due to imprecise business plans and legal penalties or lawsuits due to unclear contract terms.
Moreover, lack of this awareness can lead to reputational damage and loss of clients.
Conclusion
Developing business and legal awareness is a crucial investment for every company, especially for small businesses. This awareness allows companies to avoid pitfalls, make informed decisions, and thrive in dynamic market environments. Therefore, it’s worth investing in the development of employees’ skills and the awareness of the entire team to achieve sustainable growth and build a strong market position.
About the author:
Agnieszka Węglarz is an independent consultant, business strategist and practitioner in B2B and B2C, as well as lecturer, speaker and blogger. She has over 25 years of professional experience working as manager in both large corporations and SMEs, where she was responsible for strategy, marketing and business development. She uses her long term executive experience and training expertise to assist companies and their managers in building and implementing their business strategies. She specializes in business modeling, segmentation, value proposition, sales and marketing strategies as well as consultative selling. She runs her own consultancy business, as well as cooperates with Google for Startups as the business modeling expert and mentor in the acceleration programs. Agnieszka is an author of many business publications. You can read her writing on her business blog on www.agnieszkaweglarz.com. You can contact her directly by sending a message via LinkedIN.