Combining practical, hands-on experience with theoretical knowledge gained through study creates a well-rounded understanding of business principles, leading to improved decision-making and increased profitability.
Primary Implication
Owning a business requires a combination of experience, knowledge, and good judgment. Experience leads to practical knowledge. Augment your experience with studying why and how things work or don’t work, and you will develop the quality of being wise. It is the wise business owner who weathers any storm that comes their way on the way to making more money than the unwise can even dream of making.
Too many business owners dismiss the need to learn. They claim to be too busy doing to read about or study a business concept they need to master. Their lack of knowledge limits their ability to manage their business to higher profits and superior cash flow. Protect from this by learning the core topics of business reflected through this BusinessCPR™ Insights Library.
Overview
In any endeavor worth pursuing, there is a theoretical and a practical side to the knowledge required to be successful. In business, those who possess both make more money. They make more money in their businesses through the discipline to understand both ends of the spectrum. They put in the time to understand the how and why behind how a technique works before putting the techniques into play.
They do this to improve their probability of success because they know unforced mistakes are costly, and to this end, they become masters at acquiring knowledge through two primary methods:
- Practical knowledge is the knowledge that is acquired by day-to-day hands-on experiences. It is best gained by doing things.
- Theoretical knowledge is gained through study. It can give you a deeper understanding of a concept by seeing it in the context of understanding the why behind it.
Both types of knowledge are essential to owning and managing a profitable business. Those business owners who make the most money tend to be those who acquire the knowledge they apply to their business at both ends of the spectrum and acquire it in a variety of ways. Over the years, they become a wise business owner who knows what to do when it needs to be done.
They become wise by taking time out to develop theoretical knowledge. They read and study theory because they are open to learning from the experience of others. Particularly when it involves researching why something didn’t work out as expected, they study multiple business disciplines to see better the whole forest, not just the few trees they know.
Theoretical knowledge can often lead to a deeper understanding of a concept by seeing it as part of a larger whole to better understand the why behind it. Taking the time to appreciate business theory is proven to help those who pursue it to identify what to do differently.
Practical knowledge emerges as you master specific techniques that become the tools of your trade. It sits much closer to your actual day-to-day work. These start as the things you can only learn through doing and experiencing. Practicality is learned through the reality of life and business, not the theory behind it.
When you mix practical and theoretical knowledge, the benefit is often a deeper understanding of a concept through the act of doing integrated with the application of theory. Both are important. Few businesses will survive unless they can bring results through knowing what to act on when. Getting here requires practical knowledge. There’s no avoiding it.
The problem with learning how to solve a problem via the practical approach is you are only learning how to solve a specific problem. Practice can only take you so far. Theory helps you apply what you learned to solve one problem to different problems. It doesn’t just teach you how to solve that same problem again.
The key to getting all of the knowledge you need to make more money is to understand that whichever route got you to where you are today, you can do better. You become better by spending some time acquiring knowledge from the other end to balance your business education.
For most, this is about slowing down to acquire the big-picture view of what your business needs you to know and do. Below are ten areas where your business will benefit from you following a more formal path for your education beyond the day-to-day:
- Org Structure
- Financial Statements
- Cash Management
- Business Intelligence
- Marketing and Sales
- Operations
- Management Accountability
- Performance Management
- Leadership
- Application of Policies and Procedures
Your goal is to be more active in understanding why different techniques work as they do. Devote some time to studying these core business areas to improve your ability to own a profitable business with predictable cash flowing through it.