The word “economics” tends to frighten people off. It reminds people of math, statistics, theories, and can sound like a subject with little practical value. People, business owners especially, are action oriented. They want to know about subjects that can help them now, not learn about Adam Smith’s dusty 18th century ideas about free markets. However, there is good reason for business owners to push through their fear when it comes to the study of economics. A secure grasp on the foundations of economic theory can help a business owner understand their current situation, make predictions, and ultimately succeed.
Respected economist Andrew Charlton, who serves as an advisor to top international businesses, stated recently, “I would like to see more people take an interest in the thoughtful study of economics and to develop an understanding of just how much the success or failure of a business is determined by market factors.” Charlton has built his career around his passion for the study of economics. He developed a reputation as a person who could accurately predict global market movements, and his knowlege and skills led him to high level positions in Australian government. Charlton followed a passion for understanding international trade and finances that developed at a young age. He shares his interest through writing, lecturing, and advising. His wish that more people would engage in the study of economics is a valid one. As a person who strives to help businesses succeed, it would be very frustrating to see a lack of information lead to failure. We live in the information age, and economic insight abounds.
Business owners who desire success need to look at the big picture when it comes to their product and their profits. Businesses often measure success by discussing how many lives they touch, how many problems they solve, and how much profit they earn. Business owners set goals and then do actions in order to reach their goals. All of the action that a business takes is influenced by the economic environment in which the action occurs. If a business owner looses sight of this, and develops a tunnel vision that only focuses on their business objectives, they will fail. A successful business owner looks up and around at the economic soup in which they are submerged. That way, they do not loose sight of the big picture.
Economic study can effect the decisions that a company makes. Economists study numbers and trends, and use statistics to develop predictions about the market. This information is valuable when it is understood. A business owner should develop their understanding of economics so that they can begin to use the vast amount of data that is being collected, to their advantage. If a business misses out on leveraging data, they could fall behind a competitor who is able to understand the data.
As you can see, it is important for business owners to study economics. Business owners can improve their decision making capacity, act ahead of marketplace events, and earn more profit when they understand economics.