Small Business Management: Making Your Business a Success Story
While common sense might help you manage very small and simple businesses, things can get out of hand when complexity increases. An awareness of key management tasks can help you focus meaningfully on making your small business a success story.
In this article, we look at managing a business once it has been set up.
Once the business begins to grow, you should consider hiring competent people to attend to specialized functions.
Basics of Business Management
|Broadly, managing a running business involves:||
- Marketing your products and services to ensure a steady flow of orders
- Organizing to deliver what you sell, at a quality acceptable to your customers, in a manner convenient to them and at a cost that yields adequate profits
- Financing your business operations so that they can flow without interruptions
- Hiring, training and managing your employees so that they become competent in doing their work, and committed to your business
- Complying with all government regulations applicable to your business to keep out of trouble that can even lead to stoppage of the business
- Attending to the administrative work involved in doing all the above
The above is only a broad outline. Each of these functions involves a great deal of detail, which you would have to become familiar with and manage.
As you would have begun to comprehend by now, business management is a complex exercise with multiple dimensions. How exactly do you go about it? We look at an effective approach to this complex task in the following section.
The Process of Management
The basic process of managing consists of:
- Deciding what results you want to achieve in each key area
- Developing a course of action to achieve desired results. This could involve a few steps or a major organizational effort
- Measuring results of your actions
- Checking whether you are achieving desired results
- If results are unsatisfactory, considering what needs to be done. Needed action could involve trying a new approach, reworking your plans, etc
If your actions resulted in achieving desired results, you learn something. Even if you failed to achieve it, you learn things. Gradually, you will enhance your ability to set and achieve targets, and become a real business manager.
If Your Business is a One-Person Show
If you are both the owner and the only employee of the business, you will have to attend to everything. This typically involves:
- Finding out the level of orders you have to get every day (on an average) to become and remain a profitable business
- Developing a marketing plan to get that much orders, and implementing the plan
- Checking whether you are getting enough orders, on a continuing basis
- If the level of orders is below target, deciding how to proceed to push up the level of orders. You might have to consult marketing specialists or experienced managers or small business support agencies.
- Arranging to record all your business transactions (get an accounting package and ask your spouse or somebody to help you operate it) and reviewing your costs and profits.
- If your results are unsatisfactory, deciding how to remedy the situation. Again, you might need consultancy assistance to do this.
If You Hire Employees
If yours is a bigger operation involving hiring of employees, you might have to formalize your management procedures.
- Develop Plans: The business plan you made while setting up the business is your overall plan. You use this overall plan to develop operating plans including sales targets, production schedules, materials procurement schedules, and so on. Such operating plans will be developed for the next week, month, quarter and year.
- Set up Information Systems: You need an information system that will record details of business transactions and generate different kinds of reports. It is this system that will tell you how you are doing.
- Make Daily to-do Lists and Acting upon Them: Daily to-do lists of detailed actions are derived from the operating plans and schedules, and you use these to take necessary actions
- Review Reports: Your actions produce certain results. Are these in line with expected targets? You will review the reports generated by the information system to check this. If results are below expectations, you will analyze the variances with a view to identify the factors that caused them. You might then be able to decide upon a course of action to remedy the situation.
- Follow Up: Following up is an essential element of managing. Agreed decisions are often not implemented owing to multiplicity of pressures. Someone has to follow up to see that things are moving as agreed.
Elaborating on the Daily Actions
In the last section, we said that you will prepare daily to-do lists and take the detailed actions necessary. Let us now look at these actions in a little more detail. There are different aspects to these actions that make them more than just simple tasks.
As a manager, your actions would mainly consist of giving directions to operator level employees, or your junior managers. This involves two aspects. Firstly, you will have to decide what directions to give. Secondly, the directions should be communicated clearly, and in a manner that leads to their being carried out.
You also have to ensure that the persons to whom you give the instructions are equipped with the skills to follow them. This would involve selecting the right employees and training them up as necessary.
Your daily actions would thus involve delegating, training and motivating, as well as some hands-on tasks that you might do yourself. In addition, you would have to find time for the top level tasks of planning, overall organizing and progress review.
Small Business Success
Reduced to essentials, how to succeed with your small business involves developing an effective marketing strategy, controlling its execution and motivating people.
Managing the Project to Start a Small Business
Your small business startup project can gain such benefits as timely completion and lower costs if you adopt a project management approach to go about it. So how do you adopt the project management approach?
Constructing a CPM Network Chart
Using CPM network charts, you can manage very complex projects. However, constructing the chart itself could prove a little complex. The effort will prove worthwhile, however, by reducing the complexity of managing the project, a much bigger task.
Example of Breakeven Analysis
Breakeven analysis is a conceptually simple but practically a little difficult tool that is used to examine the implications of profitability. An example of breakeven analysis is the best way to understand how to use this tool.
Incorporating a Company
By incorporating your small business as a company, you are making your business a separate entity that can hold assets and incur liabilities in its own name. This means limiting your business liabilities.
Business Control Systems
It is business control systems that help you to be in charge of your business. These systems provide specific information to help you decide what to do. As a result, your business decisions become informed, instead of being hunch-based.
Complying with Government Business Regulations
For the small businessperson, government regulations might appear extremely distracting and even silly. However, it is these regulations that enable small businesses to survive and prosper.
Small Business Administration
In this article, small business administration means attending to all the mundane tasks – regulatory compliance, accounting, personnel and systems – involved in running the small business.
Entrepreneurial Small Business
Small businesses have an advantage in that they can be managed with an entrepreneurial emphasis. Large business behemoths tend to become bureaucratic.
Small Business Ethics
How can business ethics and small business coexist? Traditionally, business was seen as an activity with the sole objective of maximising owners’ profits and wealth. This approach led to numerous problems.