Small business management is an umbrella term that encompasses all the processes entrepreneurs use to manage businesses. The number of skills involved in managing a small business means company owners and managers need to have a solid knowledge base about many business management topics. This includes the need to make business decisions, such as hiring and managing workers, managing financial reporting and accounting records, and finding funding to buy resources and cover operating costs during the start-up phase.
Benefits of Small Business Management
There are numerous benefits for entrepreneurs who engage in effective small business management practices, including:
- It provides a sense of direction: Small business management, when done well, helps each stakeholder in the company stay focused on the big picture and working toward success, as defined by the small business owner. Getting everyone on the same page is a key benefit of small business management in practice because, when the leader presents the vision for the company, stakeholders understand why the business exists and where it's going. This helps guide day-to-day processes and encourages a healthy work environment for employees and management.
- Understanding the process of management and goal achievement go together: Many entrepreneurs enter a business area for the love of what they're doing. That may mean there's a lack of business training and experience. Learning about the management process gives entrepreneurs the opportunity to apply the process to their own businesses. Through exploring the mechanics of business principles, such as acceptable accounting processes, business financing, and marketing, entrepreneurs gain a deeper understanding of what it takes to achieve company goals.
- It speeds up the decision-making process: The ability to quickly change the course of a project that isn't working out is another advantage of having a strong understanding of management for small business owners. It boils down to maintaining flexibility and choosing the right management style for you and your business. If the market changes or there's a flaw in the marketing plan, an entrepreneur who understands management principles is able to assess the situation and switch directions quickly. This helps business owners avoid time and money lost to pursuing business practices that aren't adding to the company's bottom dollar.
- It supports better alignment with goals: Understanding and using management principles to run a small business helps owners and workers to align goals with activities. Every decision, when running a business, can be made based on the desired outcomes, and that helps when it's time to coordinate activities that need to be done for the business to succeed. This applies from the earliest stages of setting goals and sharing the vision with internal stakeholders and goes through each phase of product development and directing the efforts of employees.
Tips for Small Business Management
Whether you are new to business or have been in business for years, there's always room to pick up some new management tricks to support success. There are a number of tips for a new entrepreneur selling a product or service to try. These helpful business management tips include:
- Focus on relationships: Strong relationships are at the heart of building a business, and it typically falls to the entrepreneur who starts the business to manage them. Business relationships a manager needs to support include internal ones, such as relationships with employees, and external ones, such as relationships with suppliers, clients, and financiers. When relationships fall by the wayside, it tends to get harder for a business to grow or even to maintain an existing level of growth.
- Use software to automate the operation: Tasks such as employee payroll and accounting can be simplified by using software programs that automate aspects of certain tasks. When using these types of software, the manager plugs in some of the basic information, such as the number of hours an employee works, and the software calculates and records the results. This saves time that would otherwise be spent calculating details, such as taxes and employee contributions to insurance premiums.
- Set goals and delegate responsibilities: Avoid the trap of morale-crushing micromanaging by setting goals for each department and each employee. Then, delegate the responsibility for completing assigned tasks to each worker. Get feedback from the workers to ensure they feel confident of being able to achieve the assigned goals, then check in from time to time without hovering. This shows trust in each worker's ability to succeed while maintaining a presence to help out if asked for assistance.
- Measure performance regularly: Business records include data about how much a company is spending and earning from every possible viewpoint, so it makes sense to check out how the numbers correlate to profits and losses. Making business decisions comes down to understanding how specific actions affect company finances. The information gained from performance metrics helps a small business manager know what efforts to expand upon or move away from to achieve goals.
- Evaluate and brainstorm: With data from measuring performance in hand, it's the ideal time to evaluate what's working and what isn't. Apply all information gathered from measuring and insights from evaluating the numbers to a brainstorming session to find fresh ways to ramp up performance.
- Leverage information: Leveraging the information you collect is linked to measuring performance metrics and evaluating ways to those metrics fall short. Leveraging is the step where new ideas and plans are set in motion to replace things that aren't working as well as desired.
- Educate employees on key tasks: While it may feel hard to share some key information with employees, there's a valid reason to do it. Make sure employees know how to do key tasks, so they're able to keep the business functioning even if you're off sick or away at a meeting.
- Systemize the way the business operates: When an aspect of the business is functioning well, do a motion study and record the steps required to repeat the success. With this type of recordkeeping in place, it's easy to replicate the procedures that work well. This provides an invaluable aid if someone is off sick or it's time to bring in more workers to increase production and grow the business.
Effective small business management helps a company operate successfully to achieve goals. It also supports worker morale because everyone in the company understands the goals and plans to achieve them.