small business management

small business management

Effective Strategies for Small Business Management

1. Introduction to Small Business Management

Entrepreneurs often start businesses based on a technology or service or invention that is better than others available. The exceptional technology inventors do not remain exceptional managers as the business grows. To continue to grow and remain competitive, the firm must hire and nurture competent management, whoever they are, journeying together with trust and accountability. A key challenge then becomes the knowledge of when to alter modes of leadership and governance, to continue reflectively managing the firm. The need to balance the expert with management is a key challenge in small business management, compounded by the often simple can-do attitude of the founders and family members. Reluctance to employ or free-up competent outside management skills can act as a major constraint to form growth and success. Small family businesses often become stagnant in this growth stage, unable or unwilling to move on to professional implementation. The most successful family form is often the one whose owners are prepared to accept that those at the helm may not always be a family member and manage accordingly.

Small businesses make up more than 99% of all businesses in most countries worldwide and are major contributors to economic growth, job creation, and service provision. Small firms need different types and levels of management across different stages of the business life cycle. Stadium theory purports that as a business grows, managers need to adopt new knowledge, skills, and techniques to manage tasks while the owner concentrates on the growth of the business. There are many examples of small business failure when this does not occur.

2. Key Elements of Successful Small Business Management

1. Formulation of successful business strategies 2. Achievement of higher profits 3. Defining their competitive advantage 4. Growing sales 5. Adapting to change.

Small business management involves problem-solving and decision-making in the areas of marketing, finance, human resources, and operations. The manager must acquire efficient and effective methods of problem-solving to achieve the organization’s goals. Management can be defined as the process of planning, organizing, and controlling the financial, physical, human, and information resources of an organization. Effective small business management applies the concept of planning, organizing, leading, and controlling to the operations of companies having fewer than 100 employees. Small business management may be the implementation of successful strategies. The purpose of this article is to describe the permanent keys for successful small business management.

3. Financial Management for Small Businesses

Another important financial task is keeping track of your finances. In an upcoming section on “Financial Statements,” relevant financial reports will be described in more detail, but managing your finances also entails monitoring your cash flows and budgeting your revenues and expenses. You need to keep track of your cash flow and sales, expenditures to determine if you are likely to have enough money to pay your bills at the end of the month. Also, you need to create a plan for your revenues and expenses. Your choices for some expenditures are optional, and keeping an eye on your budget may reduce the discretionary costs during tight periods. It can also save the abandonment of some opportunities and pitfalls of growth if your budget shows that you do not have enough cash available to react to business conditions.

Financial Management Accounting is one of the most important things you will do in your business, and it is one area that helps provide information that will allow you to make the best decisions. An efficient accounting system will allow you to accurately track your financial data, and it will allow you to access your company’s performance easily. You do not have to have a very complex accounting system. You can start a small business accounting system either manually or by purchasing an accounting software package. You need to decide on the best system for the size of your business and the extent of your transactions. Whether you do the bookkeeping yourself or if you hire a bookkeeper or an accountant, you need to track your revenues and expenditures from the start.

4. Marketing and Sales Strategies for Small Businesses

Create a small database of potential customers and demonstrate that your database is small, selective, and potent. You should have the opportunity to exchange the customer profile data of the other site’s clientele. Take advantage of special low and no-cost marketing and sales techniques and guerrilla advertising. Create an awareness and make a big splash with a big bash when launching your product or service. Specialty promotions are calling cards, product demonstrations, trade shows, parties, and sponsorship of a public event or contest. Craft imaginative promotional material that directly targets your special potential customer profiles at the lowest possible cost. Provide constant follow-up and support to top customers. Use market research and customer feedback to show that your product’s perceived value far exceeds the competition. Develop a social marketing program and demonstrate that you are working on behalf of those causing the community the greatest concern about the environment. Your function in the community will thus be more readily available should the need for an apology arise. Offer all new customers incentives to become repeat customers of your business.

Marketing and sales of your product are directly tied to the quality of your product offering. Marketing and sales are the most cost-effective ways of selling your product. Determine who is attracted to your product, who buys it, why they buy it, and what they think of it compared to the competition. Try to determine why those that look at it or price it did not buy it. Based on this information, develop a profile of the most likely potential customers. This profile should include the potential customers’ location, age, income, personal values, and other personal information, such as what they do and the outside interests. Areas to implement the marketing mix – promotion, price, distribution, and product – should also be developed based on your potential customers’ profile, potential sales volume, level of competition, and net profit resulting from the price level and sales volume.

5. Human Resources and Leadership in Small Business Management

Successful human resource management processes are crucial to a small business. Human resources are an asset and require leadership, management, financial support, planning, and evaluation. Effective human resources management, while not guaranteeing business success, will consistently provide a firm foundation for both financial and personal rewards over the long term. While the owner/manager of a small business performs many duties, probably no single responsibility is as important as providing leadership for the company. The owner/manager’s leadership role is reflected in the company’s human resource management functions including planning, job design, job analysis, recruitment, selection, training, motivation, appraisal, and compensation and benefits administration of the company’s workforce. Decisions in these functional areas should match the nature and culture of the business while remaining consistent with overall business strategy.

While the role of leadership is significant in all businesses, it is especially critical in the small business. Although the demands on a small business leader are significant, there is no one-size-fits-all style of leadership that is effective for all small business organizations or all types of leaders. Whether a company needs an autocratic or participative leader or some other type of leadership style depends on the leader, the employees, and the type of work the company does. Picking the right style and using it effectively is not easy. It takes time, effort, and considerable skill. Within a company, leadership is not limited to upper management. Employees at every level are leaders when they affect productivity and motivation through their activities.