5 Great Tips for Effective Small Business Management
Effective small business management is often seen as something of a Holy Grail. It's difficult to achieve primarily because the majority of modern small business founders are young, entrepreneurial graduates, equipped with more enthusiasm and drive than you can shake a stick at, but somewhat sub-optimal when it comes to experience in managing resources.
According to the US Bureau of Labour Statistics' data on small business survival, only 44% of small businesses are still going after 4 years - and it's continually those with the most effective management teams (almost irrespective of how good the product is) that last the distance.
So what's the big secret? Truth is, none of this stuff is rocket science... Having said that, a young, headstrong 'entrepreneur' manager with a vision from which he refuses to budge might relegate these ideas to the bottom of the priority list in favour of becoming a big name on the block, and fast.
The fact of the matter is that there is a clear-cut difference between entrepreneurship and small business management. As this eHow article on the subject explains, managing a small business is an inherently more administrative role (everything from growing the business to ensuring legal compliance), while entrepreneurship has much more to do with the conceptualisation stages of a product or service, with the much more glamorous end goal of innovating and turning a profit through the development of an idea.
For the wide-eyed entrepreneur to make the leap towards becoming a successful manager, a combination of the following approaches cannot be overestimated:
- Employee training - it's a well-established fact that employee satisfaction and know-how is what drives a business forward. Employees coming into the business for the first time (especially from backgrounds in other industry spaces) will be 'stabbing around in the dark' for a while - how long that 'while' lasts is in the hands of the manager and the resources they're willing to set aside to get their employees on track and in the right mindset.
- Effective cost management - especially in the early stages, it can't be stressed enough just how key spending money wisely can be to the direction the business takes. A good manager with a sound financial head implements a cost reduction initiative to maximise the firm's year-on-year profitability.
As simple as this sounds, it includes a wide variety of factors (everything from use of company resources to bonus schemes - you've got to still keep your employees motivated!) and requires a keen eye for opportunities to spend less while gaining more. All this cost-cutting while keeping quality as high as possible and keeping customers satisfied... Not a skill to be taken for granted.
- Continued, meticulous planning - from the moment the idea is conceived, planning is an invaluable part of keeping the business going in its desired direction. A good manager will only commercialise a business idea once a full business plan or proposal has been finalised, and once specific goals have been set in place (in both the short and long terms).
- Being a market visionary - much like an animal's newborn young, a small business is fragile. It can be affected by even the slightest change in market conditions and must take advantage of its greater flexibility than larger companies to make the appropriate shifts and adjustments to cater for these conditions.If a competitor is about to release something new, the small business must show exemplary awareness and speed of reaction in order to stay ahead - indeed, one of the advantages small businesses have over their larger counterparts is the ability to react much faster. A good small business manager will already know their market and competitive field inside-out, but will remain a keen student of this market throughout.
- Be the face of the company - at least at first, the company is only as good as you are. Developing personal relationships with clients rather than just fleeting exchanges is what keeps people interested in your offering - the customers your business gains as it grows are an invaluable source through their ability to spread the word about just how good you are. Small business managers should ensure a good balance between keeping existing relationships healthy and generating new ones.