Most people start a small business because they’re passionate about what they’re selling. Some love the appeal of being their own boss, while others want to share their vision and make a huge change in their target market. What few new owners realize is the importance of small business management and how it can dramatically alter the trajectory of their business.
One of the key challenges facing small business owners is that while they’re experts in their field, they may not have the necessary experience to run a business. In addition to knowing their market, business owners must become experts in finance, marketing, and business management, all while handling their day-to-day operations.
It’s not impossible to start a small business without a business certification, but it certainly is more challenging. Understanding the basics of business management can significantly reduce your stress, especially during the formative years of your company.
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Why Is Small Business Management Important?
The goal of any small or larger business is to be as efficient as possible. Efficiency means less wasted resources and potential, which leads to reduced costs and increased profit margins.
A poorly managed business will often have a lot of inefficiencies in its processes. In many cases, these inefficiencies start during the early days of the business, when the push towards growth leads to an attitude of “good enough.” Why bother setting up an extensive client management system if a pen and paper filing system can handle your current client list? As the business grows, you’ll realize that changing these systems can be incredibly expensive and time-consuming, resulting in higher overall costs.
Having proper management in place from the outset can help reduce these initial problems and prepare the business for growth scaling. Management helps identify and eliminate inefficiencies, resulting in reduced cost of operations and smoother operations across the board.
Improves the Lives of Employees
Efficient management has multiple benefits for employees. Not only does it provide a fairer work environment, but it also improves motivation. Employees want to do their job and feel appreciated, which is more likely to happen in a well-managed work environment. Motivated employees will work harder and stay in a company longer, which is beneficial to both the employees and the company itself.
Small business management also includes fulfilling your employee needs for health and dental insurance and other group benefits. Not only do these make the workplace seem more appealing to new talent, but they’re also vital for employee motivation and retention.
Creates Effective Working Groups
A large portion of business management is delegating tasks to the right people. Having skilled people in key positions leads to improved productivity, mitigates workplace conflicts, and fosters a strong team environment.
A well-managed business will have effective working groups that excel at their function. Whether it’s providing products or services or handling the business finances, such as tax returns or human resources management, effective working groups are a key to a successful business.
Allows for Better Resource Utilization
Waste is a huge cost factor in most small companies. One of the benefits of small business management is knowing exactly how many resources you need and allocating them accordingly. These resources can be anything from office supplies and employees to building space and IT services.
Good resource utilization reduces waste but also ensures that the business has the necessary resources when it needs them. It reduces costs without sacrificing the high productivity you need to grow.
Assesses and Mitigates Risks
Every business must face some risks in its operation, some of which are large enough to completely disrupt its functions. Risk management is a subset of small business management that assesses all potential business risks and comes up with strategies to eliminate, mitigate, or reduce the impact of the hazard.
Key Management Functions
Many researchers have tried to define management and break it down into its constituent parts. One of the most popular models is the Koontz and O’Donnell model, which breaks management into five key functions:
Planning is the connecting point between your current state and your future goals. It outlines what you need to do and works out the finer details of how and when you need to execute the plan. It also includes being able to adapt the plan in accordance with any changing variables.
Organizing is the gathering and deployment of resources to achieve a certain goal. These resources can include:
- Raw materials
- Human resources
You’ll find a dedicated human resources management team in any larger business due to the complexity of the task. Staffing covers every aspect of human resources, including hiring and assigning the right people to the right jobs while continuing training and keeping employee morale high.
Directing bridges planning, staffing, and organizing by ensuring that these components work together in achieving company goals.
It’s very easy for small business owners to get lost in the day-to-day running of their business. Controlling is about taking a step back and evaluating the business on a larger scale. Is it making progress towards its objectives? If not, what steps do you need to take to correct the course and stay on track?
As a business grows, many initial small business managers will move into this global phase, delegating much of the small business management to other employees.
Important Traits of Small Business Managers
Understanding the importance of small business management is only the first step to implementing correct management practices. Almost anyone can learn business management practices, but the challenge is implementing them in your small business.
It’s also vital to make a distinction between management and leadership. Leadership is the ability to inspire and direct people to do their tasks effectively and well. Small business management covers a much larger range of skills that don’t involve the ability to lead. While being a good leader can make for a better management style, leaders don’t need to be good managers.
Most small business owners have certain traits that make managing a business easier. Successful business owners will eventually acquire these traits during their learning process as they’re a key component to succeeding in business.
These traits include:
- Vision: Every business has certain goals. Vision is the ability to conceptualize these current and future business goals and have a method to get there.
- Passion: Most small businesses start due to a particular passion, and it’s important to keep that passion going. Both employees and customers respond favourably to business owners who love what they do.
- Hardworking: Successful business owners are willing to put in the extra hours to help their business succeed.
- Decisive: Procrastination and indecision often result in missed opportunities. While having a modicum of caution is advisable, successful business managers must have the confidence to know when to act.
- Adventurous: A business’s path is seldom a straight line. Business owners should be willing to take risks and adapt their business to changing global and local trends.
- Willingness to learn: The world is changing faster than ever before, and business owners need to have the skills to navigate these changes. Managers have more management tools at their disposal than ever before, and using these tools can make running a business substantially smoother and more effective.
Reaping the Benefits of Good Business Management
Every organization, no matter how big or small, benefits from having strong management. Good managers anticipate potential problems and find solutions that benefit the business.
One of the most important challenges facing business owners is taking care of their employees. Finding the right group benefits plan can be difficult, especially when every insurance company has its terms and restrictions.
Using a broker like Group Enroll can dramatically simplify finding the right small business health insurance that will scale with the business and number of employees. Group Enroll doesn’t just handle group dental insurance and healthcare; they also help business owners find group retirement savings plans, healthcare spending accounts, and group life insurance.
Taking advantage of Group Enroll’s services is easy. All you need to do is fill in their online form, and an agent will get back to you with proposals from multiple providers. You can also contact us via email at email@example.com or visit our offices directly at 10 Great Gulf Drive, Unit 5, Vaughan, ON L4K 5W1.