Have you wondered what are the features of managing a small business?
Let’s face it, running a small business is a hard slog. Keeping on top of sales, hiring, accounting, marketing, and cashflow can easily become overwhelming. It’s no surprise that, according to the ABS, around 60 per cent of new Australian businesses wind up in the first three years of operation.
So what is the other 40 per cent doing right? How do they thrive in a competitive business environment?
Features of Small Business Management
Business owners must be the leader of their organisation. They often provide the mission, values and goals for the small business. Leadership and business ownership are two different things. Many business owners can run their company and complete operations with few problems. However, leading other employees can be a completely different issue. Business owners who expand their operations often need employees to complete various business functions. Leadership requires business owners to work through employees, not around them.
Values Define Their Small Business
If a character depends on one thing, its values. Whether talking about people or a business, values define who we are at the deepest level, give us a roadmap for navigating the world in a way that helps us improve, and allow us to express ourselves in meaningful ways.
Values can transform your small business from just another design company, wedding photographer, coding studio, (or your specific industry niche), into a unique brand that stands for something bigger in the world. And that “something bigger” turns people who hold similar personal values into fans, and fans into loyal customers.
Authenticity Permeates Their Small Business Brand
One of the most interesting things about the character is that it’s incomparable. You can’t say that so-and-so has the best character there ever existed on this planet. There are no standard marks, no points of absolute evaluation, or areas of comparison for judging the best character. Every true character is authentic.
Similarly, the best brands around the world are not the ones that have “the best” character, but the ones that have their own character. The small business brands, in other words, that are authentic to their values, to their beliefs, and to who they are without trying to copy or mimic other businesses or business models in their industry.
Trying to be like someone else won’t help you find success with your brand. Coca-Cola can’t try to be more like Pepsi to succeed; it can only be authentically Coca-Cola. And there are no rules or limits to what makes up your authenticity.
Excellent knowledge of the field of activity
A small business entrepreneur should be well oriented in the market, understand the specifics of her industry and know the specifics of his field of activity. Of course, the head of a large company should know all this.
However, in a small business, a clear understanding of what you are doing is especially important if you want to turn from a small business person into a large one.
When the head of a large company makes a decision (and more often decisions are made not even by one person, but by a whole council), a large number of people are involved in this process. That is, you first need to notify all the deputies, they, in turn, give instructions to managers, and so on along the chain and managers, unfortunately, do not always understand how their instructions can be feasible for employees. If there are any difficulties, the interaction along the chain begins again, only in the reverse order.
In small business, everything is much simpler. The business owner wanted to introduce any innovation into the business – he approached his employee and assigned him a task. In case of difficulties, all issues are also solved much faster, if only because a much smaller number of people take part in this process.
Greater freedom in decision-making
In a small business entrepreneur can do whatever he/she wants (within the law, of course). If you again compare with big business, then every important decision needs to be coordinated with its partners, co-founders, managers who are subtle specialists in this matter and it may well turn out that what the businessperson intended will not be necessary or wrong for the company.
In a small business, an entrepreneur has practically no people who can prevent him in time from making a mistake. Therefore, each decision needs to be made only after a thousand thoughts about it.
Consistency Backs Their Actions
Ever had a friend who said one thing and then did another? And I don’t say “have a friend” because if you’ve ever been associated with a flip-flopper, the chances are that relationship ended badly.
Consistency is important in building character, and it’s important in building up your small business brand. Consistency allows your customers to get to know who you are, to rely on you, and to trust you for the things you do (or don’t do) without fearing that you may change your mind from one second to the next.
Take Action – Be Consistently Great
Consistency can challenge small business owners, in particular during periods of expansion or brand shifts. How do you expand to offer more products or services (or different products or services) without losing your authenticity or your brand identity?
Lack of interaction formalities
In a small business cannot be involved with a huge staff. Work teams can be of different sizes, but they are all relatively small. For example, take a small clothing store. A cashier, two sellers, a security guard, an accountant, a manager – that is the whole team. When people work in a small team, many of the formalities of business communication go to naught.
This is a good plus – with such friendly-free interaction, the level of trust in the team rises, which results in more productive work. In addition, if employees value the team in which they work, they become more “more careful” about the work itself.
Business owners must pay careful attention to the human resource needs of their company. As a company begins to grow and expand, the hiring of employees is usually an essential part of small business management. Business owners must understand the current job market and how to set wages for various job positions. New employees can also create significant paperwork or administrative issues for small businesses. The performance of background checks and drug tests, and the collection of personal information and other paperwork are all involved with hiring employees. Business owners must decide whether this process will be completed in-house or through a third-party employment agency.
The need to deal with all management issues independently
In a large business, hired managers are involved in management, each of whom is responsible for the area of work entrusted to him. Theoretically, for a small firm, you can hire an outside manager. However, business owners go for it extremely rarely and independently manage.
This refers to the management of personnel; production, sales, marketing and so on and such entrepreneurs do very true because only they know what their company should be.
A hired manager will never do his job with the same degree of courage and conviction as the business owner himself will. In addition, in order for employees to love their work, begin to appreciate the work they are doing and rally around a common goal – you need to show them how, why and where the business is going, and no one will do it better than its founder.
Many successful business owners wisely invest in financial systems that integrate their business operations with internal and external accounting systems to ensure the generation of timely and accurate financial statements on a monthly basis. This can spell the major difference between the success or failure of a business.
Accounting is an important business function. Business owners often use accounting to record, report and analyse information relating to financial transactions. Small business accounting usually encompasses several different features. Overseeing company cash flow, paying bills, collecting money from sales on account, entering journal entries, and preparing the general ledger and financial statements are a few small business accounting features. Business owners must be able to understand and apply accounting terms, principles and guidelines to their company’s information. Accounting information can also be used by business owners to conduct a performance measurement analysis for business decisions.
Ensuring that the company director and shareholders are meeting and reviewing these statements on a monthly basis is also crucial.
They offer terms to their customers that work for them. Businesses often have to provide credit to their customers. This can be based on the standard 30 days EOM. You should ensure that:
- You know who you are dealing with.
- Some level of credit analysis is conducted
- Business references are checked.
The terms you offer your customers also need to be financed in some way, just like the purchase of other assets on the balance sheet. An appropriate level of finance can see your trade very successfully with creditors who offer short terms and, importantly, debtors who pay on or beyond your terms of trade.
Many successful businesses use either debtor finance or invoice finance/factoring or put up personal assets like their family home to secure finance. Debtor finance is definitely the least risky option.
Operational management is a key part of small business management. Business owners carefully review their operations to ensure goods or services are produced in a high-quality manner. Business owners are also responsible for acquiring economic resources to use in their business operations. Operational management can include production processes, customer service, marketing and other various activities. Smaller or home-based businesses are usually easier to manage. Business owners with larger organisations must usually spend more time managing business operations and ensuring all functions are properly completed.
They Build Great Customer Relationships
Strong, respectable characters build quality relationships. And they care for those relationships. People who treat us badly, disregard us, or dishonour our relationship with them never enter into our circle of loyal friends.
Only by building individual relationships with customers and caring for those relationships can your small business build a loyal client base that will grow. As a small business owner, you have the opportunity to get to know each of your clients personally and to form strong relationships with each one that will keep them coming back to your brand time after time.
Take Action – Build a Relationship with Your Customers
You don’t have to give away free barrels of beer to form strong relationships with your customers. (Though it could admittedly help!) Strong relationships grow out of the small things you do, like putting your best customers’ birthdays, anniversaries, or other important dates on your calendar so you can send them a thoughtful note on their important days.
Taking time not only to respond to them on social media and email, but even reach out to them with a simple hello, or a news story you saw and that the specific customer would really love. Small actions have a great impact. What small actions can you do now to show your customers that you care about them?
They Know Their Customers Well
Did you ever meet a strong character in life who was socially awkward and withdrawn? Nope, never. Being socially awkward and withdrawn are characteristics of weak characters.
Strong characters know other people well and can relate to other people well. They understand those around them and their needs, they can empathise with them and help them out—and that’s where their strength of character comes from.
Similarly, brands can only grow strong when they know their customers. When they know who their customers are and understand what they want. When they understand how they can help their customers and find ways to provide that help.
Whether big or small in size, brands can only grow in strength when they get to know their customers on a deep and personal level.
Use of outsourcing services
Outsourcing is a real catch for small businesses, and all entrepreneurs should warmly thank the person who invented this kind of interaction between several companies. A small enterprise may lack the strength and resources to solve all the problems of a business in a quality and timely manner—for example, accounting.
Even the smallest business cannot do without it, and in order to do it yourself, the entrepreneur may not have enough knowledge and time. It is also not profitable to hire an accountant – he will have to pay for an 8-hour working day, and his work tasks can be placed in much less time every day. Therefore, it is very profitable to give accounting obligations to an outsourcing company – you pay less, and the quality of work will be at a decent level (just carefully choose an outsourcing company for cooperation – after all, there can be unscrupulous people among them).
Monitoring cash flow and bank accounts
Generally speaking, only certain authorised people should be accessing the company bank account. This would include directors and only the most trusted employees. Account drawdowns should always require authorisation from a director.
Many businesses have allowed employees to access the company bank account to the peril of the business cash flow. Importantly, the monitoring of cash flow should be done on a daily or weekly basis with a sufficient financial model enabling the director/s to ensure that any shortages in cash flow are foreseen so that adequate working capital can be provided to the business at the required time.
It is thus obvious that the growth of large scale industries does not necessarily bring about the end of cottage or small scale industries. Electricity has revolutionised the large-scale industry; at the same time, small units based on electricity can also be cheaply and conveniently started with limited infrastructure.
Besides, many artistic goods, products of craftsmanship, and luxury goods do not lend themselves to the standardisation of large scale manufacturing. They are largely reserved to the cottage, rural and small industrial sectors.
Finally, new ventures, so long as they are in an experimental or formative stage are first tried on a small scale, and it is only when their success is demonstrated. Their profitability and capital base established that they are organised on a large scale.
Small business always plays an important role in the development of any country. As already mentioned, most of the industrial and business activities start small. With market opportunities and vision of the entrepreneur, it grows into a large industry.