To Small Businesses
Introduction
Modern day markets are highly competitive in nature. Organizations need to have effective management in order to capitalize on opportunities and minimize risks. This especially applies to small and medium businesses and enterprises or SMBs and SMEs as they are popularly known. Entrepreneurship has been encouraged in every economy, with state governments launching several programs to aid small and medium business owners to develop a competitive edge and survive in the market. With the increasing use of e-commerce, thousands of people attempt to convert their ideas of a business into a healthy and profitable venture. However, in order to make a business venture a success, an entrepreneur needs to effectively manage its functions. This requires detailed planning, progressive leadership, thorough organizing and effective controlling. Defects in any one of these functions can lead to the failure of the entire business.
Detailed Planning
Most small businesses start off as an idea of a product or service that a person believes has great selling potential. However, just having an idea is never enough and a wise entrepreneur verifies his or her belief with research and statistics. Planning is a crucial part of any business, especially a start up. If a business starts right, there are fewer chances of things going wrong in the near future. Detailed plans need to be drawn out for three phases: Immediate/ start up plans, Short Term Plans, and Long Term Plans. For a plan to be effective, it needs to include the following factors:
a) Business Concept: This part of the plan defines what exactly the business will be. It lays out its mission, vision and values. Plans also need to be drawn regarding how the business will operate. How many people will the business employ? What will be the working hours? Then there needs to be a focus on drawing out policies for Human Resource management, Accounting & Taxation as well as general administration. A good entrepreneur makes plan with an objective to eliminate contingencies that may lead to hindrances in business operations, product/ service supply or customer satisfaction.
b) Market Analysis & Strategy: It is vital for a business to know the environment in which it is expected to thrive. This includes suppliers, competitors, customers as well as legal entities like government agencies. Market research and tracking is an ongoing that starts before the launch of a business and continues throughout its life cycle. The market strategy clearly defines the organization’s approach to operations. For example, if a person plans to launch a diamond jewelry business, there should be a plan in place involving how purchases will be made, what will be the reach of the business, who will form the target market, will the business cater to the local market alone or export as well, and so on. An efficient entrepreneur utilizes effective market research to keep an eye on present and future developments and plan ahead to capitalize on opportunities and prepare for risks.
c) Financial Strategy: Funding is the lifeline of any organization. An entrepreneur invests a substantial amount of money when launching even the smallest of business. However, finance requirements do not end with the start of a business. Ever business has a gestation period whereby it starts making sizeable profits only when this time is past. It is vital to keep the business operating smoothly in the interim period. A good entrepreneur manages the available funds in a manner to derive maximum value from every dollar. External sources are kept at hand to meet unforeseen funding requirements. Also, it is crucial to track a business’ expenditures, revenues and investments, not only for taxation and accounting purposes but to accurately gauge the profitability of the business.
Progressive Leadership
A good leader has the capability to transform an organization’s people, operations and external interactions to capitalize on opportunities that the market presents and to stay ahead of the competition. An effective leader practices progressive leadership in the following departments:
a) Effective Decision Making: A good leader is always well informed about all the nuances of the market and the moves of the competition. He or she is decisive and have a clear view on how the business should proceed in different scenarios.
b) Comprehensive View: A leader needs to be multi-functional. He or she cannot focus on only profits or sales but needs to pay great attention to every facet of the business including HR, administration, finances and so on.
c) People Skills: Employees are more likely to give their work their best when they are inspired to do so by their leader. An effect leader is always good at maintaining healthy interpersonal relationships with not just employees but other stakeholders like suppliers, consumers and government agencies.
d) Ethics & Morality: An effective leader does not indulge in ethical practices to boost profits or solve problems. Unethical behavior lowers the level of respect that others have for the leader and makes them less likely to follow his or her example.
e) Change Management: The markets are always changing. Technology, government rules and regulations, consumer demands and stakeholder requirement, all these factors change over time. An effective leader not only adapts to this change but uses it to maximize the productivity of the business and its people and deliver better products and services to consumers.
f) Personal Involvement: It is important that the top management of any organization be personally involved in operations at least to a certain degree. This is even more feasible in small businesses where leaders can personally keep a track on the happening in various departments. This encourages an environment where people strive to attain immaculate results and increase the overall productivity of the organization. Personal involvement on the part of the leader also leads to swifter resolution of issues and grievances.
Thorough Organization
It is one of the primary functions of a leader to conduct business in an organized manner. This includes everything from setting standard procedures and processes for operations as well as forming policies for HR and administration. Everything from payroll, leave management, discipline code, performance SLAs, accounting and auditing regulation and so on needs to be drawn out. Documentation is a crucial part of effectively organizing a business as these form the basic framework and reference point for all members and stakeholders of the business to function efficiently. The best business policies and processes are clearly defined, address key functions and issues, and are easy to understand and follow, even by new recruits. Thorough organization enables a leader to conduct business in a smooth and optimal manner.
Effective Control
Once business plans are drawn out and policies and processes are in place, there needs to be regular and accurate monitoring of the performance of the business. Despite all the precautions taken against contingencies, issues will arise and will need to be tackled quickly and effectively. There could be consumer grievances or problems with the work force. Job satisfaction levels could be low or suppliers might not be delivering goods in a timely manner. There may be lapses in accounting or a need for emergency funds may arise. Monitoring the performance of every department of the business enables an entrepreneur to predict such incidences before they occur and prevent them from escalating. Effective monitoring and control are key traits of an entrepreneur that assures the continued success of a business, enabling it to thrive in a competitive market scenario.
