20 Small Business Management Strategies | SMB Compass
Ezra Cabrera | October 19, 2020
Good management is essential to the survival of any small business. In fact, statistics have shown that 90% of start-up failures result from poor management. Entrepreneurs, especially those conceiving of start-ups, need to establish a reliable small business management strategy to operate at maximum capacity.
Oftentimes entrepreneurs are idea-driven. Yes, they can conceptualize and create a company, but that doesn’t automatically mean they also have great management skills to then run the company. Management certainly requires a navigation process that hopefully gets easier and more efficient with time and experience.
Whether you’re recently unemployed and looking to start your own business for the first time, or you’re a more seasoned entrepreneur simply looking to sharpen your management skills and strategies, we want to help. Here are 20 tips we’ve compiled for effective small business management:
1. Create a Solid Business Plan
If you’re in the process of starting a business, creating a strong business plan should be your first big step. Think of your plan as the blueprint for your company. Not only does it serve to guide you as you build and run your company, but it is also crucial for attracting investors and obtaining outside financing when that time comes.
What should your business plan look like? It should thoroughly outline your short and long-term business goals, the product(s) or service(s) you aim to sell, a targeted marketing strategy, financial projections, a competition analysis, and your strategies for growth. It should also get to the heart of the brand you hope to build. What are its mission and core values and how will they touch every aspect of the business?
Your business plan should be a living, breathing document that you can amend as needed. Changes will inevitably take place that directly impacts your business – whether it’s new competition in the marketplace, cultural shifts that affect consumer behavior, new technological advancements, or a global pandemic, to name a few. When these kinds of changes do occur, your business will need to adjust and those adjustments should be reflected in your plan.
2. Embrace Technology and Automate
As a business owner, you’re constantly having to manage many things at once – marketing, customer payments, payroll, taxes, among others. With all the day-to-day operations to oversee and maintain, it’s plausible that you may get caught up in the daily minutia and fall behind on bigger picture items like growth planning.
Embracing automation technology can be immensely helpful in supplementing some of these administrative tasks like payroll, taxes, and inventory management – as opposed to doing these things manually which can be really time-consuming. Automation technology puts a reliable system in place so all you have to do is input the required numbers. The automated system then analyzes the numbers and produces accurate totals within seconds.
In addition to saving time, automation technology also helps businesses prevent human error calculation mistakes. Inventory, accounting, and bookkeeping software are all built with meticulous algorithms that ensure the computing is extremely accurate. This accuracy may very well lead to accumulated savings for the company.
3. Create a Standard Company Process
Chris Abrams, the founder of MJ Life Insurance, firmly believes that an entrepreneurs’ best business management strategy is to create a standard company process or standard operating procedure (SOP). When a business physically documents its various processes, it helps to align staff and maintain consistency throughout the company. For instance, what procedures are in place for employees should an emergency arise and they are unable to reach the company’s main decision-maker?
A standard operating procedure is particularly helpful when the company is bringing in new hires. The staff can use the SOP in their training to give new employees an overview of the company’s processes. Well-documented standard procedures help achieve efficiency, produce quality output, and improve communication in the company.
4. Invest in Education
When you manage a small business, you have to be a jack-of-all-trades. You have to know how to market your business, manage your company’s finances, communicate with your clients, etc. The best way to learn all these different facets is to educate yourself.
Ian Blair, a mobile app consultant and co-founder of BuildFire, believes an entrepreneur should invest in educational opportunities, like classes and courses, that can help his or her business. Free classes certainly exist, but those taught by respected field experts with highly refined skill sets can cost a decent amount of money. Blair finds these types of investments (if feasible) to be highly worthwhile as they can have a valuable, long-term return. Learning from an expert can help entrepreneurs avoid months or even years of trial and error before arriving at the right management strategies and systems for their business.
5. Separate Personal from Business Finances
When you run your own business, you should really keep your business’ finances separate from your personal finances. Meaning, don’t use a personal credit card for your business expenses and don’t use business accounts for your personal expenses. Beyond just messing with your company’s finances, this will likely make it far more confusing and complicated to calculate the company’s taxes. Miscalculating company taxes can result in expensive fines from the IRS.
When you open your new business, you should apply for a separate credit card solely for company use. The company’s savings accounts should also be separate and should only be intended for official business transactions. This will make it easier for your accountant to trace the expenses and calculate the company’s taxable income.
6. Have a Budget and Stick to It
All businesses, no matter what their age or size, should have a thorough budget in place. Budgeting is a smart and effective way to manage a business’ finances. It helps businesses, especially small operations, track where they stand financially. This allows them to strategically plan for both short-term and long-term expenses, like current operating costs and possible expansion in the future.
If the company isn’t a sole proprietorship and has shareholders, having an accurate budget can also help create accurate projections and sales reports to be presented to the board of directors. This will allow the owner and shareholders to determine if they have to change their strategy should the unanticipated cost exceed that of the projected earnings.
The best way to go about this is to hire an in-house accountant or outsource one. A professional accountant can set up an accounting system to organize all of your finances, track expenditures, and create financial reports, all of which will be helpful for the owner when it comes time to making important financial decisions. Accountants are also immensely helpful when it comes to organizing a business’ taxes come tax season.
7. Delegate Tasks
We’ve already acknowledged a small business owner has to wear many hats. That said, you should also know when to take some off and delegate tasks to get a better output. For instance, if you know that you’re not good at accounting or bookkeeping, don’t beat yourself up for it or waste hours of your time trying to crunch numbers. Consider hiring an in-house accountant or outsource the skill.
Evaluate yourself and identify which areas in business you’re good at. Continue to educate yourself in those areas and focus your efforts there. Now identify the areas you’re weakest at. Look to assign those types of tasks to people who can do that part of the job better than you. This will help save both time and effort which could be put to better use elsewhere, like planning and implementing your company’s growth strategies.
8. Hire for Attitude
As a small business owner, the most important part of the company that you’ll manage is the staff. After all, a company is only as good as its people. When you’re hiring, pay attention to candidates’ attitudes. People can be trained and taught skills, but a bad attitude is much harder to correct. No matter how skilled an employee is, if they don’t have the right attitude and can’t adapt to the company’s culture, they likely won’t be a good fit. A negative attitude can also have a rippling effect and you don’t want one person bringing down the rest of the team.
Recruits with a positive, can-do attitude are dedicated to improving the company’s bottom line. They can be taught and are willing to learn just about anything. Employees with the right attitude typically get along well with their co-workers and can quickly embrace the company’s culture.
When hiring, be on the lookout for the following characteristics in your candidates:
- Willingness to learn
- Good collaboration skills
9. Train Your Employees Well
Hiring for attitude is one thing, but training your recruits is another matter. Once you’ve hired the right employees for your company, now you have to train them so they can become familiar with the company’s processes. Understanding this acclimation period will take some time, it may be beneficial to develop some kind of basic training program or session that all new employees must take to jump start their onboarding.
It’s important when training new staff to be patient. Even if someone had been doing similar type work for years in their previous role, every company has its own operating systems in place that take learning and getting used to. Just as a new employee is making their first impression on the company, so is the company making its first impressions on them. You want new employees to feel welcomed and safe to ask questions when they arise.
10. Be Organized
Staying organized goes hand in hand with good management, and it helps to operate most efficiently. Take company expenses, for instance. Every month, you’re responsible for paying suppliers, rent and utilities, payroll, and possibly debt repayments. Staying organized is key to managing all your different costs and their due dates. Keeping track of important documents is also reliant upon the good organization. Things like tax receipts, invoices, employee paperwork, and the like. You should have a system in place so you know exactly where to find something when you need it.
If organization is not your strong suit, try creating a schedule each day, listing all the things you need to get done. Prioritize the most important tasks at the top of the list to reinforce that those are priority and need to be done first. Check-in with your list throughout the day to see how you’re making progress.
Integrate the organization into your company culture. Ask potential employees about their organizational skills in interviews. Reward it. The more present it is throughout the company, the better off you’ll be.
11. Dedicate a Few Hours of Your Day to Yourself
When you’re running a small business, you’re the one handling most of the decision making for your company. This likely leaves you with little time to think about yourself and your own well-being. Make it a priority to do so.
Designate some time in your day to turn off from work. Maybe this is in the morning. Instead of waking up and instantly checking emails, can you hold off on checking them until you’re in the office? Or if you work remotely, until official work hours begin? Maybe you take a true lunch break in the middle of your day or do an exercise class after work. Whatever it may be, give your brain time to recharge. This will be helpful to avoid burnout and fatigue, which ultimately affects your ability to make better business decisions.
12. Be Goal-Oriented
Small business owners and entrepreneurs should set specific goals for the company. Clearly define what these goals are and devise a plan to achieve them. Share these goals with the entire company to ensure that everyone is on the same page. This will help both employees and managers realign their specific goals to reflect that of the company.
Having goals also boosts morale in your employees. Knowing their role in the company’s bigger picture makes employees feel valuable. Concrete goals also motivate people to work harder as they have a finish line to work towards. As they complete one task after another to get closer to that finish line, it will instill a sense of accomplishment. Accomplishment leads to confidence and confidence improves productivity levels.
13. Have Faith in Your Employees
If your company is an engine, your employees are the fuel that keeps it running smoothly. Trust them to do the job you hired them for. Avoid micromanaging. You may find it beneficial to create an employee evaluation process where you meet with employees every six months or every year to discuss their performance – address what they are doing well and where they need to improve. Give them the tools to succeed. Allow them to take ownership of their work and hold them accountable for it.
14. Don’t Think Twice About Investing in Marketing
When you open a business, you can’t expect customers to come flocking simply because you’re open. Running a business requires you to use smart strategies that will attract consumers to your business.
Don’t be scared to invest in marketing strategies. Digital marketing is among the most effective strategies in today’s current landscape. Your company should have a website that clearly details the product(s) or service(s) you sell. It’s recommended that you hire a professional web designer to bring your vision to life as you’ll want the website to look great. This will cost you a decent amount of money but the ROI is definitely worth it. You should also have a social media presence – a Facebook page and Instagram account – where you can target and engage new customers, share company news, and promote new offerings.
If your budget allows, you can also look into hiring a marketing professional or public relations professional to help ideate creative ways to generate awareness for your brand.
15. Decide on Your Business Entity
Choosing a specific entity for your business affects how you’ll operate your company, and the way you’ll present it to the world. Establishing your business entity also allows you to separate personal assets from the business ones, thus, offering protection for your personal assets should the business fail to thrive in the future.
Business owners can choose to structure their business as the following:
- Sole proprietorship
- Professional corporation
- General partnership
- Limited partnership
- Limited liability companies
By deciding on a business entity, you’ll have financial and legal protection should legal issues (tax miscalculations, client disputes, etc.) arise and threaten your business’ survival. You’ll be protected from having to use your personal finances to cover any damage the company has done, and avoid being sued and losing everything you and the shareholders own.
It’s important to note that certain kinds of business cannot qualify to be certain entities. Whichever entity you feel is best for your business, do your research and make sure your company qualifies.
16. Finds Ways to be Productive
Productivity is essential to a company’s success. There are a lot of practical ways in which you can boost productivity, and it’s important for you to find and identify ways that work best for you and your staff. Time management is key when it comes to maximizing work output. Perhaps you can invest in a class or training program on time management that is presented to your employees.
The Pomodoro technique is a method that has proven to be useful in completing tasks. It involves alternating time intervals – 25 minutes spent working, followed by a five-minute break. Every four cycles, you allow yourself a longer break. The idea here is that you only have a short time to work between breaks, which encourages your mind to really focus on completing tasks within that allotted frame.
17. Celebrate Wins (Big or Small) and Recognize Hard Work
Achievements deserve recognition. Not only does this encourage a strong work ethic throughout the company, but it is also motivating to your employees. When you and your team reach a specific milestone in your business – be it a successful product launch, gaining an investor, or seeing a steady increase in sales – share this news with the whole company. If certain individuals played a particularly important role in achieving the said milestone, call them out for their great work.
If your employees feel that they’re being seen and valued for their hard work and contributions to the company, they’re more likely to work harder and produce better results. Incentivize them, if you’re able, with bonuses, travel incentives, or paid days off. Make them feel that the company is thankful for them and their dedication. There’s nothing more motivating than knowing there’s something worthwhile waiting for them as they accomplish each goal.
18. Keep Your Cash Flow Stable
Every once in a while businesses experience cash flow issues. Whatever the issue may be – a seasonal lull or a pile up of outstanding customer invoices, for example – they need resolving as soon as possible. Cash flow gaps can lead to big losses which, if unaddressed, could endanger a company’s survival.
As a small business owner, it’s your job to manage finances. Be sure to think ahead and have a back-up financing option in place to solve business cash flow problems should they arise. Securing a credit line is a good option. This will ensure your company has access to cash to support cash flow shortages, equipment breakdowns, or expansion opportunities, to name a few. While adding on additional debt to your company can be daunting, it can translate to greater returns in the future when it’s done for the right reasons.
19. Always Have a Contingency Plan in Place
There’s no way of telling what the future holds for your business. Business challenges can happen at any time, and when you’re not prepared, it could take your business down. That’s where a contingency plan comes in handy.
Contingency plans are documents outlining the steps the company has to take in the event of a disaster. It will ensure that a business can still operate normally as it deals with business issues, like damages resulting from natural disasters, a data breach in the company, an economic crisis, and other devastating challenges. These back-up plans will help minimize the impact of the event, protect company resources, and guarantee the safety of the company’s employees and customers. It will also act as the company’s guide as they make their way towards recovery.
With a good contingency plan in place, you can ensure that your business will stay operational and profitable in the event of a disruption. The benefits of having a good contingency plan include:
- Continuity of work
- Increased chances of financing approval
- Aversion of panic
- Protected business reputation
- Improved customer relationships
20. Keep Your Staff Happy
Make sure that your staff is happy working for the company. Provide great benefits, offer bonding opportunities like team happy hours, acknowledge and appreciate hard work, provide rewards, and encourage learning. There’s no right way to build a positive company culture, so listen to your employees and figure out what works best for your company.
Happiness and satisfaction are great morale boosters. If employees feel the company is invested in their well-being and growth, they’re more likely to pay it forward by working hard. The work market is competitive and you’ll want to do all you can to keep strong employees on staff.
Signs of a Well-Managed Company
Now that you have all the tips needed to run a healthy company, you’ll need to know whether your management strategies are working or not. Here are three simple signs of a well-managed company:
1. Happy Employees and Increased Retention
Happy employees are a reflection of a well-managed company. Great benefits, competitive salaries, bonuses, paid leaves, and healthcare benefits are among the many things that promote satisfaction and happiness among a company’s employees. Add autonomy and trust to that equation, and you’ll be assured of a healthy and properly run company.
Studies show that one of the reasons many employees leave a company is because of poor management. When employees aren’t motivated, they lose interest in their jobs. Eventually, they may go looking for another job that will challenge them and reignite their interest. A manager should be able to keep the staff happy and engaged at work. The happier they are, the more likely they’ll stay loyal to the company.
2. Increased Productivity
A significant increase in the company’s productivity is the best sign of an effective management system. High productivity reflects strong communication and staff alignment. When everyone is on the same page and knows what their roles and responsibilities are – as an individual team member and as part of the larger whole – more things will get accomplished.
3. Happy customers
Happy staff translates to better service, which translates to customer satisfaction. Clients who are handled with high enthusiasm levels are more likely to have a positive buying experience and return in the future. When a customer has a positive experience, they’re also more likely to recommend your business to friends, family, and peers. Word-of-mouth recommendations is the best form of marketing there is.
Related: How to Keep Your Customers Happy: The Secrets to Success
Small Business Management: Conclusion
As you make your way towards success, there will be many things to learn, first and foremost, management skills and strategies. We know running a business is tough and there are many aspects to juggle. Don’t let management fall to the wayside as it’s too important to the overall success of your business. We hope you’ll find these tips helpful as you navigate what management style and strategies work best for you and your company.