4 areas of small business management to improve your startup
As a small business owner, you have to wear many hats. Not only do you need to do things like manage your finances, but you're also in charge of things like developing a business plan, reaching out to investors, crafting marketing strategies, and making decisions that affect employees. You need to have a broad array of management skills, including:
- Business development
- Time management
- People management
- Money management
Whether you're an entrepreneur looking to start your business or the head of an established tech startup, there's always room for you to grow and improve.
In this article, we'll provide you with four specific areas of small business management to focus on when growing your business. We’ve provided management tools and tips for each area. Even implementing just one or two of these could help your business grow and become more successful.
Knowing how you're going to shape the structure of your company is essential for owners. Understanding your development strategy goals will help when making managerial and business decisions. Consider these business development tips to help define your company’s structure and culture.
1. Choose a business entity
One of the most important decisions for new business owners is the structure of the company. The structure of the business will help determine how managerial decisions are made. Common business structures include:
The structure that you choose will impact your decision making and day-to-day operations. For instance, if you establish as a sole proprietorship, you are the only person responsible for management decisions. You are also responsible for all liabilities associated with your business.
Filing as a corporation removes those liabilities, but also institutes a board of directors that oversees business operations.
You can also change the structure of your existing business. Take time to research the different types of available business entities to find out if your company’s current setup is the best option moving forward.
2. Declutter your company
Take time to think about your company's goals. Also, take time to identify the processes that make your business more efficient, and the people who make your culture more pleasant. Then, eliminate anything that isn't helping your business reach these goals and milestones.
This is a broad technique, but it will help reduce clutter and keep you focused on business growth. You can apply this technique to everything from letting go of employees who are not pulling their weight to going through old filing cabinets.
3. Know your processes
Business owners should document their processes. Not only will this hold them accountable, but it will also make expectations clear to employees. You can start by crafting a set of standard operating procedures.
Another aspect of small business management is time. As a small business owner, you probably find yourself wishing there was more time in a day. However, implementing a time management system and working smarter instead of harder could help you build a successful business.
1. Leave 20% of your day available
When planning your day, you may be tempted to schedule something for every minute. But as you're aware, things can pop up, throwing your day into flux.
Instead, only schedule 80% of the time for work. For instance, if you block off five hours at the office, only schedule four hours of actual work. This allows you to address unexpected emergencies in real-time. And if nothing pops up, you can use this extra time to get caught up on email or work toward a new skill.
2. Work in half-hour blocks with the Pomodoro technique
Another time management technique that helps keep you focused and productive is the Pomodoro technique. This technique calls for you to work for 25 minutes and then take a five minute break.
By dedicating yourself to five minutes of not working, you'll cut down on distractions like email and social media. Then, you can take a five minute break to answer a few texts and recharge before working again. This method also requires you to take breaks, meaning there aren't any requirements to finish a project in a single sitting.
3. Eliminate multitasking
Multitasking is tempting, but it can be a significant time drain. Eliminating multitasking in your company can keep employees more productive and on task. It's practically impossible for your brain to recognize two activities at the same time.
Gone are the days when employees try to absorb information from a podcast while catching up on emails. Focusing on one task at a time will not only make you more efficient, it will also improve the quality of your work.
From the minute you hire a new employee, you're shaping that individual's perception of your company. Successfully managing employees allows you to motivate and get the most out of your team, thereby helping your business grow.
1. Invest in training
Too often, business owners hire new employees hoping their to-do list will immediately shrink. However, the opposite should be the case. When you hire a new employee, you should expect your workload to increase — at least at first.
You're going to need to take time to train your employees the right way. Doing so should be seen as an investment. Teaching your employees the right way to do things up front will pay dividends down the road, and will prevent things like firings and turnover. New hires should have a clear understanding of your expectations and requirements, as well as their role in your company’s culture.
2. Focus on finding the right attitude
Too often, small business managers worry about finding employees with the right skill set. While skills are certainly important, it's more important to find potential employees with the right attitude. From there, you can train the employee.
Think of it this way — an employee with a bad attitude is going to be disruptive to your business, no matter how experienced they are. On the other hand, an employee with a good attitude can contribute to your team, and will have the desire to grow.
3. Establish a culture of transparency
Culture is important to your organization. One of the core values of successful businesses is transparency. Providing your employees with honest and timely feedback can do wonders for their growth. Implementing transparency into your daily business operations — as opposed to waiting for formal reviews — will allow employees to improve their work immediately, thereby accelerating results and lowering turnover.
Organizational culture is critical to employee growth, but owners can't neglect money management. Proper money management ensures you have the cash flow to support you now and down the road.
1. Keep your personal and business finances separate
One of the common mistakes by new small business owners is failing to separate their personal and business finances. This means opening separate:
- Bank accounts
- Credit cards
Not only can this protect you from liability, it can also help when filing taxes. Many investors will require you to provide business financials anyway, so establishing this now can save you trouble down the road.
2. Use accounting software
Using accounting software is a sure-fire way to help you save money and know precisely what’s going on in your business. Accounting software is worth the cost. Not only will it help you keep track of business finances and money going in and out, it can also help you see trends and patterns in your spending.
This software also helps come tax time. It allows you to send more professional invoices to clients. And, it helps you keep track of employee expenses.
3. Consider a cash management account
A cash management account is an alternative to bank accounts. A cash management account allows you to initiate ACH and wire transfers in less than a minute. A cash management account also allows you to accumulate interest. Essentially, it combines the best benefits of checking, savings, and investment accounts.
You can link a corporate credit card to your cash management account as well. This will help streamline your financial management while keeping your personal and business finances separate.
Make better small business management decisions
Nine out of ten of all startups fail. 7.5 out of ten venture-backed startups fail. Fortunately, with hard work and an open mind, you can avoid becoming a statistic, and your business can succeed.
As an entrepreneur or small business owner, you can never afford to stop developing your business skills. Steve Ells, a successful entrepreneur and the founder of Chipotle, once said, "I'm always tweaking, always trying to make it better, constantly moving the levers and dials."
Even if you have a revolutionary idea and adequate funding, complacency could lead to the downfall of your company. Taking time to identify your management style, including its strengths and weaknesses, could prove beneficial. Implementing some of our small business management tips will give you the know-how you need to take your company to the next level.
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