- Take your small business to new heights with our actionable tips on effective business management. Stay ahead of the competition.
While it seems as though everyone is setting up small businesses these days, it takes a special type of business owner to really build a successful brand. Unfortunately, small business owners are often at risk of closing thanks to pressures from the economy and fluctuations in trade.
Therefore, the key to surviving and thriving as a business owner is to learn how to manage an enterprise effectively. It is a broad subject, of course, as no two companies or ideas are ever quite the same. However, there are a few management principles that business owners should keep in close mind if they want to weather fluctuating profits and losses for the years ahead.
For individuals who are just getting started as a small business owner or are looking to take that next big step in their growth plan, here are a few robust management tips to help them on their way.
Always be ready to pivot
Small business owners that dig themselves into niches risk getting left behind. Consider companies and brands that have invested hugely in crazes over the years. It is evident that tastes in toys, fashion, and even food and drink fluctuate over the years.
However, one attribute that many startups seem to hold over bigger companies is the willingness and ability to pivot, or adapt, to changes in the industry and consumer tastes. By carefully managing the scale and output of business, owners stand a chance of adapting and changing quickly.
Startups are in firmer positions to pivot simply because they lack the lumbering numbers of personnel typical in larger corporations or businesses. They can shift niches and audiences at short notice.
Pivoting requires extremely careful management and consideration. Owners shouldn’t ever choose to change focus completely or they may alienate existing customers. However, by carefully analyzing a broader audience when setting up a business, owners will be in a better position to switch niche if they wish to.
Being able to pivot is a crucial management technique for small businesses everywhere. If the economy fails or the industry faces a downturn, owners will need to move quickly to avoid closure. Small businesses are at greater risk than any other in the US, regardless of industry – so they should keep their options open.
Common purpose drives movement
A huge facet of running a successful business with any number of people is keeping everyone on the same page. Common purpose in small business ownership may cover the ethos, five-year plan, or method of dealing with customers.
Managing common purpose within a business isn’t always easy, but the smaller the company, the easier it is to communicate with others. This management principle is vital for small businesses as it can allow them to grow quickly in relatively restricted circumstances.
Some of the biggest startups to have scaled up massively over the past decade or so have thrived because the small teams running said brands shared the same vision.
With joint founders pulling a business in different directions, it is easy for smaller companies to fold even before they get started. Many popular bands split up due to ‘musical differences’ – the same principle applies to business ownership.
Common purpose management is hugely beneficial both for the survival of a small business and for the building of a strong customer base. People get behind brands with clear messages and visions, and if their teams seem to be working together in the same direction, they are all the more inspiring.
Managing a small team is no mean feat, but practicing this management principle early on will benefit owners greatly. It is arguably more difficult to manage and instill common purpose in hundreds of people further down the line than it is to grow with smaller cohorts in the beginning.
Managing resources cuts costs early on
When owners begin to run a business, they face the temptation to ‘fly by the seat of their pants,’ or to ‘plan to plan’ later. It is true that many great small business ideas ignite by accident, and that some successful entrepreneurs don’t tap into business plans until some years into the running. However, planning to manage resources as simply as possible, as early as possible, will help owners to navigate potential financial hazards further down the line.
Small business management practices surrounding resources and inventory will help owners to better visualize what they need for their company, and their customers, as they grow. In the beginning, it is arguably better to overstock than to understock.
However, as a small business grows, owners may find that they overstock and run at a loss by purchasing too much material. Keeping resources to a minimum, or at least finding a healthy margin, can and will help them to minimize any waste they generate, cut running costs, and even boost how productive their team is from day to day.
It is unlikely that many small businesses will hit their strides in resource management the day they start. However, the earlier owners start to manage their resources with a view to grow, the easier they will find the years ahead.
This is why learning basic management skills and principles can support owners in the early years of their business as much as it can further down the line. One of the most enduring benefits of online MBA study (with universities such as St. Bonaventure) is that students cover both the basics of resource management and more complex techniques before they even get started.
Data-driven companies court confidence
In the ‘new 20s,’ data is everything. It is always growing, and, as long as people continue to be born and register for services, there will be data to mine. Small enterprises can use this to their advantage, providing they manage the details they pull effectively. For example, some small business owners may choose to break down sales numbers as soon as possible. After all, sales measure success. But at the same time, they also need to consider leads, losses, and conversion rates. Once owners start managing one pool of data, they are soon handling several at once.
Many small businesses choose to be data-driven early on in their lifespans simply because buying information and customer data can help them to tailor services and products without extensive market research. While there has always been the need to monitor buying behavior and data since before the rise of the internet, the smaller world we now live in demands businesses crunch a huge array of numbers!
Therefore, it pays for small business owners to embrace the data crunching and analytics culture as soon as they first set up shop. Even small store owners benefit from data-driven management, as they will see which customers return, which products sell the best, and which advertising techniques resonate most.
Dare to be different
Good business management once revolved around the idea that you could actively mimic a leading brand in an industry and still be a success. While that is still true to an extent (if a product or service is of exceptional quality, for example), we now live in an age of over-saturation and customer savviness.
This means small business owners should be careful to manage ideas that appear too similar to others already on the market. If anything, new business operators need to focus on what’s different about their firms and products. What is it that they are bringing to customers that is disruptive, and what is going to change the way they see the industry?
It pays to be creative, but at the same time, business owners still need to manage a base service or product that, ideally, exists in the public eye. They can innovate from the word go if their product fills a niche that no one has thought of yet, but the risks of running at a loss are much higher.
Daring to be different when managing a business means looking carefully at what customers do. Are there any gaps in services or products that business owners could think more creatively about? What about the products and services their competitors provide?
Instead of striving to be the same as the competition, small business owners need to learn to manage a more unique output. That means taking some risks with inventory and marketing, but with careful planning and management, they can still bring in a healthy bottom line while promoting their uniqueness.
Being unique doesn’t have to rock the world, at least not right away. It may be as simple as introducing cashless transactions while the rest of the industry is still handling cash.
Don’t lose sight of the customer
The well-worn phrase ‘the customer is always right’ might not ring true for some people, but it is certainly true that they hold incredible sway over the survival of a business. After all, without paying customers, small businesses have zero purpose, and they stand to run dry once their own supplies are used up.
That is why it’s important for small business owners to carefully manage their customer service as soon as possible. They shouldn’t ever make assumptions about what their buyers want or need – hence why market research and data analytics are so important. If anything, small business owners should always plan for their customers, not around them. A common misstep in business management among smaller enterprises is developing products and services that interest the owners and stockholders more than the waiting customers!
Therefore, working closely with customers is vital to gain feedback as soon as possible. Customer opinions, despite varying wildly and not always being useful, can help to point small business managers in the right direction.
It is healthy to innovate and produce new services and stock that hold personal attraction, but small business owners must always appreciate the power of the customer when they start managing for the first time. They pay the wages!
Look for funding early on
Finally, a pivotal area of business management that many new owners fail to monopolize on is seeking funding. It is easy for owners to get carried away with their own funds, but after a few years, that money may dry up.
What’s more, business owners may also find that they are ‘locked out’ of opportunities for small businesses as they have traveled beyond the age brackets for specific grants and funds. That is why it’s so vital for small business owners to at least consider startup grants and funding options before they throw too much of their own capital behind an idea or a venture.
Funding at an early stage can help small businesses to invest in inventory and gain steam ahead of finding customers for the first time. It is a great way to both grow at pace and/or soften the blow of any first-year difficulties.
Of course, not all funding options may be worthwhile, and there is no guarantee that every business will be accepted. This is why careful management of bookkeeping and funds is still so important even when businesses have yet to make a sale. Funding makes a huge difference for startups as they grow from one checkpoint to the next. Failure to manage money effectively early on can spell doom for many entrepreneurs.
All small business owners can benefit from management principles
The principles and management ideas explored above are only a handful of those that small business owners are likely to witness. Therefore, it always pays to keep an open mind – and while owners may start a business venture for a hobby or for genuine interest before profit, learning a few management techniques could make or break their brand early on.
Studying for an MBA can help individuals hit the ground running – and if not, taking the time to study successful startups elsewhere across the globe is still a great practice.