Everyone knows the typical entrepreneurial success story: A couple of entrepreneurs have a great idea, work their tails off to establish the business and, before long, they're set for life. Right? Hardly. Turnaround artist Theo van Dijk knows two things: First, young businesses that have survived the start-up years will face periods of stagnation. Second, every venture at some point reaches a complacent plateau, owners take their eyes off the ball, and--wham!--a crisis charges through the door. Entrepreneurs can avoid that fate by watching for signs of trouble and taking the action steps van Dijk outlines in this book.

How Do You Manage Your Small Business?

Small Businesspersons Have to Become Business Managers

Small businesspersons cannot usually afford to employ professional managers and specialists. Even if they can afford it, they might not be equipped to manage such highly trained persons. Because of these, they would have to depend on outside consultants.

However, hiring professional consultants has its own problems. Not everyone who claims to be a consultant can deliver promised results. They might make unrealistic promises just to get you hire them. Or they might not be competent enough to know what is involved.

Hence the best option for the small businessperson is to learn the basics of business management and be extremely careful in selecting outside professionals.

Basics of Business Management

We are speaking of managing a business once it has been set up. Broadly, managing a running business involves:

Marketing your products and services to ensure a steady flow of orders
Organizing to deliver what you sell, at a quality acceptable to your customers and a cost that yields adequate profits
Financing your business operations so that they can flow without interruptions
Hiring, training and managing your employees so that they become committed to your business
Complying with all government regulations applicable to your business to keep out of trouble that can even lead to stoppage of the business
Attending to the administrative work involved in doing all the above

The above is only a broad outline. Each of these functions involves a great deal of detail, which you would have to become familiar with and manage.

As you would have begun to comprehend by now, business management is a complex exercise with multiple dimensions. How exactly do you go about it? We look at an effective approach to this complex task in the following section.

The Process of Management

The basic process of managing consists of:

Setting a target to be achieved
Taking actions to achieve that target. This could involve a few steps or a major organizational effort
Measuring results of your actions
Comparing the result with target
If result is below target, considering what needs to be done. Needed action could involve trying a new approach, revising the original target, etc

If your actions resulted in achieving the target, you learn something. Even if you failed to achieve it, you learn things. Gradually, you will enhance your ability to achieve desired results, and become a manager.

If Your Business is a One-Person Show

If you are both the owner and the only employee of the business, you will have to attend to everything. This typically involves:

Finding out the level of orders you have to get every day (on an average) to meet the target set in your business plan
Looking at your marketing plan and implementing it.
Checking the results of implementing the marketing plan. Are you getting enough orders?
If the level of orders is below target, deciding how to proceed to push up the level of orders. You might have to consult marketing specialists or experienced managers or small business support agencies.
Arranging to record all your business transactions (get an accounting package and ask your spouse or somebody to help you operate it) and reviewing your costs and profits.
If your results are unsatisfactory, deciding how to remedy the situation. Again, you might need consultancy assistance to do this.

If You Hire Employees

If yours is a bigger operation involving hiring of employees, you might have to formalize your management procedures.

Develop Plans: The business plan you made while setting up the business is your overall plan. You use this overall plan to develop operating plans including sales targets, production schedules, materials procurement schedules, and so on. Such operating plans will be developed for the next week, month, quarter and year.
Set up Information Systems: You need an information system that will record details of business transactions and generate different kinds of reports. It is this system that will tell you how you are doing.
Make Daily to-do Lists and Acting upon Them: Daily to-do lists of detailed actions are derived from the operating plans and schedules, and you use these to take necessary actions
Review Reports: Your actions produce certain results. Are these in line with expected targets? You will review the reports generated by the information system to check this. If results are below expectations, you will analyze the variances with a view to identify the factors that caused them. You might then be able to decide upon a course of action to remedy the situation.
Follow Up: Following up is an essential element of managing. Agreed decisions are often not implemented owing to multiplicity of pressures. Someone has to follow up to see that things are moving as agreed.

Elaborating on the Daily Actions

In the last section, we said that you will prepare daily to-do lists and take the detailed actions necessary. Let us now look at these actions in a little more detail. There are different aspects to these actions that make them more than just simple tasks.

As a manager, your actions would mainly consist of giving directions to operator level employees, or your junior managers. This involves two aspects. Firstly, you will have to decide what directions to give. Secondly, the directions should be communicated clearly, and in a manner that leads to their being carried out.

You also have to ensure that the persons to whom you give the instructions are equipped with the skills to follow them. This would involve selecting the right employees and training them up as necessary.

Your daily actions would thus involve delegating, training and motivating, as well as some hands-on tasks that you might do yourself. In addition, you would have to find time for the top level tasks of planning, overall organizing and progress review.

Business Models: What Are They?

A business model is the first thing you should worry about when you begin thinking of starting a business of your own. The model illustrates clearly how you can make money in that business.

Company Incorporation to Protect Your Personal Assets

Company incorporation results in registering your business as a separate entity that can hold assets and incur liabilities in its own name. This means limiting your business liabilities.

Example of Breakeven Analysis

Breakeven analysis is a business modeling technique that indicates the key requirements for profitability - the required levels of selling price, costs and sales volumes.

Success in Small Business

Effective marketing strategies, business operations control and people management are the essentials for small business success. How do you attend to these essentials and achieve the much desired business success?

Business Ethics in Small Business

A reputation for ethical business practices is becoming a key factor for attracting business, finding talented employees, raising finances and avoiding trouble with governments and the general public. Naturally, ethical businesses will increasingly find it easier to succeed.

Business Organization - the Legal Format of Your Business

Businesses can be run as sole proprietorships, partnerships and limited companies. What are the implications of the different formats? Let us say that you are Mary Businessperson, planning to set up a catering business. Which of these forms should you adopt?

Administration in Small Business

By small business administration we mean attending to all the mundane tasks - accounting, personnel and systems - involved in running your small business. These routine tasks mignt not be as exciting as marketing or production operations, but have to be performed to keep the business going.

What Are Business Control Systems?

How do you get on top of your business, instead of letting the business get you down with apparently insoluble problems? Answer: You implement good control systems.