When starting a startup, one must be aware that business management will become increasingly complicated as the months go by. Indeed, if in the beginning it is possible to perform virtually all tasks alone (also in order to keep costs down), as the business expands it becomes prohibitively expensive to maintain direct control of every management aspect. Not only that, when the startup is well established, taking on all the responsibilities could be a drag on the growth and development opportunities of the company itself.
For all these reasons, you need to keep in mind that while it is true (and it is) that knowing how to run a business yourself is important, it is even more important to know how to put together a plan that highlights which skills you possess and which you do not, so that you can then delegate some responsibilities.
In this guide devoted to the best practices and strategies to adopt for effective business management, you will discover how to optimize resources and maximize the success of your business.
What is business management
Of course, it is first important to clarify what business management is. In this regard, very suggestive (and, at the same time, well explanatory) is the definition of business management found by Ben Horowitz:
“Business management is the art of balancing dreams and reality, ambitious goals and limited resources.”
From a more purely technical point of view, business management is defined as the process of coordinating and organizing all the operations performed by a company for the purpose of achieving its ultimate goal (producing a profit). But what, specifically, are these operations? You are about to find out in the next few lines.
Key components of business management
Broadly speaking, the basic operations for business management can be grouped into 4 groups:
- the financing transactions, through which the company obtains the capital (its own or third parties) needed to carry out its business;
- investment operations, through which, once capital is obtained, the inputs needed to carry out the activity are purchased;
- the technical/economic transformation operations, by which, combining the various factors, the production process is put in place;
- disinvestment transactions, which consist of the sale of goods or the provision of services.
Strategies for improving business management
Now that you know what is meant by business management, you also need to know how to run a business effectively. The “secret” is to know (and practice) some precise strategies.
Continuing education and updating
Study, study and more study: this is the first strategy we feel like advising you if you want to run your business effectively. It doesn’t matter if you feel that you already have sufficient business management skills or if you are already satisfied with how your business is doing: the business world is constantly changing and there is always something new to learn or something that you can improve.
Training, however, also means staff training: growing digitization, in fact, requires that all workers in your startup be ready to use the new technologies offered by the market. Otherwise, hiccups in business management will always be just around the corner.
Learning to delegate tasks and responsibilities
We pointed this out at the beginning of this guide: as a company evolves and its business grows, being able to identify the right people to whom to delegate certain responsibilities becomes crucial. Often a startup does not have enough budget to build a full team of managers, but it is a good idea to hire one or two key people to manage the crucial areas and, then, as the months go by and as the company expands, grow the team of managers as well, so that each area can be covered.
For this to be possible, of course, there is a prerequisite, and that is, specifically, to recognize the importance of delegating (and be prepared to do so): don’t be seduced by the temptation to concentrate all in your own hands because this is (perhaps) only possible when the company is small and taking its first steps. If you can find the right people to whom you can delegate some tasks and responsibilities, you can focus your attentions and efforts on the most important activities.
Motivating the team
Delegating some tasks also has another great advantage: it gives you the chance to empower your team members, rewarding them and increasing their skills. Motivating the work team is very important: offering employees opportunities for professional growth is, however, only one way to do this. You could, for example, offer bonuses and other incentives. To find out which route to take to ensure that your entire team is well-motivated and productive, you need to get to know the members of your work group thoroughly. Don’t underestimate this: take your time and figure out the best strategy.
Effective communication in business
In order to run your company at its best, you must also take care of another very delicate aspect: communication. No one will follow your directions if you cannot communicate your ideas and your company vision in a clear and engaging way. Communicating effectively, however, also means knowing how to listen: only by keeping a direct channel open even “inbound” can you win the respect of all team members (and thus make your communications more credible and effective).
Establish short- and long-term goals
Being a leader means not only being able to inspire others, but also making important and difficult decisions when necessary, setting clear goals and defining the actions necessary to achieve them. Goals must be both short-term and long-term: at the strategic planning level, this means that you need to provide for a dual strategy, i.e., a “high-level” one dedicated to long-term goals and a more specific one to be developed on a day-to-day basis to achieve short-term goals.
SWOT analysis and strategic planning
The SWOT analysis, aiming to bring out “internal” strengths and weaknesses but also “external” opportunities and threats, is a very useful tool at the strategic planning level. There is, in fact, a lot of valuable information you can glean from this particular analysis: you may, for example, discover some gaps you were not aware of or new, as yet unexplored possibilities for growth.
Crisis and change management
There’s one mistake you really can’t afford to make when drawing up your business management plan: you can’t fail to account for the unforeseen events that, inevitably, your startup will face. To deal with them in the best possible way, you need to draw up an ad hoc plan dedicated to crisis management.
Developing a crisis management plan
When you have to manage a crisis, every second lost can prove decisive (in a, of course, negative sense). A crisis management plan is what allows you to take timely action to solve problems. How? By identifying crises (and, more importantly, the most appropriate responses to handle them) even before they occur, so that when it turns out to be necessary, everyone will know whether and how to intervene.
Adaptation and flexibility in situations of change
To lead your company to success, you must be prepared to redefine its structure according to new needs. Adaptation and flexibility (not coincidentally) are among the cornerstones of proper business management: generally, companies have a function-based structure, in which the business is divided into functional areas with a manager at the head of each, but in some areas and times a team-based structure (for example, when a problem needs to be handled promptly) or a network structure (more agile and decentralized, particularly suitable for startups) may prove more useful.
Role of technology in business management
We have already mentioned the importance of harnessing technological innovation for the purposes of running a business as optimally as possible, and we cannot fail to devote a specific paragraph to this, now that technology is a key ally for entrepreneurs.
Use of software and digital tools
It is important for you to know that if you want to improve your business management skills, all you need to do is choose one of the many management software programs available on the market today. Tools of this type allow you to manage a large number of operations in an automated, simple and fast manner. Not only that: in addition to speed, these systems also ensure accuracy. By minimizing manual operations, in fact, you also reduce the possibility of making errors in calculation or data entry.
Effective business management: now it’s your turn
Having reached this point in the reading, you have no more excuses. Now it’s your turn: you have all the theoretical skills to run a business effectively, and you know well how to translate them into practice. Don’t forget, then, that you can always use software to make running a business even easier.
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