Growing a small business isn’t easy – timelines are hectic, fires pop up just as quickly as you put them out, and some months you’re worrying about making payroll. Whether you’re employed at a small business or running one, managing a small business requires a fair deal of planning and investment.
So if you’re just getting started with small business management, or you’re looking to improve your existing processes and functions, you’ve come to the right place. We’re going to explore the various dimensions of small company management before covering some tips you can use to improve how your own business operates.
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What is small business management?
Small business management entails managing the resources, employees, processes, finances, customers, and relationships of a small organisation (which typically includes businesses with workers in the 2-250 range).
Managing a small business is different from operating an enterprise, in several ways. While smaller businesses are typically leaner, with less red tape and hierarchies, they might operate on tighter budgets (making cash flow management really important) with less structure.
5 reasons small business management is important
Management isn’t exactly the most exciting part of running a small business–but it’s crucial. And here’s why.
1. Improve productivity and efficiency
Smaller businesses have the advantage of being lean – team members are empowered to make decisions and take quick action. But if you don’t have the right systems in place, this flexibility can fuel problems.
For example, if your employees make snap decisions without enough context, their judgment might be poor. And if your team members lack visibility into each other’s work, don’t have clear processes in place, and aren’t trained to operate in a structured way, your company’s productivity will suffer.
That’s why small business management is so important – to make sure team members are sharing knowledge, making decisions with the right context, and operating in a predictable way.
2. Deliver better customer experiences
When a prospect reaches out, wanting to learn more about your product or services, does your team have a clear process for wooing them?
When a customer reaches out with a problem, does your team have a structured process for addressing their concerns, providing them with a resolution, and ensuring they’re satisfied with the outcome?
And when a customer initiates an interaction with one team member, and follows up with another, does the second team member have enough context to deliver a consistent customer experience?
If you answered “no” to any of these questions – or if you don’t have systems, in general, to provide customers with a consistent experience – then your customer experience is at risk. When you have clear processes in place, you can provide customers with consistent, satisfactory experiences, helping you capture new business and retain loyal customers.
3. Cash flow and forecasting
Managing cash flow is one of the biggest challenges that small businesses face – SMBs may struggle with cash flow planning, estimating budgets, tracking expenditures, forecasting cash flow, etc. Since cash flow is essentially the lifeblood of your business, it’s an area that you really can’t neglect.
So, SMBs looking to thrive need to improve their cash flow management by adopting tools and systems to manage cash flow, forecast needs, track expenditures, and operate within defined budgets. Holding your employees accountable is also vital – make sure your project managers aren’t overspending, and that your finance team is taking the time to analyze previous cash flow trends in your company and make forecasts accordingly.
4. Optimizing resource allocation
For B2B businesses especially, all accounts and projects are not equal – you’ll inevitably have some accounts that are worth much more than others, and some highly profitable projects. So when you’re managing resources, you’ll want to allocate them sensibly to drive business goals forward.
Are your best people on your most profitable projects? Are team members playing to their strengths? Have you allocated more resources and higher budgets to projects with greater ROI? And, just as important, are you minimizing waste and identifying projects that aren’t profitable?
5. Build a scalable foundation for growth
To grow your business sustainably, it’s crucial to have a scalable foundation in place – which includes having the processes, tools, operating standards, documentation, and a culture of accountability.
Otherwise, when you start scaling your operations, you’ll face problems like:
- Inefficient processes
- Uncertainty in teams – people won’t know what to do in certain situations
- Bottlenecks in knowledge sharing – team members won’t know where to look for the information they need
8 Tips for improving your small business management
Looking to improve how your business is managed – and how it operates? Here are seven tips that can really help you out.
1. Unite your business with common goals and objectives
Goal setting gives your team direction, instils a sense of accountability, and helps you drive business goals. The objectives, key results (OKRs) system is one of the most common methods for tracking goals and objectives – and almost 60 % of businesses use it to drive transformation, while 100% use it to drive business strategy.
While you can adapt the OKR system to your business and the way your team members work, the gist of it is:
- Your company’s leadership devises core objectives to drive business goals forward – these may be centred around revenue, landing new business, cutting costs, growth and expansion, etc.
- Different teams/departments will then have their own objectives that relate to the company-wide objectives. For example, if your CEO sets a revenue target that’s x4 your existing revenue, your sales team may have an objective of X new contracts to sign per quarter. And to help sales close these new deals, your marketing team might have an objective of generating X warm leads per quarter.
- Your objectives will have related key results and dependent key results. These are the results your teams will need to achieve to help the company secure its objectives.
2. Implement processes and document workflows
For a business of any size to function effectively, team members need to know what’s expected of them, how they should tackle new projects, and how to share (and access) knowledge. For example, when you sign a new deal, which team needs to onboard them – and what does your onboarding process entail? Or, when a project isn’t profitable, what are the steps for renegotiating terms with your client?
As your business grows, it’s important to have clear processes in place for every operation – that includes processes for managing clients and projects, resources, personnel, finances, contract relationships, and anything else relevant to the way your business functions.
3. Invest in technology and automation
Thanks to the rapid growth in business software, you’ll find solutions and tools to help you enhance nearly every business function. Whether you need to manage client relationships or your business economics and budgets, document and share knowledge, manage projects and track progress, there’s software to help you out.
Moreover, software solutions can also help you automate repetitive, time-consuming tasks. Like sharing updates, onboarding new clients, assigning responsibilities, migrating data across platforms, forecasting, and more.
If you use a business management solution like Caflou, or rely on a third-party automation software like Make, you can build custom automations to meet your business’s unique needs.
Tip: Check out these 13 tools to automate your small business
4. Leverage reporting and analytics
Earlier, we mentioned how:
- Cash flow is the lifeblood of your business, but many small businesses struggle with managing it.
- Projects vary in their profitability, and some accounts are worth more than others. Hence, resource allocation is really important.
Keeping these points in mind, it becomes clear just how important reporting and analytics are. Analytics provide insights into:
- Productivity. How much time are team members spending on a given project? What tasks are taking up most of their time?
- Profitability. Which projects are most profitable?
- Expenses. Where is your cash flowing out? Where is it coming in from?
By tracking important metrics, you can improve your company’s productivity, reduce waste, and make sure your teams are focused on the most profitable projects and accounts. Scheduling regular reports (and automating them where possible) also ensures accountability and helps you maintain visibility into your business operations.
5. Don’t skimp on financial management
While we’ve stressed the importance of good cash flow management, there are other areas of financial management that are important for your business, too. This includes:
- Client invoicing. Make sure you send your customers invoices on time to avoid delays, and that the invoices are tied to the relevant offers/timesheets. A business management solution like Caflou will help you automate client invoicing altogether.
- Costs and profit. Track how profitable your projects are, how much revenue each employee and client bring in, etc.
- Business economics. Track your expenses and income, and use predictive analytics to forecast your cash flow, VAT, and overall financial health.
6. Work on your recruiting and onboarding processes
Having great team members is necessary to grow your business, and building the right team starts with improving your recruiting and onboarding processes. According to research from Enboarder, a bad hire can cost you 90-200% of their annual salary, and although great onboarding experiences have been linked to employee retention, around 88% of employers aren’t delivering a good onboarding experience.
So if you’re looking to improve your workforce, you’ll want to start with recruiting and onboarding. Consider:
- Crafting a role-specific recruiting process. Use initial screening to narrow down your applicants, and then try using merit-based assessments (e.g., coding interviews for tech roles, project work for management roles, etc.) to vet candidates for important skills.
- Increasing your talent sources. If you aren’t attracting the talent you want, it might be time to explore new sources. Look into recruiting on platforms like LinkedIn, consider hiring fresh graduates from universities, set a booth up at a job fair, or try implementing an employee referral program.
- Design a formal onboarding experience. According to Career Builder’s research, more than one-third of businesses don’t have a structured onboarding process. If you haven’t put one together, ask your HR team to look into it.
A formal process should walk the new hire through their role and expectations, familiarize them with your company and its structure, provide them with training for any tools or systems they need to use, etc.
7. Cultivate a positive, trusting workplace culture
Research has revealed a strong correlation between employee engagement and performance – in other words, if you keep your team members engaged and fulfilled, they’ll do better work. So it’s really important to invest in building a positive work culture, which entails:
- Empowering team members. Avoid toxic micromanagement and empower your team members to take responsibility for their tasks. Provide them with the tools and support they need to excel, but don’t get in their way.
- Create a psychological safe space. Make sure your team members feel valued and that their input is properly considered and received well. Encourage people to respect each other and to share feedback in a constructive way.
- Make collaboration and communication seamless. This involves putting the right infrastructure in place and defining standards for communication.
- Invest in team building. Don’t neglect the importance of meetups, team activities, and trust-building exercises.
Ultimately, iteration is key to building a successful business – you’ll need to improve continuously by analyzing your existing systems, operations, and structures and tweaking them as you grow. You’ll inevitably find inefficiencies in processes, misallocated resources, wasted budgets, and time-consuming tasks that could be automated – what’s important is to keep making improvements.
Manage your small business with Caflou
Ready to radically improve your small company management? Here’s how Caflou can help you out.
1. Manage projects, teams, and timelines
Caflou lets you manage projects, track timelines, allocate resources, and more. Learn which accounts are most profitable, how much time you’ve spent on each project, which projects are running late, etc., with a fully integrated system:
2. Get a 360-degree view of your customers and business
Manage your whole business – including your processes, clients, finances, resources, and people – in one fully centralised platform. Caflou is a complete business management solution for managing all essential business functions, from client invoicing to resource allocation and managing cash flow.
3. Automate mundane, repetitive tasks
Use Caflou’s built-in workflow automation function to automate your repetitive, mundane tasks, saving time, reducing error rates, and freeing your employees to focus on more valuable work. For more complex automation needs, you can use our integration with Make.
Ready to streamline your business management and grow your company to new heights? Sign up with Caflou today – and get started for free.