It began when you started making lampshades for fun. Then, your lampshade-themed Instagram account gained millions of followers, orders rushed in, and you soon debuted a new product line of throw pillows. Suddenly, you’re running a small business. Your crafting skills are already on point, but turning your venture into a successful company will require learning a few new tricks. Brush up on the essential elements of business management to begin building your empire.
How to manage a business
- Clarify your vision
- Draft a business plan
- Figure out your finances
- Budget for growth
- Assemble your team
- Practice good people management
- Emphasize communication
- Consider the customer
- Hone your marketing strategy
- Assess risks
- Stay nimble
- Streamline your operation
- Measure your performance
- Celebrate success
- Learn and grow
A two-person tech startup operating out of a garage and an international consumer-goods maker have this in common: They both need good management to succeed. Small business owners and senior executives use the same fundamental principles for guidance. Here’s how to manage a business:
1. Clarify your vision
What is your business idea, and what will your company achieve? If you’re starting a new business, drafting a mission statement or laying out your vision may help clarify your company's values and objectives. Expand on this by determining what success looks like and establishing broad goals. Goals are something to work toward because they provide motivation and direction. A clear mission creates a moral framework for your company. Referring back to the mission statement can aid in making decisions down the line.
2. Draft a business plan
A mission statement and goals depict the broad outlines of your company. A well-written business plan offers a roadmap for how you will achieve those goals. Business plans can help attract investors, but even if you aren’t planning on showing it to anyone, developing a plan will encourage you to think strategically. Business plans typically include market analysis, financial goals, and competitor research. Online resources can offer new business owners valuable insights into how to draft a business plan.
3. Figure out your finances
If you’re starting your own business, establishing a financial plan will be at the top of your to-do list.New businesses face start-up costs, and you’ll need to make sure you have enough money to get things off the ground. Initial costs can include purchasing materials, leasing office space, and hiring employees. Applying for a loan from a government agency like the Small Business Administration (SBA), seeking investors, and self-funding are all potential options for obtaining financing.
Once your business is running, maintaining meticulous financial records will help you manage money effectively. Consider using accounting software to keep track of financial information including business expenses, cash flow, and revenue.
4. Budget for growth
As your business grows, expenses will climb. Consider this example: An ecommerce company that sells ceramic houseware goods has rapidly increasing sales. The company orders more clay, trains new ceramicists, and upgrades to a high-capacity kiln to fill more orders at once. These are investments in growth, but these expenses can mount quickly. When developing a budget, allocate more funds to high-priority initiatives and aim to factor in expansion costs.
5. Assemble your team
Managing a business often involves hiring employees or working with partners. If you’re building a team, seek out passionate individuals who believe in your company’s mission. Invest in employee well-being by offering competitive compensation and robust employee benefits to help attract high-quality candidates.
Larger companies may offer incentives like training programs to facilitate career development or equity packages. For high-growth companies, establishing a human resources department can make the hiring and onboarding process faster and easier. Depending on your location and company size, there may be legal regulations related to employee benefits. Check benefits and pay obligations on a federal, state, and local level to make informed decisions.
6. Practice good people management
If you’re leading a team, strive to provide them with the support they need. Different people may prefer different management styles—taking the time to get to know all your employees can help you understand their needs. Once they’ve been trained, give employees enough space to do their jobs—no one likes a micromanager.
7. Emphasize communication
Corporate culture flows from the top down. By practicing effective communication, you may set a positive example for your teammates. Managers can foster a culture of communication and transparency by hosting town hall meetings, creating a question-and-answer forum, and sending periodic all-staff emails with important updates.
8. Consider the customer
Focus on creating an excellent customer experienceduring every step of the sales process. Conducting market research can help develop a deep understanding of your target audience. In addition to their relationship with your product, research can reveal information such as the other brands your customers like, what they do in their free time, and demographic statistics. This data can help you improve customer interactions. Don’t forget about service—providing excellent support can help create loyal customers.
9. Hone your marketing strategy
Businesses use marketing to communicate with potential customers and generate excitement. A comprehensive marketing plan includes a budget, channels (social media, email marketing), brand guidelines (language and design), formats (audio, video), an analysis of the competition, and crucial metrics (conversion rates, engagement). The goal is to make your product appealing and memorable. Your marketing team can use market research to target your customer base with specific messaging that resonates on a personal level.
10. Assess risks
Analyze potential threats to your business and develop a strategy for prevention. Business risks vary depending on your industry, but common concerns include cybersecurity, regulation, supply chain disruptions, natural disasters, and reputational damage. Implementing a solid security system can reduce the risk of cyberattacks, but not all of these threats can be avoided. Establish a contingency plan for addressing any anticipated problems.
11. Stay nimble
There comes a time in every young business’s life when things get a little messy. Operational errors, recessions, and market upheavals can all pop up unexpectedly and may have a negative impact on business. Staying flexible can help your business respond to these situations. If an external factor disrupts your business plan, try to identify opportunities to pivot or adapt.
12. Streamline your operation
Achieving operational efficiency can save time and money. Automation, information technology upgrades, and identifying workflow bottlenecks are all strategies for increasing efficiency. Examine your operation to determine if there are any technology solutions for important tasks and business processes to automate. Make an effort to spot redundancies and optimize your workflow to keep your business running smoothly.
13. Measure your performance
Establish a system for evaluation and a regular reporting schedule. In addition to tracking progress toward your goals, performance data can help identify strategies that are working or falling short. With this information, you’ll be able to make informed decisions about which tactics to continue and what to try next. Many businesses use KPIs, or key performance indicators, to evaluate success. Common KPIs include cost per customer acquisition, revenue, customer satisfaction, and social media engagement. The best business metrics to track will vary depending on your industry.
14. Celebrate success
Make an effort to recognize significant milestones. Whether you choose to host a pizza party or simply send a heartfelt email, showing appreciation for your team is a great idea. Recognition proves that you’re paying attention to their hard work, and it can positively contribute to employee satisfaction.
15. Learn and grow
Develop your management skills as your business grows. Invest in your own professional growth by learning from others, researching market trends, and seeking feedback. You can also offer professional development opportunities to employees, like access to courses, conferences, and mentorship programs.
How to manage a business FAQ
What are the four Ms of business?
In business, the four Ms refer to money, manpower (or worker power), machinery, and materials. A business requires all of these elements to run smoothly.
Why do businesses fail?
Large and small businesses fail for a wide variety of reasons. Common causes of business failure include a lack of demand for the product, poor planning, financial mismanagement, and legal issues.
How hard is it to manage a business?
Managing a successful business is never easy. The complexity of business management can vary based on factors such as the size of the company, the industry, and the strength of the competition.
What skills do managers need?
The best managers have diverse skill sets. Business leaders should possess strong leadership qualities, time-management skills, problem-solving tactics, and be effective communicators, among other traits.