Small Business Management: An Extensive Guide

Small business management refers to aligning and coordinating all aspects of a small business, whether it’s managing your employees, suppliers, business finances, its roadmap, or performing your daily tasks.

Managing a small business presents some unique challenges for the owner. Apart from knowing the basics of small business principles, you must also know financial management, human resource management, and the laws and regulations related to your business.

Key Takeaways

• Due to their size, small businesses must ensure they hire productive and competent employees
• Successful small business owners must learn to master the art of delegating
• A solid business plan sets the foundation for successful management
• The four functions of small business management include planning, organizing, leading, and controlling
• Small business owners must learn to become proficient in several different domains (e.g., marketing, accounting) to run an effective business

What this article covers:

What Is the Definition of a Small Business?

What Is Small Business Management?

Why Is Small Business Management Important?

What Are the Most Important Skills for Managing a Small Business? 

8 Tips for Managing a Small Business 

What Does a Small Business Manager Do?

Conclusion

Frequently Asked Questions

What Is the Definition of a Small Business?

The Small Business Administration (SBA) usually considers a company with fewer than 500 employees to be a small business. Small businesses are typically able to apply for government support. According to the US Census Bureau, about 99.7% of all companies in the United States are small businesses. 

Apart from the number of employees, the SBA uses other factors to determine whether a company is a small business. For example, is the business headquartered and operated in the U.S., is it a minority player, is it independently owned, is it a profitable venture, etcetera.

The reason why businesses are classified as small business is that the management and operational issues of these businesses differ vastly from large corporations. By defining themselves as small businesses, companies can win contracts and get business loans from the government. A business can also get access to tools that can help it compete against larger businesses.

Unlike large corporations, small businesses have limited budgets, far less bureaucracy, and may be catering only to a regional geographic area. They’re often focused on providing high-quality customer service and using creativity and innovation to create better products and services.

What Is Small Business Management?

Small business management refers to all aspects of running a successful business, such as accounting, employee management, product development, and much more! 

Since every small business is different, FreshBooks Payments let you meet your business’s specialized needs. Whether you’re looking to accept payments or automate your payroll process, our products are built to help you ditch the hassle and get you building the business of your dreams. Click here to sign up for your free trial today. 

Why Is Small Business Management Important? 

As every entrepreneur knows, successfully managing a small business is the bedrock for long-term success. Small business management, in contrast to operating a larger business, has its own unique set of challenges that make it a crucial skill to learn and master.

For example, one key reason why small business management is important is because it offers owners and leaders a different lens through which to view their commercial concerns. More specifically, it takes into account the fact that small business owners are much more likely to be in direct contact with their employees, thereby necessitating strong interpersonal skills and on-the-fly problem solving. 

In addition, a small business mindset can put you ahead of the curve when it comes to saving time and automating those tedious tasks that pull you away from your business goals. Looking for ways to save small amounts of time can add up to massive returns both on your time and your money. Unlike management advice meant for large corporations, a small business mindset takes this factor into account to help owners find success.

What Are The Most Important Skills For Managing A Small Business?

Small business management requires a unique set of skills for success. While grit, determination, and hard work are invaluable, having a keen eye for time-saving solutions is also helpful.  

Imagine shaving fifteen minutes off your daily task list each day: By the end of the year, those minutes add to multiple days’ worth of time savings. Hard work counts, but so does long-term, solution-focused thinking. Our suite of products here at FreshBooks helps you scrape back your time and simplify small business management so you can find your success.

8 Tips for Managing a Small Business

From creating a business, determining funding requirements, managing employees, overseeing marketing and advertising, and managing your own time, small business management involves coordinating all aspects of the company to ensure that it keeps growing and achieves success.

What follows is a detailed listing containing ten small business management tips to put you on the pathway to success:

Create a Business Plan

To create an effective business plan, outline your business goals and objectives and provide a succinct description of your business and the products or services. Include the details about the market you’re about to enter, your marketing and sales plans, and your financial projections.

As a small business manager, you’ll want to review your business goals regularly to see what’s changed, what’s been achieved, and what needs to be revamped.

Separate Your Personal and Business Finances

Since the taxes for you and the business are calculated separately, it’s necessary to open separate personal accounts that are designated for only business transactions.

Determine Funding Requirements

If you’re starting a new business, funding the business’s operations is the topmost priority. Whether you’re opting for personal investment, angel investment, business incubators, bank loans, or government grants, it’s essential to familiarize yourself with the advantages and disadvantages of these funding sources as well as the criteria they use to evaluate the business.

Hire the Right People

If you want your business to thrive, hiring motivated, high-energy trainable people who are looking for success rather than making a quick buck is important. As a small business owner, you need to know how to retain valuable employees by offering them perks such as flexible schedules, happy hours, and team-building activities.

Train Your Employees

Even if you hire the most innovative people in the world, it’s going to take some time for them to understand the ins and outs of your business and figure out how to put things together to achieve long-term goals. This is why training your employees well is vital for a small business. Create a training plan that makes your employees feel more competent and empowered in their jobs.

Keep Track of Your Finances

When you start a new business, keeping track of the money coming in and going out of the business is easy. However, this task can become a headache as your business operations grow. This is why you should hire a full-time, on-staff accountant or simply invest in an easy-to-use accounting software that helps you keep track of your finances and save your precious dollars. 

Invest in Marketing

In a world where brands are constantly competing for consumers’ attention, small businesses need to force their way in front of people, show them something valuable and somehow have them listen to their pitch. Research the different small business advertising and marketing options before choosing a marketing model that works best for you and the business.

Learn to Delegate

Time management is crucial for small business owners. Managing your time involves delegating work to those awesome employees you’ve hired and trained–especially tasks that you don’t enjoy doing or those you know you’re not very good at.

What Does a Small Business Manager Do?

In a small business, the owners either manage the business themselves or hire a business manager to handle business operations.

Managing a small business entails having a variety of knowledge or understanding relating to business topics. It’s the manager’s job to oversee the employees’ activities, hiring, training, and evaluating new employees and ensuring that the business is on the right track to achieving its financial goals.

Listed below are some of the key responsibilities of a small business owner:

• Oversee the daily activities of employees
• Recruit, hire, and train new employees
• Ensure the day-to-day operations are running smoothly
• Manage inventory and make purchase decisions
• Handle production, marketing, and administrative functions
• Design and implement the company’s budget
• Set sales goals and ensure that the team is on track to achieving them
• Ensure the financial goal of the business are being achieved

Managing a small business means managing all aspects of your business, including your time, employees, and other resources, as effectively as possible. FreshBooks Project Management software can help you learn innovative ways to manage your time and make your business more efficient.

Conclusion

Effective small business management is the cornerstone of any successful enterprise. Every small business realizes, sooner or later, that organization is the backbone to ensuring success in its field of business.

By reading this short article, you’ve gained a powerful understanding of some core aspects of small business management, such as hiring, marketing, and finances. You’ve also learned a few handy tips to help your business excel in today’s crowded marketplace. Keep honing your skills and learning; there’s no limit to what your small business can achieve.

FAQs on Small Business Management

What are the four functions of small business management?

The four functions behind small business management are planning, organizing, leading, and controlling. Each function is crucial in keeping your entrepreneurial excursion pointed towards its north star.

What makes a small business successful?

Success in small business involves many skill sets, but one of the most valuable is organization. Knowing exactly where and how to accomplish different tasks (payroll, estimates, invoicing) removes some of the most significant barriers to unleashing the full potential of your own business. 

What are the types of small business management?

There are many different aspects to small business management. Here’s a quick list of some of the most prominent:

• Marketing Strategy
• Strategy
• Cash Flow
• Customer Service
• Financial Management
• Business Relationships
• Employee Performance
• Quality Assurance
• Team Culture
• Information Technology

What types of small businesses are most successful?

In the world of small business, there is no one-size fits all solution. Every company faces unique challenges while also being poised to capture opportunities specific to its market niche. Our suite of products here at FreshBooks helps your business find its own version of success by providing you with time-saving tools that cut down on hassle, save money, and make organizing a breeze. 

What is the most important factor in small business?

Each small business must grapple with its own unique business environment. With that said, the most important factor in good small business management often comes down to organization. 

Invoicing, expense reporting, and receipt tracking are all time-consuming activities that can easily overwhelm new business owners. Successful businesses know that the automation of these daily tasks means more time for perfecting your product.

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