Whether you’re a business owner, experienced manager, or entrepreneur, the way you manage a business has a huge impact on your employees, company culture, and overall success. Across all industries, so many businesses have felt the squeeze of the pandemic. From multiple lockdowns to supply issues and regaining consumer trust, managing a business in today’s economy is tough.
Many businesses are facing new challenges and looking to overcome obstacles as they continue to navigate operations in a post-Covid world. By looking at the fundamentals of business management, we try to understand some of the best management practices you can implement for growth and success.
In this article, we dive into the challenges of managing a business right now and look to the future.
Skip ahead to:
- What does managing a business mean?
- Business management statistics you need to know
- What are the biggest challenges of managing a business right now?
- The fundamentals of managing a business
- 8 business management tips for growth and success
What does managing a business mean?
Essentially, business management is managing, organizing, and coordinating your business activities. It’s figuring out where to direct your resources to complete objectives and grow the business. The reason that this sounds like a huge undertaking is because it’s true. Business management itself includes a range of different tasks like:
- Hiring employees
- Marketing management
- Dealing with finances
- Creating company culture
- Raising brand awareness
The list of small business management tasks could continue. Because business management is so broad, managing and growing any business is difficult. There’s a lot of spinning cogs that need to align to create an effective and productive workforce. Whether you’re an entrepreneur who does everything or a business owner with a team of effective managers, at its core, business management is directing the right people, effort, and resources into the correct place to make the biggest impact.
Business management statistics you need to know
What’s good about business management is that there’s a lot of information out there where you can learn from great business experts and thought leaders. If you look at the statistics as to why businesses fail, you can see that:
- 23% of small businesses fail because they don’t have the right teams in place.
- 14% of small businesses fail because of poor marketing.
- 82% of businesses fail because of cash flow issues.
From an initial glance, it’s obvious that people, marketing, and cash flow are incredibly crucial when managing a business. That’s not to say that these are the only things that matter. One study found that happy employees are 20% more productive than unhappy ones. In a sales environment, happier employees make more sales. As managing a business includes a range of processes and tasks, you can see how the various elements can impact your business in different ways.
What are the biggest challenges of managing a business right now?
It’s no secret that change is in the air. The pandemic has accelerated the adoption of home working, digital initiatives, and the way people live and work. With financial hardships, many businesses are in a grey area of uncertainty as we move into a world that resembles some sort of normalcy. Currently, business leaders are finding a balance between fighting a crisis and looking for opportunities to adapt and grow their businesses.
As small businesses look to recover from the initial shock of the pandemic, new problems continue to arise that face all industries. A report from the National Federation of Independent Business found that 93% of business owners looking to hire found few or no “qualified” applications for positions earlier in the year. Small business owners are struggling to get workers back into open positions like never before.
With many businesses looking to set goals and priorities for the future, some of the biggest challenges of managing a business include:
- Money management
- Shaping company culture
- Creating inclusivity and diversity in the workplace
- Meeting regulations and compliance
- Supporting employee well-being
- Uncertainty of the future
- Leaving brick and mortar to embrace digital-first initiatives
While some of these challenges aren’t new, others are creating new obstacles for businesses. For instance, money management has always been an integral part of managing a business. But with the acceleration and adoption of technology, some businesses are reevaluating their entire business models to meet changing consumer demands and expectations.
The fundamentals of managing a business
It’s easy to feel overwhelmed when managing a business. By bringing it back to the basics, you can dive further into the fundamentals of business management to see where you could improve. Each part of your business plays a role in your overall success and growth. It’s important to review each area as you go to optimize your time and resources.
Your employees and team members are at the core of your business. Without the right talent and management skills, your business could suffer. Human resources include everything from the recruiting process to training and development. It’s not only about hiring employees for a small business but retaining them long-term. Managing your team is about effective communication and creating a company culture that drives engagement and productivity.
Your business operations are all the tasks and processes you do every day to make money. In itself, business operations is a broad term. It covers tasks like resource and supply management, organizing your team, and the day-to-day management of your business finances. Your day-to-day operations keep everything ticking along on a daily level and support your overall business objectives and goals.
Strategic planning includes the direction of business development, creating objectives, and taking a critical high-level view of the business and industry. At this level, it could include creating new strategies to stay ahead of the competition, analyzing certain processes, and making strategic data-driven business decisions.
Finance and bookkeeping
Financial planning and management involve all your decision-making around budgeting, resources, investments, and purchases. It can include your bookkeeping and payroll. Whether you hire a good manager or take the role on yourself, financial management is key to generating revenue and expansion.
Your marketing efforts are another crucial part of managing a business. This part of the business includes creating your marketing strategy, identifying, and nurturing your target audience, and growing brand awareness. In a digital age, your marketing strategy is crucial to attracting and converting customers. Although the precise marketing tools you use may differ from one business to another, an effective marketing strategy is a core pillar of any business.
8 business management tips for growth and success
A successful business requires the perfect combination of flexibility, planning, and organization. While it’s important that you have a fantastic business plan and your product or service has great market fit and demand, making money in business is often much harder than you initially think. Here are eight business management tips for growth and success.
1. Craft your hiring process
The people within your business are crucial to its success. To target, attract, and retain high-quality talent, begin to refine your hiring process. Your employees are a key part of your growth, especially for a startup. A bad hiring decision is not only a waste of resources, time, and energy, but it can have a big impact on the business. When hiring a new employee, think about cultural fit as well as experience and knowledge. The hiring process doesn’t stop when the contract is signed. Instead, think about your onboarding process too, and how you plan to nurture new business employees in the first year of employment.
2. Diversify your income
If the pandemic has taught us anything, it’s that relying too heavily on one source of income can put you at a higher risk of going under. We saw this in many brick-and-mortar businesses that were unable to adapt to a digital initiative and, ultimately, couldn’t generate revenue during a lockdown. Now, many businesses are looking toward the future, and diversifying your revenue streams can minimize risk. The challenge comes in managing a business model that supports different revenue streams in a way that makes sense for your customers and service.
3. Continue to adapt
As organizations continue to adapt to a new normal, finding opportunities to adapt and stay ahead of the competition are key. For instance, having flexibility in your workout environment is now an important consideration for job seekers, with 97% of workers desiring some sort of remote working. This is just one area where it’s clear that adoption to remote working and offering more flexibility as a business could help you attract quality talent. We’ve seen that businesses that can adapt to change often stay ahead of the curve.
4. Leverage data insights
Data analytics and insights give you a deeper understanding of the state of your business. You can access data insights across your business including marketing, employee well-being and happiness, productivity, sales performance, and more. By taking full advantage of the data you have available, you can make data-driven decisions that have a bigger impact on the overall business.
5. Keep an eye on the competition
From a strategic point of view, keeping an eye on the competition and the industry can help you to gain a critical understanding of what you need to do as a business. Don’t be afraid to learn from your competitors’ successes and mistakes, it could provide you with the insight to spot an opportunity in the market. Competitor analysis helps you to understand the strengths and weaknesses of your own business management too.
6. Effectively manage cash flow
Naturally, your cash flow is an important part of managing a business. It may sound like an obvious one, but money management is a huge reason why so many businesses fail. By having a good understanding of your numbers and metrics, knowing how much you need to make to generate income, and creating a simple process for collecting payments, you can begin to effectively manage cash flow. Building a cash reserve is crucial for managing cash flow, especially for a small business. While it’s not always possible to build a huge cash reserve, extra cash can help you if a crisis does occur.
7. Maintain creativity in a virtual environment
Maintaining creativity in a virtual environment is a challenge. You may have a fully remote workforce or a combination of office and home workers. Whatever you’re set up, the likelihood is that someone will be joining a meeting virtually. Keeping those virtual environments creative and productivity flowing is hard. Think about keeping sessions short and encouraging feedback and online collaboration. Continue to encourage employees to get moving, maybe suggest an outside video collaboration session.
8. Switch up your marketing mix
One of the great things about marketing is that you have access to so much data. On top of that, it feels like there’s a new way to market your services every other week. While some marketing channels may not be ideal, others can be very rewarding. We’re seeing the rise of podcast marketing and the continuous expansion of social media marketing. Keep an eye on opportunities to switch up your marketing. Also keep content and creative fresh to avoid ad fatigue, and remain entirely relevant to your target audience.
From inspiring your employees and creating a great company culture to hiring staff and tracking finances, managing a business is hard. When you combine the added pressure of living in a pandemic, business owners and entrepreneurs are in a relatively unknown time. That uncertainty of the future and changing consumer behavior mean that businesses have to continue to adapt and find opportunities to grow and succeed.
As a business owner or entrepreneur, there’s a lot to think about daily. By continuing to learn and finding ways to manage your business more effectively, you can make decisions that have a bigger impact on your company.