16 Small Business Management Tips Every Small Business Should Know
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Small business management is an umbrella term that encompasses all the processes entrepreneurs use to manage businesses. The number of skills involved in managing a small business means company owners and managers need to have a solid knowledge base about many business management topics. This includes the need to make business decisions, such as hiring and managing employees, managing financial reporting and accounting records, and finding funding to buy resources and cover operating costs during the start-up phase.
What is the Definition of a Small Business?
According to the Small Business Administration (SBA), in general, a small business usually has fewer than 1,500 employees and no more than $41.5 million in average annual receipts. However, the qualifications for “small” also vary based on your industry. Each industry has different “size standards” set by the SBA.
What is Small Business Management?
Small business management is the process of coordinating and aligning all of an organization’s aspects to accomplish the company’s objectives and goals. As a small business owner, effective management means overseeing your employees, handling finances, and having the final say in all products or services.
Benefits of Small Business Management
There are numerous benefits for entrepreneurs who engage in effective small business management practices, including:
- It provides a sense of direction: Small business management, when done well, helps each stakeholder in the company stay focused on the big picture and working toward success, as defined by the small business owner. Getting everyone on the same page is a key benefit of small business management in practice because, when the leader presents the vision for the company, stakeholders understand why the business exists and where it’s going. This helps guide day-to-day processes and encourages a healthy work environment for employees and management.
- Understanding the process of management and goal achievement go together: Many entrepreneurs enter a business area for the love of what they’re doing. That may mean there’s a lack of business training and experience. Learning about the management process gives entrepreneurs the opportunity to apply the process to their own businesses. Through exploring the mechanics of business principles, such as acceptable accounting processes, business financing, and marketing, entrepreneurs gain a deeper understanding of what it takes to achieve company goals.
- It speeds up the decision-making process: The ability to quickly change the course of a project that isn’t working out is another advantage of having a strong understanding of management for small business owners. It boils down to maintaining flexibility and choosing the right management style for you and your business. If the market changes or there’s a flaw in the marketing plan, an entrepreneur who understands management principles is able to assess the situation and switch directions quickly. This helps business owners avoid time and money lost to pursuing business practices that aren’t adding to the company’s bottom dollar.
- It supports better alignment with goals: Understanding and using management principles to run a small business helps owners and employees to align goals with activities. Every decision when running a business can be made based on the desired outcomes, and that helps when it’s time to coordinate activities that need to be done for the business to succeed. This applies from the earliest stages of setting goals and sharing the vision with internal stakeholders and goes through each phase of product development and directing the efforts of employees.
- Transparency with your team: Part of small business management is keeping all your employees updated and informed about what’s going on behind the scenes. Transparency regarding financial information, executive decisions, and company news can facilitate teamwork and make your employees feel more trusted and respected. In a transparent workplace, employees will sense that you recognize and value their strengths, capabilities, and contributions.
Easier to show appreciation: Long-term success comes from more than just a good marketing strategy – it also depends on your employees. If your employees aren’t happy with their environment or constantly feel overwhelmed, your company might experience higher employee burnout and turnover rates. Properly managing your small business can help you show your team appreciation since, when employees know that you appreciate their work, they’ll likely feel more engaged and motivated.
Tips for Small Business Management
Whether you are new to business or have been in business for years, there’s always room to pick up some new management tricks to support success. There are a number of tips for a new entrepreneur selling a product or service to try. These helpful business management tips include:
- Focus on relationships: Strong relationships are at the heart of building a business, and it typically falls to the entrepreneur who starts the business to manage them. Business relationships a manager needs to support include internal ones, such as relationships with employees, and external ones, such as relationships with suppliers, clients, and financiers. When relationships fall by the wayside, it tends to get harder for a business to grow or even to maintain an existing level of growth.
- Use software to automate the operation: Tasks such as employee payroll and accounting can be simplified by using software programs that automate aspects of certain tasks. When using these types of software, the manager plugs in some of the basic information, such as the number of hours an employee works, and the software calculates and records the results. This saves time that would otherwise be spent calculating details, such as taxes and employee contributions to insurance premiums.
- Set goals and delegate responsibilities: Avoid the trap of morale-crushing micromanaging by setting goals for each department and each employee. Then, delegate the responsibility for completing assigned tasks to each worker. Get feedback from the employees to ensure they feel confident of being able to achieve the assigned goals, then check in from time to time without hovering. This shows trust in each worker’s ability to succeed while maintaining a presence to help out if asked for assistance.
- Know when to delegate: Just as important as delegation is knowing when to distribute those responsibilities. As your business grows, so too will the amount of work that needs to get done. While you might be inclined to do it all yourself, this approach is neither productive nor efficient for your business (nor good for your mental health). That’s why managing your employees and letting go of full control is so important. Not only will you avoid burnout, but you’ll also give your employees the chance to learn new skills. They’ll grow from their new tasks – and so too will your company.
- Measure performance regularly: Business records include data about how much a company is spending and earning from every possible viewpoint, so it makes sense to check out how the numbers correlate to profits and losses. Making business decisions comes down to understanding how specific actions affect company finances. The information gained from performance metrics helps a small business manager know what efforts to expand upon or move away from to achieve goals.
- Evaluate and brainstorm: With data from measuring performance in hand, it’s the ideal time to evaluate what’s working and what isn’t. Apply all information gathered from measuring and insights from evaluating the numbers to a brainstorming session to find fresh ways to ramp up performance.
- Leverage information: Leveraging the information you collect is linked to measuring performance metrics and evaluating ways to those metrics fall short. Leveraging is the step where new ideas and plans are set in motion to replace things that aren’t working as well as desired.
- Educate employees on key tasks: While it may feel hard to share some key information with employees, there’s a valid reason to do it. Make sure employees know how to do key tasks, so they’re able to keep the business functioning even if you’re off sick or away at a meeting.
- Systemize the way the business operates: When an aspect of the business is functioning well, do a motion study and record the steps required to repeat the success. With this type of recordkeeping in place, it’s easy to replicate the procedures that work well. This provides an invaluable aid if someone is off sick or it’s time to bring in more employees to increase production and grow the business.
- Schedule meetings with yourself: Managing a small business often means a hectic schedule of meetings, meetings, and more meetings. Amidst this calendar chaos, take some time to schedule a meeting with yourself. When you set aside private time for yourself, you’re able to review your own goals (and set new ones), reflect on your performance, and just take a breather from the hustle and bustle of the office.
- Avoid multitasking: Although you may feel that multitasking is more productive than working on one project at a time, multitasking may negatively impact the quality of your work. Taking on too many things at once can cause you to make errors, work overtime, and burn out more quickly. Instead of handling all your tasks at once, organize them into different categories and rank them by priority.
- Pay your taxes every quarter: Small businesses, especially those that don’t automatically withhold taxes from employees’ income, will need to pay estimated quarterly taxes. Remember to write down the date of each payment due date so you can plan ahead and avoid the risk of forgetting.
- Track your time and identify your biggest time-wasters: Managing your time efficiently can be the key to getting a project done on time and on budget. Instead of rushing to get a task done right before your deadline, track your time so you can see just how long it takes to get each task done. Use your findings to determine the tasks on which you should spend more or less time. Identifying these big time-wasters can help you plan to spend less time on them while also prioritizing key tasks.
- Beware of “shiny object syndrome”: Looking for ways to improve your business is always encouraged, but only if you’re not constantly jumping from one strategy to the next and making it hard for your team to keep up. This frequent change in operations is often known as “shiny object syndrome” (SOS), and you should avoid it. Under SOS, each time an employee adapts to a strategy, they must discard it for something new and better. You can probably see why this model makes it harder for employees to focus on what they’re doing and become exhausted.
- Don’t book your entire day: Packing your entire day with appointments, meetings, and other tasks can leave you overwhelmed and stressed when something unexpected comes along – and let’s be honest, something always comes along. It’s almost impossible for your day to go exactly as planned, and if your schedule is at full capacity, you can’t accommodate these changes. That’s why, when booking your day, you should leave 20% of it open so you aren’t scrambling to find time for unexpected last-minute tasks.
- Don’t lose sight of the bigger picture: Regardless of whether your business is just starting out or you’ve been around awhile, it can be easy to feel discouraged in moments of slower progress. However, if you aren’t thinking about the bigger picture – namely, slow periods may precede fast ones and vice versa – you may feel unmotivated to address the slowdown. Remember that all successful businesses go through slow periods – the struggle doesn’t always last, and you’ll be back on track soon.
- Effective small business management helps a company operate successfully to achieve goals. It also supports worker morale because everyone in the company understands the goals and plans to achieve them.
SmartBizTeam. “16 Small Business Management Tips Every Small Business Should Know,” Business Owners, 21 April 2021, SmartBiz,