You’ve almost certainly heard the analogy of a business as a machine, and that is an apt way of thinking of your small business. While it can be reductive to an extent, it helps to think of your company as a machine with many moving parts. Such machines are often delicately tuned, and small errors can cause major problems. Managing a business, then, is like being the mechanic that assesses the machine’s functionality and occasionally has to make repairs. Here’s what you need to know.
Finances
The lifeblood of any business big or small is its finances. Your mission statement is to make the most money you can, but you also have to spend money to make money. That means that maximizing your profit margins and maintaining cash flow can make or break small businesses that don’t have the safety net afforded to bigger companies with more substantial budgets. Hiring an accountant early on is the key to keeping your finances under control, because a professional accountant brings some much needed experience to this cognitively demanding aspect of management. For example, you’ll need to optimize your R2R in order to keep accurate, up to date financial records, and that has major ramifications concerning revenue recognition and earnings reports. On that note, reporting your earnings accurately is necessary under federal law, and inconsistent or inaccurate reporting can lead to an audit by the IRS. Financial records form the basis of your business’s strategy, as well, because it indicates specific areas in which changes need to be made in order to improve your profits.
People Skills
While comparing your company to a machine serves a practical purpose, your business is nonetheless fueled by human workers, and it depends on the patronage of consumers. That means that your ability to interact with these people is paramount. Keeping the peace among your employees, for example, will necessitate open and honest communication and some occasional conflict resolution. Employees need to be able to come to you with concerns and questions, so you need to make sure they know that you’re in their corner. Employee morale in general is important, as well, because the moods of your employees have a direct impact on productivity. Therefore, you’ll need to be able to determine the needs of your workers, and that requires getting to know them and listening to them. Along the same lines, customers need to be made to feel valued by your company, and that can mean stepping in to intervene if a customer is dissatisfied with your business. While these interactions typically happen between customers and employees, your employees will only have so much knowledge and power, whereas you can more easily put irate consumers at ease.
Technology
Technology and business have long gone hand in hand, but modern advancements have exceeded all expectations by once again revolutionizing the way business gets done. Perhaps the most impactful way that tech enhances businesses today is through organizational software in an IoT framework. IoT tech specializing is creating a network of interconnected devices in order to consolidate a variety of functions, and many IoT applications simplify the operations of a business and improve efficiency as a result. Likewise, using apps to give your business more structure helps to reduce redundancies and inaccuracies, which further improves productivity and can even render certain roles within the company obsolete. For example, time card apps can do all the heavy lifting of payroll, meaning that the payroll department is likely to be phased out moving forward.
Achieving success in your small business can only come as a result of mastering a number of factors that can either strengthen or weaken your company. While this can be daunting for first time business owners, there are solutions to each of the problems you’ll face. Doing your research is an important part of overcoming these obstacles, and these tips will give you a strong foundation on which to build.
