9 Key Business Management Tips and Strategies

 

Achieving business management success isn't about a single magic hack; different strategies work for different businesses and scales. Nevertheless, these 9 simple strategies can provide valuable insights and ideas that you can apply to your own business.

 

 "The way a business is managed will say a lot about where the business is going."

 

 

You've likely heard that many business fail within their first two years. A data from U.S. Labor Statistics shows that on average, 50% of businesses do not survive beyond 5 years. And even after a decade, only one-third of businesses manage to endure.

 

Survival rates for private-sector business establishments born in 2013, by industry, 2013-2023

Source: U.S. Bureau of Labor Statistics

 

It's important to note that this data doesn't include businesses that are operational but have not officially registered. Some enterprises spend months or even years testing the market before fully committing. Which makes more businesses that cease operations might not be included in this study. The true number of such cases would likely be staggering in itself.

 

 

So, what happens to these businesses that cease operations?

There are different factors that takes place but one of the reasons is because times do change along with different aspects like the supply chain, the acumen of the founders, increased competition, alterations in the business model, and fluctuations in demand. However, perhaps one of the primary underlying reasons is the inability of some businesses to adapt to these ongoing changes that is happening every time.

 

Properly managing a business will help assess the difficulties and opportunities ahead of time. Thus, making it easier to adapt to the changes that for some might be unforeseen and strokes of luck. In this discussion, we are going to dive into key tips and strategies to efficiently manage a business and how to build robust systems for long-term adaptation.

 
9 Key Strategies for Business Management:

1) Set Clear Plans and Goals

Without clearly defined targets, many businesses will be wandering off which eventually leads to failure. While this concept may seem straightforward, its implementation can be challenging. Business owners often ask questions like, "How can I ensure that this is the best path we as a business should be taking?"

Achieving goals is only possible if we aim for it, and especially if we know what we are actually targeting. This may be about defining crucial aspects such as the business model, target market, suppliers, distribution channels, profit margins, and product-market fit.

Business Plan Mind Map Model

 

As Warren Buffet famously said,

“Risk comes from not knowing what you’re doing.”

 

Managing a business becomes significantly easier when there's a clear set of goals and plans in place, spanning both short-term and long-term objectives. These will set the operations and daily procedures of the business at ease and in a straightforward flow.

 

With a clear mindset and strategic approach, one could lead a business to win. Businesses that have written plans grow 30% faster than those without them. Companies with a plan are more likely to thrive in their initial years, while over half of new firms fail in their first year and 44% fail by their third year. Having a strategic plan boosts the likelihood of growth and long-term success.

 

 

2) Identifying Key Areas

To manage a business, we should first know what is there to be managed.

In the early stages, a small team or even a solo entrepreneur typically handles the whole operations of the business. However, as the business expands, the workload can become overwhelming.  And here is why categorizing different sectors in the business will be beneficial. As the business grows, more tasks need to be delegated and monitored. These sectors may include accounting, inventory management, operations, sales, marketing, production, and more.

 

Business Operations Mind Map Model

 

By clearly delineating and organizing these areas, it becomes easier to delegate tasks and establish schedules. This clarity ensures that everyone involved has a comprehensive understanding of the day-to-day operations, minimizing confusion and streamlining workflow.

 

 

3) Keep Records and Know Your Numbers

As humans, we improve by learning from our mistakes and successes; Same goes with business. However, learning from experiences is only possible when there are records to reference. Especially for businesses that has multiple players that are at play.

While we've discussed the different areas of a business, it's important to recognize that each area comprises both physical and non-physical components. This is where small startups begin to fail. By not knowing the ins and outs of business resources such as capital and inventory, teams may find themselves surprised of the changes and unable to trace back its cause or origin.

 

For example, in the accounting sector, the daily transactions of the business must be monitored and analyzed.

An Overview of Daily Expenses vs. Sales
 

This helps provide insights for leaders and managers of the effectiveness of their operations. By understanding daily profits or losses, managers can easily identify successful strategies to double down on and eliminate ineffective ones.

 

Similarly, in the production sector, there’s the inventory system and tracking of daily supply and product stocks of the business, some might even be the physical assets like machineries or equipment.

Product Stock Inventory Monitoring

Regularly monitoring these records, whether physical or digital, is essential for identifying how the business allocates its resources across various departments.

 

While collecting data may seem bureaucratic and tedious to some, it serves as the memory and nourishment needed by the business. Keeping meticulous records can yield significant benefits, especially when efficiently systemized.

 

"Without big data analytics, companies are blind and deaf, wandering out onto the web like deer on a freeway." 

— Geoffrey Moore

 

 

4) Prioritize and Eliminate

You might be familiar with the 80/20 rule, also know as the Pareto Principle. A concept suggesting that around 80% of results will come from just 20% of the efforts given.

 

The Pareto Principle

 

By focusing only on the top 20% of efforts that works out and eliminating or minimizing the bottom 80%, businesses can enhance their chances of success.

Consider the last time you created a long list of tasks where they are all high priorities. Did you feel overwhelmed by the sheer volume of tasks?

This is when we prioritize the priorities. Meaning, we look for the 20% of tasks within the top 20% and set what can realistically and rightfully be accomplished within the given timeframe.

The word 'Prioritization' might be overstated again and again, many entrepreneurs still find themselves getting sidetracked by less important tasks. Going back to record keeping, this practice would help discern the vital 20% from the trivial 80% of the business, thereby easily identifying the main priorities of the business ahead.

 

 

5) Streamline Connections

Connections could involve both systems or people. A seamless integration of daily procedures will keep a consistent flow of business operations. For instance, the production must have direct contact with inventory and sales department to optimize efficiency.

Same goes with a proper communication for the people behind the business to ensure that message is conveyed as intended to every team member; From the CEO, to the manager, to the senior, and to each staff.

These connections are the lifeblood of the business. It is what essentially keeps the business running.

 

 

6) Delegate Tasks

No matter how hardworking or exceptional an individual may be, we all have the same finite amount of time each day. Therefore, it's impossible for one person to handle all aspects of a business alone. Sustainable growth occurs when tasks are effectively allocated to the right individuals, allowing the business to function independently. This is achieved when each team member specializes in a specific task and excels in it.

Take, for example, Apple's organizational structure and core activities. From research and development to customer service, each phase operates in a linear process supported by the company's infrastructure, management, and systems.

Apple's Organizational Structure and Core Activities
Source: IvyPanda

 

However, as tasks are delegated, there must be a structured framework for team members. An interconnected hierarchical organization, akin to an army of soldiers, ensures effective coordination. This hierarchical structure is essential because leaders cannot directly manage every staff member; there are inherent limitations, needing the implementation of a systematic approach.

 

 

7) Create Systems

Effective management becomes significantly easier when the processes are set in place, relatively independent, and coherently automated. With the advancements in technology today, business management have never been easier than ever before. One could dedicate a whole department within a single application or platform. Outsourcing is no longer just about people but the whole system in itself.

In a well-structured business, different departments function cohesively, each contributing like cogs in a machine, synchronizing tasks and goals. These systems are established through the implementation of standard operating procedures, manuals, rules, frameworks, etc., ensuring that every member of the company is aware of and adheres strictly to established protocols.

 

 

8) Assess Performance Status

The benefits of creating a system is the convenience of assessments and performance monitoring. After keeping records and creating analytic systems, the daily decisions become clearer and more streamlined.

Now, imagine if you can have an overview of your business status and performance from a single dashboard. How convenient and effective could that be?

Here's a sample template of Business Management System done through with built-in data analytics using spreadsheet:

 

Business Management System (dashboard preview)

 

How do you know whether a change you've implemented has resulted in improvement or deterioration?

The answer lies in maintaining records of past and present performance. By quantifying a clear number of the percentage of growth or decline, you gain insights into the effectiveness of your decisions and when course corrections are necessary.

These kinds of system are the perfect management tools for businesses and different specialized operations.

 

 

9) Create Room for Growth & Exploration

When a business have established the playbook for how each of its sector will continue to do its daily operations, that’s when there will be more room for growth and expansion.

 

"Business is a simple cycle of creating and trying new things that resonates with the needs of the market."

 

Achieving efficiency and robust standard operating procedure (SOP) will drive the business to become independent and allow the leaders to explore ways that is not obvious and not possible back when the business operations didn’t have a system and were all over the place.

These internal systems serve as invaluable assets, akin to machineries driving day-to-day procedures. As they accumulate and integrate, they fortify the business, creating a formidable fortress or even an empire that continually outpaces competitors.

Ultimately, effective management still hinges on the vision, perseverance, and execution of its leaders, particularly top executives. Their leadership sets the tone for the organization, amplifying the efforts of their team members. Therefore, great management should still start from within.

 

"Show me an experimenter, and over the long run, I'll show you a future winner."

— Shaan Puri

 

Conclusion

Business management must evolve alongside the business itself. It is critical that the management is able to adapt to the growing changes and establish clear systems and operations to ensure sustainable functionality.

You can only know if a business is doing good or bad if there is a record. Monitoring and recording performance metrics are essential for assessing overall business performance. This practice makes it easier to determine the business's trajectory, evaluate the impact of developmental changes, and anticipate future challenges and opportunities.

 

 

P.S. Built-in templates for business management, check these spreadsheet analytics system tool here.