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Business Management Skills
The skill set required for running a business includes many things like planning, organizing, co-coordinating, etc. Actually the number of skills needed to manage a business are many. However, a greater emphasis is laid on developing some of the important skills. Bringing people together and channelizing their efforts towards a goal is the essence or core of any business activity. The following business management skills list should help in getting an idea about how to run a business successfully.
List of Business Management Skills
The topic of business management skills is vast and it should ideally cover information about the details about planning, devising solutions, co-coordinating the workforce, motivating the employees, meeting the standards of a certain level, etc. However, the important business management skills discussed in the article should also provide an idea as to how a business needs to be run smoothly. These points should act as guidelines in running a business organization.
The following basic business management skills needed for efficient management should be mastered so as to take care of the smooth operations of a business. No matter how cliched the ideas sound, their underlying thought and effectiveness helps manage a business in a better manner. Let us understand which skills are needed for efficient management, through the following paragraphs.
Planning
It is one of the important manager skills which need to be possessed by a successful entrepreneur / manager. The goal / target set by an organization is the focus of all planning activities. Forecasting and predicting the consequences of a particular step or action should be taken into account. It is therefore an important part of planning. The activity of planning also involves the process of analysis of data / information. Analyzing the information helps in taking decisions. The problems if any, and which may affect the smooth running of a business, need to be given due consideration in the planning process itself. Appropriate solutions for these problems should be devised beforehand in the process of planning. Information on effective manager skills should help in delving deep into this topic.
Communication Skills
Communication skills prove to be of great use, not only for running a business, but in all walks of life. There are many different situations in a business environment where communication skills prove to be useful. Negotiating with the supplier is one such area where good communication helps. Get more information on negotiation skills. The manager / owner has to face employees, business associates, and many people in a work environment. Good communication is therefore, a must-have skill.
Organizing
The workforce needs to be organized in a manner that optimum use of their skills is made. Organizing and co-coordinating the workforce is one of the most important business skills needed. It keeps the employees focused on their goals and enables them to work and proceed in a harmonious manner.
Financial Management
Managing the finance is important from the point of earning profits. Having a good knowledge of the financial statements helps manage the business in a proper manner. After all, finance / money is the fuel that keeps a business running. This Buzzle article on basic management principles regarding finance and other aspects, should provide an overview of the skills needed to manage efficiently.
Logistics
The subject of logistics deals with managing the inventory. It is necessary to arrange for adequate amount of stock required for running a business. Efficient management of this stock also is important. It helps in using the capital required for business in a better manner.
Dealing with Legal Issues
A person who wants to run a business needs to be aware of legal issues which could potentially affect the smooth running of a business. The different subjects covered under this topic include the knowledge of tax requirements, industry regulation, business structures, industrial relations, etc. Staying updated with all the related information helps dodge these legal potholes by fair means.
Ethical Business Practices
Ethical business practices helps a business organization to survive on a long-term basis in the market. The environmental issues need to be taken into account and optimum use of natural resources made in the process of running the business. This particular point may not fit into today’s business ‘ethics’ that are largely profit oriented. However, a person who is looking to continue business on a long term, should find the environmental issues to be important. The study of these management skills for new managers should especially be useful.
All the business management skills listed above, help in dealing with problems that crop up in the process of managing a team or bigger organization. It is possible to develop these skills over time by studying the nature of work and practically applying them to a particular business model.
Keeping Business Records
Record keeping is defined as ‘practice of maintaining the records of an organization from the time they are created up to their eventual disposal. This may include classifying, storing, securing, and destruction (or in some cases, archival preservation) of records.‘ Record keeping refers to keeping a track of all the transactions, monetary and non-monetary, that take place in a given period within a business organization. Record management is a super-set of the term ‘keeping business records’. The subject of record management includes records like birth certificates, medical records and other data.
Business record keeping refers to maintaining a track of capital invested and borrowed, reserves made and used, liabilities, both current and deferred and outstanding payments. On the asset side, the business record keeping is directed towards evaluating fixed assets, current assets, preliminary expenses and shareholder’s equity.
Keeping business records for big firms has a set of guidelines, rules and regulations. Hence, maintaining the huge business record keeping is not a ‘How-To?’ issue. The issue arises, when the records are not maintained properly, which is often a cause of individual differences. Double-Entry and Single-Entry, are the two methods used for the purpose of maintaining the accounts of the business. These systems have been set and are being used efficiently in all the limited companies globally.
Other than accounting records, a business may have other records such as Articles of Association, Memorandum of Association, shareholder’s records, debenture records and other such records. A small business firm may have letter of incorporation, employee register and payroll register. It is important that all these records are maintained for taxation purposes, legal purposes, analyzing business strategies and future planning.
Record Keeping For Small Business
As a matter of fact and experience, record keeping for small businesses is rather cumbersome. Especially in the case of a sole proprietorship, the owner and the management is not necessarily different, hence the problem of over work occurs. Moreover, as a sole proprietor may not have the know-how about record keeping, management goes for a toss. Here are some tips to help with the record keeping for small business.
Gross Receipts
Gross receipts is the total income your business earns. The documents that validate gross receipts are cash registers, bank deposit slips, invoices, bills received and credit sale slips.
Purchases
Purchases refer to the raw material and any other item that you buy for production. The documents that will support the purchases that you’ve made are purchase book, invoices, check books, bank statements, bills payable and credit purchase slips.
Assets
An asset is a property that you buy for your firm. It may be a machinery, furniture or computers. It is important to maintain a record for the same as it helps in evaluating the worth of business and its goodwill. The documents that will support the assets you have, are its receipt, the date when it was purchased, depreciation accounted and its usage.
Liabilities
Liabilities are the aspects of a business, that have to be paid off. No matter when you pay them off, its necessary that you note down how, when, where and why it was paid. The documents that will help you maintain liabilities are bill of exchange and invoices.
Electronic Record Keeping
With the advent of technology, keeping business records has become very easy. Electronic medium has eliminated all the paperwork and required filing. Right from employee attendance register to balance sheets can be made and maintained electronically. There are many record keeping softwares available for keeping business records. They make the work of retrieving the data and calculations extremely easy. This fastens record keeping, making the business firm efficient in nature.
Keeping business records can be easy if its organized and clear. Understand the nature of your business and then appoint people to maintain business records. In the long run, business record keeping will help your business in understand its strategies and potential.
Sole Proprietorship Advantages
Sole proprietorship is a form of business wherein a single individual is the owner or proprietor of a business organization. He takes all the business management decisions himself and is also solely responsible for all the transactions carried on by the company. Sole proprietorship is a preferred form of business by small business owners. Even in USA, there are many small businesses which are run by individuals. This is because there are various benefits of sole proprietorship business. Some of the sole proprietorship advantages are listed below.
Advantages of Sole Proprietorship
Ease in Business Commencement: The business can be very easily started if there is only one owner. The legal costs involved in such a type of business structure is very low. The paperwork and formalities are also very less. Due to this many businessmen start as sole proprietors initially and later change the business structure when their businesses grow. Read more on business growth strategies.
Absolute Control: Decision making power lies with a single person. The proprietor has complete control over each and every aspect of the business. He has full legal and financial responsibility. Hence, there is no question of any kind of conflict arising due to difference of opinion related to business policies. This is one of the primary sole proprietorship business advantages.
Avoidance of Double Taxation: One of the main sole proprietorship benefits is that the taxes to be paid are lesser compared to other forms of business which have business partnerships involved or in case a firm is a corporation. The reason for this is the absence of double taxation in a sole proprietorship firm. Double taxation means that the company and his owner both have to pay tax on the income generated by the business. The company pays the corporate tax and the owner pays income tax. This is not the case in sole proprietary firms. In the eyes of the law, the proprietor and his business are considered to be a single entity in case of a sole proprietorship firm. So there is no corporate tax that has to be paid. The owner only has to pay the income tax.
No Income Sharing: Another one of the sole proprietorship advantages is that in a sole proprietorship, the owner has 100% right over the income generated through the business. Thus, financial planning becomes hassle free as the income remains in the hands of a single owner and he may keep it with him or re-invest it according to his discretion. The owner may also use the business income for non business purposes or for personal use. The reason for this is that in sole proprietorship, there is no distinction between business income and personal income.
Reduced Income Tax: In case the owner has just started the business or if the business is going through a slump, the proprietor may face some business losses. In such a scenario, the owner can deduct his business losses from his total income, including the income generated from sources unrelated to his business like interest on shares and sale of property. The income tax a proprietor pays is then calculated on the basis of this reduced income.
Ease in Business Dissolution: The business can be dissolved very easily. The proprietor reserves the sole rights to sell his business to anybody. The proprietor can also transfer his business on anybody’s name. There is no headache of calculating percentages of the sale proceeds to be given to different parties or conflict related to on whose name the business should be transferred. Thus, financial management becomes easy. This is one of the main advantages of sole proprietorship.
These are a few sole proprietorship advantages. Although all businesses are different and what may be an advantage for one could prove disadvantageous to the other. In sole proprietorship, the owner has full control over the income and the decision making, but at the same time he also has unlimited liability. Unlimited liability means that in case of a business bankruptcy, the owner has to single-handedly bear all the business debts or lawsuits if any against the company. Thus, there are a few risks associated with sole proprietorship firms as well. So if you are planning on starting a business and still deciding on the best suited business structure for it, look at both disadvantages and advantages of sole proprietorship and then arrive at a conclusion.