Business Management

Business Management Skills

admin — Wed, 17 Aug 2011 07:08:01 +0000

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

admin — Wed, 17 Aug 2011 07:06:25 +0000

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

admin — Wed, 17 Aug 2011 07:05:02 +0000

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.

How to Manage a Business

admin — Wed, 17 Aug 2011 07:03:55 +0000

Have you always wanted to own a small business that will allow you the opportunity to be your own boss? While starting your own cafe or book shop may seem like a distant dream, once you have your initial capital in hand, running your own business can be child’s play as long as you learn how to manage a business effectively. If you want to manage a small business, then you need to be aware of the responsibilities that come with the job. Depending on what the business is, your responsibilities can range from ordering the things you need, managing the employees, assigning their duties, managing accounts and finances, marketing and advertising the place, customer relations, etc. While your key responsibilities can seem overwhelming, with effective management skills you will be able run an organization pretty well.
How to Manage a Business Effectively
Learning how to manage a team and effectively turning a business into a profit making organization requires you to imbibe a lot of skills and work on several things like leading a team, managing employees, etc. Here we tell you more about how you can learn to manage a business.
Leadership
One of the most important skills that any effective manager needs to possess are leadership and management abilities. Without proper leadership a business can flounder. You need to able to make good decisions and solve problems as and when they come. Being a good leader does not mean that you take all the responsibilities on your head. In fact it means that you need to be able to delegate responsibilities and ensure that your employees perform all the tasks that they have been assigned effectively. Another important thing to keep in mind is that while managing business you are responsible to create strategies in order to develop the business. While learning about what makes a good manager, many people forget that one of the most important duties of a manager is not only to ensure that the business is run smoothly but also that it makes profits. As a leader you need to think of opportunities and possibilities that will allow your business to grow. It is important to understand and imbibe this while learning how to manage a business.
Employee Management
As a manager it is your duty to ensure that your employees are motivated and give their best to the job at hand. Ensure that your employees are satisfied and that you are approachable in case anyone has any problems. Treading the fine line between being a boss and a colleague is important. While they should know that you are there to solve their problems, they should also be aware that at the end of the day the employees are reporting to you. Good employee management also entails that you treat your employees with the respect they deserve. Avoid reprimanding or disgracing your employees in front of other employees or customers. Never get into petty fights with them or bad mouth them. If an employee confides in you about something, it is important that you are discrete about the same. Good manager qualities such as these and managing business properly will ensure that you command respect from your employees.
Marketing the Business
One of the main office manager duties is ensuring that you market and advertise your business well. This is crucial for successfully running a business. While trying to understand how to manage a business, it is also important that you learn what is critical to marketing a business like proper market research, good customer service, deciding on your target audience, proper packaging and pricing, advertising your business properly, etc. While you can always use traditional advertising techniques like newspaper ads, radio spots, etc, as a small business one area you must target are social networking sites. Using technology for business management and advertising gives your business a much needed edge.
Awareness about Regulations
Effective manager skills need to be combined with an awareness about the laws and regulations that you need to follow so as to ensure that your business does not become one of those organizations that is charged with non-compliance. Pay your taxes on time and understand taxation processes. If you have a successful business it is only fair that you pay what you are due for. Insure your business against any probable accidents and mishaps. As an owner cum manager there are some important decisions that you will have to make which includes taking proper insurance for your business. It is also important that you understand the legalities that are connected to your business. While you do your bit, it is essential that you know where to go for assistance in case you are being impacted by unfair regulations. Understanding the laws that protect you and knowing what resources are available to you for help, are important while managing business.
While these are some of the necessary skills that you need to educate yourself about while learning how to manage a business, it is also important to learn how to manage a business budget. Understand your finances and capital; if you are borrowing money for your business from a lender then plan out how you are going to go about repaying the money. Financial planning and growth are important aspects of business management. As important as it is to manage your business effectively, an important aspect of management development is also to plan your exit strategy. It is important to learn how to go about selling or shutting down your business if need be. This is an important lesson to be learned while mastering how to manage a business office, which is generally forgotten. Now that you know what are the different things that go into management of a business, you just need to practically apply them in the management of your business.

Business Acumen

admin — Wed, 17 Aug 2011 07:02:55 +0000

It is a well known fact that every businessman cannot become a legend and every business cannot be extremely profitable. The business acumen definition is related to the ability of a person to run his venture successfully. Business acumen can be developed by consistent work and concentrated efforts. Before we know how to develop business acumen, let us first understand its meaning in detail in the next section.
Meaning of Business Acumen
Business acumen is more related to understanding a business thoroughly. Unless a businessman understands what is the exact nature of his business, what are the challenges before him and how is he supposed to overcome them, he cannot establish his brand in the competitive market. A person with a business acumen takes the right decisions at the right time for the benefit of his organization and ensures increasing profitability. Identifying business opportunities successfully before peer companies can help generate high revenues and profits. Business acumen also includes identifying the potential threats to the organization and taking preventive measures to deal with them. Now, the main question before many people is whether this business acumen can be acquired or is it only a skills with a few people. The answer to this question is simple – it is possible if you develop some qualities. The suggestions given below on developing business acumen will help you understand things about entrepreneurship better.
How to Develop Business Acumen
Observe Functioning of Established Businesses
Keen observation can help a person learn a lot. So, if you wish to acquire business acumen like the big corporate leaders, you need to observe how the established and successful business houses run. Try to understand what makes them different from the rest of the companies and how they maintain their leadership position despite several hurdles and stiff competition, leading to good business management. Note down some important points and start training yourself in that direction.
Get the Basics Right
Improving your business acumen is possible only if you have learnt your basics thoroughly. So, the main rules and regulations of business should be clear to you completely. The business acumen of people well educated in the fields of management is high and hence you should go through training programs to learn basic management concepts. A person will automatically develop his business acumen while he applies these concepts practically. He may find things difficult initially, however, every failure becomes a learning experience and a person improves the way he looks at things.
Change the Way You Think
To see an improvement in your business acumen and decision making abilities, you need to change the way you think. Try to adjust to the changing ways of business by learning new technologies which are constantly being introduced into the market. By doing so, you will be able to match up with your peers in a systematic manner. You also need to change your attitude and work hard for taking your organization to the position where you want it to be.
Implement your Plans
Business acumen cannot be achieved unless you implement your plans. So, you need to start off by making changes in the way you function to see the results in the time to come. The thinking process can develop only when you try to bring in some creative changes. Every experiment you do with the functioning of your company will help you learn new things and be more knowledgeable. For articles on entrepreneurship, refer to:

Horizontal Integration

admin — Wed, 17 Aug 2011 07:02:02 +0000

Strategic management is all about initiatives taken by the middle and mostly upper echelons of the management with respect to optimum utilization of business resources. This is done as a means of achieving higher profitability, from enhanced business performance, with the external business environment acting as the functional and evaluative background for all such activities and undertakings. Horizontal integration is one such tool of strategic management which is used to strengthen the position and presence of a business in numerous markets. This strategic management tool is basically a marketing-based integration, as opposed to vertical integration which is a style of management control for industrial supply chain. While the former is an attempt to influence the market in its favor, the latter attempts to coordinate and control the supply chain of a consolidated vertical production process and supply/ distribution chain. Saying that, let’s get to the details of horizontal integration now.
What is Horizontal Integration?
As per horizontal integration definitions provided by Investopedia and Wikipedia (respectively), horizontal integration takes place “when a company expands its business into different products that are similar to current lines” and “when a firm is being taken over by, or merged with, another firm which is in the same industry and in the same stage of production as the merged firm, e.g. a car manufacturer merging with another car manufacturer. In this case both the companies are in the same stage of production and also in the same industry. This process is also known as a ‘buy out’ or ‘take-over’.” If we try and dissect both these definitions, two main points come to the fore - same industry and same stage of production.
So, the question arises that why would a company want to integrate with another which practically deals with the same product, that too, in the same stage of production? Well, the fact that both firm’s products are the same and both are in the same stage of production has a very important implication – they share the same market. Well, I guess, now the chief reason for such integration must have struck you! Yes! Horizontal integration is a major tool for eliminating competition! Besides buying out competition, horizontal integration also brings about economies of scale, stocks and scope involved in increased scale of production. Also, in terms of marketing efforts also, a single, united, consolidated campaign is far more effective for customer conversion than a dozen small business enterprises fighting tooth and nail for a share in the same consumer market.
Horizontal Integration Examples
Examples of horizontal integration can be seen in the form of a number of significant mergers and acquisitions around the world. One of the most prominent instances of horizontal integration in recent times is Tata Steel’s acquisition of Corus. The acquiring of a high value product manufacturer by one of the lowest cost steel producers in the world boasting of self sufficiency in raw materials meant that the steel market would now have access to a product which boasted of high quality at a lower price.
Another example of horizontal integration is the GAP Inc. retail clothing corporation which controls Banana Republic, GAP and Old Navy. This enables GAP Inc. to cater to different customer needs without having to compete with either Banana Republic and Old Navy.
Horizontal Integration vs Vertical Integration
When a firm, which is part of a particular industrial supply and distribution chain, acquires or merges with other firms within the same chain, it is known as vertical distribution. The purpose here is to cut out on supply chain inconsistencies and hold-up issues. On the other hand, Horizontal integration is when firms dealing in the same product line which are at the same stage of production combine together (either via media merger, acquisition, takeover, amalgamation, etc.) with a purpose of earning manufacturing and marketing economies and eliminating competition. Therefore, vertical integration coordinates all stages in a production process while horizontal integration is an attempt to dominate a market by eliminating competition once for all and to earn various manufacturing and marketing economies.
That explains what horizontal integration is all about. It is a management tool that is aimed at ousting competition by taking over competitors rather than trying to outrun them in the market, thereby, reducing marketing costs involved in wasteful competitions. However, the market dominion brought about by such integration often sow the seeds for market monopolyand many anti trust laws have been enacted with a bid to keep a check upon such anti competitive conduct of firms who participate in horizontal integrations

Conceptual Skills

admin — Wed, 17 Aug 2011 07:00:59 +0000

What goes into making a good manager? Leadership skills, the ability to think straight under pressure, and the trait of being able to come up with quick and practical solutions to problems. Apart from these, one also needs excellent communication skills and a certain level of technical skills too, in order to be a good manager. However, among themanagement skills list, there lies one particular group of skills that not all can master. It takes time and a deep understanding of the principles of business and human resource management to develop them. They are conceptual skills in management. To know more about these skills, read ahead…
What are Conceptual Skills?
Conceptual skills are probably some of the most important management skills. There are some very basic principles behind conceptual skills. The inputs by people who are hired especially for their exceptional conceptual skills often influence thedecision making process in an organization, be it about a simple thing like a change in the employees dress code, to something as big as a revamped advertising campaign for a product. Some functions of these skills are mentioned below. They might help you understand it better.
Establish Inter-relation
A person who has conceptual skills has the ability to carry out a detailed study of the possible and probable inter-relation between various ideas and ‘concepts’. It is a cognitive skill that requires the person to have a deep understanding of what has to be studied, what can be ignored and how to ascertain how much importance should be given to which concept. It also relates to how to use the inter-relation between the various aspects of the matter and come up with a concept or an idea to make it better. It is an integral part of how business management actually goes about.
Problem Solving
A conceptual person can combine problem solving with the practice of conceptualizing a practical issue. For instance, if there is group of people who are opposing the construction of a bridge near their houses, the person will go deeper into the problem, find out why it is so, how to convince them without offering them just money, get them to understand how the bridge will in no way harm the peace and harmony of their homes and finally get them to agree to the construction.
Study as a Whole
A conceptual person will not look at the organization as a part of the industry. Using this basic business management skill, he will look at it as a whole. The main focus will be on how to study, analyze and develop new strategies that will enable the smooth and better functioning of the organization as a whole. He may compartmentalize each section within the organization and come up with various concepts to help them individually, but the overall progress of the whole organization is the ultimate goal.
Creative Thinking
Apart from problem solving, conceptual skills also play another very important part as far as manager skills are concerned. This involves coming up with creative and innovative ideas and concepts pertaining to the growth of the organization. For instance, a company needs to boost the sales of its new product- a tangy tomato ketchup, with a hint of mint in it. A person with conceptual skills is the one who will treat the ‘increase of sales’ as a concept rather than a physical target. He will perform the important functions of management. He will study and speculate, he will analyze and comprehend. He will then come up with a concept which will use the distinct ‘flavor’ of the ketchup as its USP. As you can see from this, the person has come up only with a concept of the flavor being different. The next step of forming a suitable advertisement is the job of the ad department and the technically skilled managers will handle the technical aspect of making the whole concept a reality.