How to Manage a Business
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
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
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