Updated June 8, 2023
What is Business?
In layman’s language, business is “an exchange of goods and services for money with the main aim to earn profits, which involves risk and investment of time, ideas and finances”.
“If you can run one business well, you can run any business well.”
– Richard Branson
Proper management of time, human resources, finance/money, updated technology, new and creative ideas, and cooperation is essential for running any business, be it small-scale, micro-business, large-scale, or online business. Remember, “Customer is the King” for any business. An efficient businessman not only lures new customers but also maintains his/her old customers so that he can make maximum profits by providing the best of goods and services according to the current demands and needs of his customers. Losing a customer can be a setback because one unhappy customer can turn down a lot more customers.
Thus, with this comes the risk of losing loyal customers, which leads to fewer profits and ultimately lowers the market share and value. This does not stop here, especially if unforeseen, because if the planning goes wrong, it leads to a greater loss than expected. This was the case for small/micro businesses until they came up with some great ideas to get back their customers and retain the market position. The large scale businesses have a lot many other things to take care of as well. With the ones discussed above, they need to take care of the human resources in their business, i.e., the people working inside the organization. It’s not the people outside (customers) but also the ones inside (employees) that the business needs to keep happy, as they are the ones who can either prove to be an asset or a liability for the business.
If employees are unhappy and dissatisfied, implementing those planned ideas can be adversely affected despite perfect ideas, planning, directing, controlling, etc.
Therefore, business does not imply producing goods and services, exchanging them for money, and earning profits. A businessman needs to be dynamic and flexible to accept the changing needs and demand patterns, considering the diversification experienced each day. The most important factor to remember is providing customers with the best product or service, along with after-service, at an economical cost to retain customers and generate good profits, creating a win-win situation for the business.
Griffin and Ebert (1996) say, “Business is an organization that provides goods or services in order to earn profit”.
Proper planning and strategy, maintaining healthy relationships with the resources or the 4 Ms, Men, Money, Materials, and Machinery, and setting pre-defined short and long-term objectives with a futuristic approach all contribute to running a business effectively. The common goal is to earn profits, retain existing customers, attract new customers, and ultimately increase market share, contributing to the economy’s overall development.
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How to Manage a Business Effectively?
Communication is the key to any business. Proper communication is necessary to achieve the best results. It should ensure that the message conveyed to the last person is the same as the sender intended, without being tampered with. Direct communication is the most effective way, which makes the message clear and creates a sense of trust, responsibility, and belonging in the employee, thus making him deliver better results.
Communication is a two-way process. When discussing the plan and delegating responsibilities, everyone must be on the same page, meaning that all individuals should have the same perception about the plan and its implementation and ensure that nothing is tampered with.
Brainstorming is an activity that involves getting ideas from all the employees in a business. In the case of hierarchy, it’s done at different levels in the form of mini teams, and finally, ideas are discussed with the top management. And in small businesses, businessmen can organize a meeting with all their employees and get ideas about a specific situation.
The best part about Brainstorming is that you have the freedom to speak your mind without being judged or questioned, given that you have logic behind your idea, of course. This results in obtaining new innovative ideas from all employees, whether experienced or fresh talent, giving them confidence and belongingness. This further motivates them to contribute their efforts towards the company’s best interests.
Any business that is static or closed to the changing environment of the world cannot expect to develop itself or retain the same market position as it had when it began because adapting the latest trends keeps you going as you can cope with the demands of your customers or the end-consumers.
“Change is the Only Permanent Thing.”
Therefore, it is necessary for the business to adapt to change, be it in technology, product line, demand patterns of the customers, or anything that might affect your business. Any business, large or small, should be flexible and dynamic to manage a business effectively. Human resources should be trained occasionally with the upcoming new trends or updated technology.
It’s not only with the demands or needs of the end-consumers but also the updated technology a business needs to cope with. We live in a tech-savvy world; therefore, keeping yourself updated and with the world is always the best way out.
Authority and Responsibility
Business can prove fruitful only when there is an appropriate delegation of authority and responsibility. There has to be an equilibrium or balance between “Authority” and “Responsibility” as they go hand in hand. In case the authorized person does not delegate the responsibilities constructively, it can create a loophole in the entire working system because with authority comes great responsibility. The authorized person is also accountable and answerable for any obligation, trust, debt, or bridge gap between expected and delivered.
It’s very important to delegate some authority to the person you are delegating responsibility to. It gives them the power to make necessary decisions rather than running here and there to take permission from the seniors. At the same time, it also gives them the liberty and confidence to make decisions, developing them into better employees.
Planning is an art that is futuristic and goal-oriented. It becomes very important for a businessman to have at least two to three best plans (Plan A/B/C) so that any plan proves to be incapable or a businessman needs to change a course of action in between he has an alternative plan ready, producing optimum maximum results.
The best way to manage a business effectively is through effective planning. You can easily do this by planning a defined strategy for business. You first need to etch out a great strategy that should focus on both the positive and negative outcomes of a potential business plan. The best way is to prepare for failure rather than success, as most first ventures have limited chances of success.
Planning processes can lead to better productivity, higher accuracy, and faster turnaround for essential business tasks. The goal of planning as a process is to improve and streamline the business methods of a company. This would have results like:
- Lower costs due to fewer staff needed to complete the same process.
- Increased efficiency by eliminating problematic process steps like loops and bottlenecks.
- Higher accuracy by including checkpoints and success measures to ensure process steps are completed accurately.
- Greater understanding by all staff of what they need to do to meet their department objectives.
A team comprises people with different backgrounds, experience levels, knowledge status, and thought-process. One and one are eleven; therefore, an efficient team can prove fruitful and constructive. The outcome of the action of employees and managers determines the effectiveness of a business. If they demonstrate effectiveness in their workplace, it will help in producing high-quality outcomes. Customer Satisfaction and a company’s reputation are often dictated by a team’s effectiveness, which includes the way they put forward the company’s service or product.
It’s very likely that the team members work together towards the same goal and put forward their best foot. This can only be possible if there is cooperation, absolute understanding, a thorough flow of communication, and a positive atmosphere among the team members. There might be a possibility that different ideas might create conflicts in a team, but a trait of a strong and productive team is to develop coherence and come out as plausible and advantageous.
4 M’s of Business
The four M’s of business are Men, Materials, Money, and Machinery. These are the most important resources any organization must possess and utilize optimally. Men contribute to the human resources inside and outside the business, including employees-laborers, stakeholders, retailers-wholesalers, CUSTOMERS, and everyone involved directly or indirectly. It’s essential to retain and take care of the needs and demands of every human resource that is a part of the business.
The next M is Materials. This includes raw materials, work-in-progress, finished products, and services. Timely management of materials is pivotal as they are the initial products that will further decide how the final products must be delivered to our end consumers.
The next and very crucial M is Money or funds. A business starts with the correct usage and allocation of finances and cost management. Therefore, it is the most significant resource to run or upgrade any business. Hence, a business should have a trustworthy source of finance and maintain healthy relations with financial sources like Banks, Financial Institutions, Stakeholders, etc.
In this concept, money does not only stand for the funds available but also the costs involved. Thus, the wider concept of managing finances is also important for a business to cut costs without compromising the quality of the product or service demanded by the customer.
The last M is the Machinery or the technology. For any business to survive in the long run, the essential factor is to be updated with the newest technology by training the employees and being aware of the changing trends in the market. Thus, running ahead of time is of utmost importance, as it will help the business to be at the top of the market and create a benchmark for other organizations in the industry.
Learning to manage a business effectively is generally not a skill that happens overnight. Managing a business is a task that requires a person to have a great deal of knowledge about their specific industry and knowledge of general business practices and people skills. It is a learning process where the practices and approaches can change throughout a career. However, the basic principles of business management that always remain the same include the ability to successfully motivate and lead employees, increase business growth, smoothly operate the business, and follow business laws.
“Time is the essence of Life”, rightly said. Time management is of key importance in running a business effectively as it plays a vital role in every business activity from planning to proper implementation of these plans, thus further producing effective results:
- Preparing the best plan which produces optimum results with minimum utilization of resources.
- Arrangement of funds not only for the execution of the plan and day-to-day functioning of the business but any unforeseen and uncertain activity.
- Effective marketing strategy involving market research, advertising, promotion, sales, and after-sales service.
- Allocation of proper resources to various activities involved.
- Changing market scenarios and upgrading technologies
- Venturing into new business lines or investing in new strategies.
All these activities mentioned above require efficient time management, or it might make your business a Dog rather than a Star, as per the BCG Business Matrix.
“Entrepreneurs never have enough hours in the day, so it’s important to optimize your time to the fullest”. Thus, time management and the above-mentioned points help a businessman manage their business excellently and efficiently, producing extraordinary results by making higher profits and a customer base.
Here are some articles that will help you get more details about the Business, so just go through the link.