Learning the Essentials of Small Business Management
Running small business may not be a cake walk for all. It requires a different outlook towards life and a different way of goal setting, if you really want to succeed in it. People who are happy to work for others and be content to pocket their monthly salaries religiously are of one class and those who can't fit themselves to this comfort zone are of a different class. The second class of people seems to have better chances of becoming entrepreneurs.
If you feel you want to have your own small business and love to manage it, first check out whether you really have the basic qualities essential for entrepreneurship, by reading THIS.
If you are sure that you have the right entrepreneurial spirit and you are very confident that your pet idea will work and you can really start off with a blast, then read on:
Grasping some of the essentials of running a small business
(1) Do Not Dream Of Making Millions Straight Away
Small business will mostly be begun with less investment, be less risky and with less "plinth area" and consequently with less scope for making any big money. Not every body can start a venture in the unused Garage and become the owner of a billion dollar enterprise like Steve Jobs. Your goals should be correlated to your line of activity, your investment base and the potential customer base.
(2) Do Not Plan To Have A Large Capital Base
It might be wonderful if you could have the latest computers and gadgets, the best possible CNC machinery and equipment to run your production shop and a fleet of vehicles to do your deliveries, all done from your owned factory building. But until you earn really big enough to invest on these on your own, you will be better off with cheaper and less glamorous alternatives, by sub-contracting support services and hire-purchasing the shed, equipment and machinery.
(3) Be Minimal On Hired Man-Power
Until you make reasonable money and afford to have additional hands, be prepared to do mantle many roles -- the production manager, the marketing manager and the accountant -- all yourself. If you are the bossy type who thinks all managerial work is to be done only by others and you will only give policy guidelines, then better watch out. A small business is not like a corporate conglomerate.
(4) Be Prepared For A Low-Profile, Less Glamorous Life Initially
Small business is mostly a low profile, adventure-less, glamor-less way of life till you establish yourself really well. Until you are stabilized, you can not afford costly parties at 5-star beach resorts to your customers, huge advertisements in the form of TV Commercials etc. If you are the type who worked in a corporate business house where you had seen extravaganza and you want to imitate them in your small business, you will soon run out of money.
(5) Have Some Rudimentary Knowledge About Accounting And Taxes
In a small business, you must have some basic capacity to plan and manage cash flow, credits, debits and bank transactions. But one area where it is better to pay money and use specialist services/ consultancy is in the area of Taxes. It may not be worth if you waste your time and effort on this slippery area. At least make use of the services of Tax consultants to get the necessary preliminary registrations done at the appropriate Government Departments, get the necessary forms filled and submitted, and get clear-cut guidelines on the types of taxes you have to pay, the exemptions you are eligible for specific to the type of business you are doing etc.
(6) Be very watchful about cash-flow
Unless you have done your homework and spadework well, cash flow crunch could end up as a major head ache in small scale businesses. In an enthusiasm to book orders against competition, you may be tempted to accept orders without advance, agree for abnormally delayed credit period, accept very high valued orders that involves your spending heavily on bought-out items etc. Unless you are careful, you may end up with cash-flow crunch in such overenthusiastic endeavors.
Failure to pay employees, suppliers and subcontractors promptly or within a reasonable period of time will soon lead to loss of goodwill from the concerned stakeholders. They may ditch you at a crucial period and you may end up from frying pan to the fire.
(7) Be aware of statutory matters
If your factory is involved with hazardous chemicals, polluting gases and effluents etc., it is extremely important to get all the statutory approvals and clearances from Government departments.
To conclude ...
A lot of hard work must precede tasting success in small business. People without entrepreneurial spirit, particularly those who are used to hi-fi corporate life, may find it extremely difficult to run a small business successfully. No success is possible without the right spirit, perseverance and focused effort.