This paper focuses on the factors that need to be considered by small business operators in their day-to-day running of the business. Also, discussed herein are the skills and strategies that should be used by small business owners to make their service or product provision effective in the face of customers. Small business owner should posses’ traits and skills which are critical for decision making and for encouraging human resources or employees to succeed. Absence of such skills and strategies in small businesses hinder business performance. It is thus essential that owner managers use the needed skills and strategies while running their businesses. Apart from the knowledge of the market place, there are vast skills that are needed for effective small business performance. Various strategies that boost small business performance are thus highlighted below.
Good leadership skills
Superb leadership skills motivate employees. Good leadership skills characterized by motivation inspire employees to find efficient ways of performing their tasks as well as increasing their productivity. This increases revenue to the business. It is thus significant that good motivational skills persuade workers to take an interest in the business’ success (Butler, 2001). Thus, small business owners should run their businesses with top leadership skills so that employees add value to the business and hence business success.
Market driven strategy
Small business owners need to be market driven. Not only should the owner be focused on a defined market, they should also focus on different market segments and market niches. This guarantees occupation of a larger market share (Aaker, 2001). However, to attain competitive edge small business owners need to fully understand the marketing trends on customer level. To understand the market trends, owners must possess better market analysis skills.
Accurate financial forecasting
Effective control systems
The owners need to have excellent control systems. Excellent control systems help manage costs so that the business operates as was projected in the cash flows budgeting. This is crucial aspect of business budgeting that owners should employ for effective running of the business. The control systems as well enables small business managers undertake profit analysis and to fully examine the expenses incurred (Butler, 2001). Mangers thus need to possess both profit analysis skills and cash flow analysis skills as these help understand the correlation between cash generation, profits realized as well as operation overheads in form of expenses. However, small business owners need to have forward looking control systems and not backward looking.
Market planning and strategic planning
Running a small business effectively calls for owners’ ability to undertake both market planning and strategic planning. For instance, a strategic plan is essential in running the business since it helps business owners implement controls, establish a well defined competitive edge, helps analyze occurrence of risks and threats and also in assessing the relationship between marketing information and financial forecasts (Butler, 2001). Better market analysis on the other hand enables owners put in place excellent marketing strategy which can only be put to operation via strategic plan. It is thus essential for small business owners to employ market planning strategies and strategic planning in their day-to day running of the business for better performance.
Effective people management and human resources
Running a small business demands excellent human resource management. The owner should be in a position to set specific, measurable, achievable and timely goals. Besides, the owners need to motivate workers to enable their performance match the set standards. The owner must communicate to the workers what is expected of them; explain to them the destiny of the business as well as their roles in the business. This is likely to enhance human resource performance hence better business performance (Hendrix, 2006).
Effective capital management
Effective running of small business requires excellent capital management by its owners. With the ever changing capital or financial strategies due to an increment in sales volume, small businesses outgrow their capital structures (May, 2010). Therefore, to remain relevant in its performance, owners need to understand how much cash is floating or is in hand and how much can be used to offset the deficits. This demands excellent capital management skills and strategies.
Effective management of business structures and resources
The owner needs to put in place a well designed structure that promotes business goal achievement. Owners need to put in place both upper level management planning and the middle level management of its resources and structures. On the whole, communication skills are very essential for small business managers (Butler, 2001).
Aaker, D. A. (2001).Developing Business Strategies. 6th edition. Wiley.
Butler, D. (2001). Business Development: A Guide to Small Business Strategy. 1st ed. Butterworth-Heinemann.
Hendrix, R. (2006). Strategic Decisions for Small Business: It's Just Noodles, This Ain't No Trattoria. iUniverse, Inc.
May, G. (2010). Strategic Planning: Fundamentals for Small Business. Business Expert Press