Small Business Management
Success Principles

by Tom Egelhoff

Author Tom Egelhoff

If you are a fan of American professional basketball you have probably heard of both Magic Johnson and Larry Bird.

Both are bonefide super stars of the National Basketball Association and both took a shot at coaching.

Magic lasted half a season, didn't make the playoffs and retired from coaching.

Larry Bird became the first man in NBA history to win both Rookie of The Year as a player and Coach of The Year in his first season of coaching.

The point of this little NBA history lesson is that good management is much more than just knowing and having the ability to play the game well.

You must also be able to communicate and relate well to people and their needs.

Magic Johnson was a terrific communicator but he expected all his players to be like him and they weren't.

They couldn't be Magic Johnson and he couldn't work with who they were.

On the other hand Larry Bird evaluated the strengths of each player and began motivating that player to be the best that he could be and that was one of the secrets to his success.

He and each player had the same goals.. championships. But each worked toward that goal in their own way with the support and dedication of the other.

What Is Management?

Management definitions are all over the chart.

Here's mine: Management is inspiring and directing yourself and others toward achieving a common goal.

People working together to get things done.

And, once again, in a small town good management is much more critical than it is in a large city. I'll explain why shortly.

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Where Does Good Management Start?

It starts where all business success starts.. the leadership of the business.

You must have a plan that will define what management must do to be successful. The key to that success is the Business Plan.

The business plan will give you the direction and goals that will define what management functions will be needed.

Before any sports contest the participants evaluate the competition and form a game plan that will take advantage of the home teams strengths and the opposing team's weaknesses.

A business plan and management plan work the same way. Everything from products carried to customer service is a form of management determined by the business plan.

A plan for success.

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What Do Good Managers Do?

As with most jobs there is more to good management that meets the eye. Here are a few points that I think small town business owners must master to manage effectively.

  • Vision of the future - Someone has to know where the business is going and has to make the necessary decisions to move the company in that direction.

    Employees may not realize where you are headed. Biggest mistake is keeping this information to yourself. Give employees a goal to shoot for with you.

  • Organization and Evaluation - No business can be all things to all people. But many try. Evaluate what you do best and let someone else do the rest. Match your employees and equipment for the types of jobs that are profitable and can be completed within deadlines.

  • Personnel and Staffing - Remember above I said that management in small towns is much more critical than in large cities. This is that area.

    Good employees are hard to find and even harder to keep. Our local McDonalds owner told me it costs him $500.00 to train each employee. The employee pool in a small town is naturally smaller than in a big city.

    People will stay with a company that they feel is well run and w here they can see a future. They will not stay with a poorly managed company with no direction.

    The more people you lose, in a small town, the harder it is to find quality people. Word will get around and soon no more people apply.

  • Leadership - Good leadership is contagious. It spreads throughout an organization. People respond to it. Many people lead by example, others are good motivators, still more recruit quality people and give them a challenge. Whatever the method of leadership it must be present for a company to succeed.

    See: "How To Lead And Motivate: Yourself and Your Employees."

  • Control the business - This is the most important of all and it's the one area most business owners are weak in.

    I personally believe the reason for that is that they have been conditioned most of their lives to be an employee taking orders not giving them.

    When they finally get their own business they don't want to be a boss like the ones they used to have so they want to be the employees pal.

    Someone has to decide levels of performance and insist that those levels be met. Performmance standards must also be consistent throughout the company.

    Employees must have guidelines and job descriptions in order to feel confident in what they can and cannot do. They shouldn't find out that something is their responsibility after the fact.

These are certainly not the only areas of successful management but I feel these are some of the most important. If you do well with these five your chances of business success will be greatly enhanced.

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Day To Day Management

The five principles described above work well over the long haul but there are also some day to day management functions that can't be overlooked either. Here are some points to keep the doors open day after day.

  • Other plans - I mentioned the business plan above but a successful business also needs that components within the business plan and that is the sales and marketing plan.

    "How To Read Your Business Condition."

    In order to manage successfully all facets of the business must be taken into account because each piece of information will affect the decisions you make as you guide your business.

    Things like; financial statements and projections, equipment and productions capabilities as well as personnel.

    See: "Financial Statements: How To Read And Profit From Them."

  • Your budget - Expense planning, as you will see later in this article, is one of the principle reasons for small business failure.

    You must be prepared financially to meet opportunities and challenges as they arise. Create a monthly budget so you know where you are and for the next fiscal quarter.

    See: "How To Double Your Profits The Easy Way."

  • What's expected - Employees come and go. That's just the nature of business. Every employee should know exactly what is expected of them.

    A clear concise job description should be given to each new employee at time of hire and also revisited with each evaluation. Also no part of an evaluation should fall outside the job description.

    If you want the employee to accomplish more or take on more responsibility then re-write the job description.

  • Put it in writing and be accountable - Every goal should be written down for those who are expected to accomplish it with a clear date for completion.

    If the job needs to be passed from each department have some one sign off that their part is done and the next person sign on to be accountable from that point to the next.

    Passing the blame doesn't accomplish the goal but this method will alert you to someone who can't handle responsibility. They may need more training or less responsibility.

    See: "How To Get Employee Participation In Your Marketing Plan."

  • Schedule for success - The ability to prioritize tasks cannot be stressed enough. Wasted time or resources are wasted money and profits. Good managers are able to schedule jobs and responsibilities that increase profit and reduce waste.

  • Company Policies - What do you stand for day in and day out. What is your company position on employee conduct, customer service guidelines, level of product quality, safety procedures and sexual harassment?

    In order to protect yourself legally you should have a comprehensive employee manual for all employees.

Once again these are not the only things good managers need to consider but they will give you a good start in your learning process.

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What To Watch Out For

Most business fail because management made some poor decisions along the way. Here are a few potholes to avoid on your way to success.

  • Promoted too soon - Good employees are always going to ask for more responsibility and that's a good thing. But sometimes that over zealous attitude can mask the fact that they may not be ready to tackle some jobs or positions. Phase people into jobs slowly and let them adjust to the new position and for the other employees to adjust to them.

  • Underestimating the money - Many new businesses just flat fail to realistically estimate how much the business is going to cost. Good accountants are worth their weight in gold. Consult with one before going into business. They can point out many necessary things you might have missed.

  • Location, Location, Location - Years ago many people thought this was the principle reason for business failure. However it's now been reduced to a contributing factor. With the advertising options available today there is no reason customers shouldn't find you. Make sure you are in an area that contains a sizable proportion of your target market.

  • Inventory Control - This is by far the principle reason for restaurant failure. Too much food one day too little the next. It's extremely important that you know the industry before you get into it. Work in it if possible. People who love to cook don't always have the ability to estimate how much food is enough for a restaurant.

  • Equipment - It would be nice to have a monster printing press and binding machines to produce my books but it would take forever to sell enough books to justify the expense.

    For now it makes more sense to have someone else do it who had the equipment and is prepared to take that risk.

    Don't invest in new or even used equipment unless you feel confident that the business will produce the necessary income to pay for it.

  • Expansion - When should you expand and grow the business to the next level?
    "How To Know When To Expand Your Business."

  • Credit - Whenever I try to negotiate goods or services I always used to say, "Remember, I'm a poor struggling author."

    Well one day I was asking a designer friend to do some work for me and I used my standard line and he replied, "Tom, there's no use in both of us being poor."

    Don't reduce and compromise your products or abilities and don't issue credit to people who have no intention of paying you back. Good credit must be earned and proven.

  • Blaming others - It's always the other guys fault. Why did your business fail? It was the suppliers, bad employees, rent too high, wrong location, advertising didn't work, everything but poor decisions by management. Every reason above can be laid right at the front door of those in management.

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The last word on Small Town Management Success

Like marketing, management is also a long hard learning process but it's not impossible. The secret of successful management, if there is one, is to plan and set goals that are attainable by management and employees.

The second secret is that no successful business I know of has done it completely on their own. They must sooner or later rely on someone to help in some area.

So be receptive to help when you need it. Also remember that your employees have a stake in your success too. Share the good and bad with them.

Give them a feeling of ownership and some control in their situation and they will be loyal.

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