Introduction to Business Management

Managing for success and profit

Any business, regardless of size, can do better if it is actively managed. The basics of business are relatively simple as we point out in our “Simply Put!” series of guides, which are referred to throughout this Introduction to Business Management.

The key to keeping business simple is to realise that the myriad of tasks that you need to perform can all be grouped under one of the following 6 headings:

• Strategy and business planning
• Administration and finance
• Marketing, sales and public relations
• Human resources
• Technical procedures and quality assurance
• Information and communications technology

“In the end, all business operations can be reduced to three words; people, product and profit”

1. Strategy and business planning

Successful organisations prepare a strategy and business plan at the outset. They also refer to them frequently and use them throughout the year as a prompt to take action and stay on course. It is important for every business to have a written strategy. The purpose of writing a strategy is that it exposes flaws in your thinking and helps to steer you away from expensive mistakes.

Strategy

Every organisation needs a statement on its overall objectives; to define its scope and the way it wants to do business.

New Organisations can start with a clean sheet of paper, learn from the mistakes of others and create a first class strategy.

Established organisations have the more difficult task of ensuring that they do not become a “slave” to their strategy and thereby fail to adapt to changing circumstances.

Successful organisations have the foresight and confidence to revisit their strategy on a regular basis and determine whether they need to adjust their course.

The format of a strategy can vary dramatically, depending on the scale of the organisation, the complexity of its goods or services and personal preference. There are no hard and fast rules in the scoping of a business. Typically, the strategy might comprise the following:

• Vision
• Mission Statement
• Strategic objectives

Together, these documents summarise the wider context of why the organisation exists and the outcome that it seeks; the role that the organisation plays in delivering these outcomes and the strategic objectives which it has to deliver them.

Business plans

If the strategy describes where the organisation wants to be and what it wants to achieve, the business plan should describe how it intends to get them, including the financial and organisational consequences.

A business plan should be an action plan, not just a reference document. It should be referred to frequently and progress monitored.

For further information, see:

• “Strategy and Business Planning – Simply Put!”
• “Vision and Mission Statements – Simply Put!”
• “Strategic Objectives – Simply Put!”

2. Administration and finance

The importance of administration and finance is well known to successful organisations but underestimated by many. The facts are that good administrative and financial systems are vital to the smooth running and even the survival of an organisation. (It is a fact that more businesses go out of existence due to poor cash flow than due to poor profitability).

To the less enlightened, administration contains all the “thankless tasks”. In reality, administration is an area where the skilled make a large impact on the organisation. The range of activities is very wide, including:

1. Premises
2. Housekeeping
3. Purchasing
4. Insurances
5. Record keeping

Since the key task of administrative systems is to make the organisation run efficiently, it is important that information can be found. Each piece of data should fulfil the following criteria:

• It should be of value
• It should be stored once only
• It should be used, wherever possible, for a variety of purposes
• It should be used in conjunction with other data to provide answers to questions or to guide the organisation in seeing trends and taking action accordingly.

Administrative systems can become unwieldy over a period of time due to the wide range of matters which they deal with. It is appropriate to review them from time to time.

The standard of financial systems varies considerably between organisations. There are three main purposes of financial systems:

1. To provide a very clear picture of the current financial position.
2. To provide a forecast of the likely financial picture in the short, medium and long-term future.
3. To direct management in taking action to improve the financial position of the organisation.

Finance systems include:

1. Balance sheets
2. Profit and loss accounts
3. Invoicing Debtor control Creditor control
4. Cash flow
5. Budgeting
6. Banking

There are many proprietary systems for dealing with financial information, but in our experience, most organisations need to either devise a specialist area of its software or carry out a “manual intervention” to bring all of the financial information together in a meaningful way.

For further information, see:

• “Business Administration – Simply Put!”
• “Business Finance – Simply Put!”
• “Profit and Loss Accounts – Simply Put!”
• “Balance Sheets – Simply Put!”
• “Cash Flow – Simply Put!”

3. Marketing, sales and public relations

These three “companions” are fundamental to the survival, development and success of most organisations, whether they are in the private, public or not-for-profit sectors.

Marketing

The Chartered Institute of Marketing defines this as:

"The management process responsible for identifying, anticipating and satisfying customer requirements profitably"

Effective marketing should influence and align with the strategy and business plan. It “paves the way” for the organisation as it is about positioning, co-ordinating and carrying out a mix of different activities consistently. (Even the public sector needs to market itself to its political masters if it is to survive.)

Sales

This is the process by which an organisation provides information to a potential customer to persuade them to buy goods or services. (This applies only to the private sector).

Successful organisations are very professional in their sales techniques, which comprise of consultation and the provision of information, rather than aggression and pressure.

Public relations

This is the planned and sustained effort to establish and maintain goodwill and mutual understanding between the organisation and the outside world.

It involves communication and improving the reputation of the organisation, through a wide range of processes that need planning and executing consistently.

The majority of organisations have a number of different facets of the public to address. For example, a local authority may have to consider public relations for:

• Local Constituents
• National Government
• Local Press
• National Press
• Contractors
• Suppliers

For further information, see:

• “Marketing, Sales and Public Relations – Simply Put!”

4. Human resources

Successful organisations do more than administer the terms and conditions of staff; they help to develop their people to fulfil their potential.

Organisations vary considerably in size; some being run by owner/managers and others being international corporations with a professional in-house HR Department. However, the basic tenets of human resources are as follows:

Policy and procedures

Any organisation which employs people must have some policies and procedures, many of which are determined by law.

Successful organisations tend to focus on values and they ensure that their systems are as simple as possible. They also ensure that they keep up with the rapidly changing employment laws.

Payroll

One of the most important functions of the HR department is the establishment and maintenance of a payroll system which pays people the right amount at the right time.

Recruitment

The way in which organisations recruit can have a profound impact on their level of success.

Good practice involves a clear policy, detailed planning, good communication with candidates, thorough testing to effectively match the competencies, experience and attitude of candidates with the culture and needs of your organisation.

Development and training

Managing staff training and development results in improved performance, cost efficiency and higher morale. It also creates a better place to work.

Health & Safety

Nothing is more important to an organisation than the health and safety of its people.

Health & safety requires close attention to the following:

1. Policy
2. Attitude
3. Vigilance
4. Monitoring
5. Regular review
6. Integration with day to day operational procedures

For further information, see:

• “HR Management – Simply Put!”
• “Leadership – Simply Put!”
• “Contracts of Employment – Simply Put!”

5. Technical procedures and quality management.

Every organisation needs written procedures which define how business is conducted day to day. They should be designed to provide clear guidance to people working in the organisation to avoid errors, improve efficiency and set standards. The most important role of technical procedures and manuals is to produce consistency, even when new people come into the organisation.

Successful organisations review their procedures regularly and consult their people in order to make incremental improvements, saving time and money. They achieve this by observing what works well in-house or for their peers and competitors in order that they gain insight into the changes that would deliver results. Often, they will commission a full benchmarking study in order that they can accurately measure where they stand in terms of results.

The terminology for these documents is varied; technical procedures; process manuals; quality assurance manuals; best practice procedures and many more. The title does not matter; what is important is that procedures are fully documented and made available in a readily available form, whether it be paper manuals or online.

For further information, see:

• “Technical Procedures and Quality Management – Simply Put!”

6. Information and communications technology

ICT is vital to the success of an organisation as more information and services are dependent on the ability to deliver them through ever-changing computer and telephone equipment.

The key to the success of ICT is to ensure that it is aligned with your business objectives, rather than being seen as a “stand alone” series of systems and equipment.

The four cornerstones of effective ICT are:

1. ICT Strategy

   It is important to set out the details of what the organisation requires to operate effectively. This is similar to setting out the strategy and business plan for the organisation as a whole; indeed, it is important that the ICT strategy is aligned with the overall strategy. The question to ask is “how does this component of the ICT system contribute to achieving our objectives?”

2. Software

   It is important to give people the “right tool to do the job”. A proper analysis of core business requirements leads to the procurement of the right software, which provides a return on their investment. Successful organisations tend to buy the best software that they can and appreciate the fact that if they are asking their staff to deliver a quality service under pressure, it is better to remove the inefficiencies and de-motivation caused by outdated software.

3. Infrastructure

   First class ICT infrastructure is essential to prove a reliable and rapid service to all ICT systems.

4. Training and support

   If an organisation invests a substantial amount of money in ICT systems, it is equally important to ensure that it is used effectively and efficiently by providing training and support to Users.

For further information, see:

• “ICT in Business – Simply Put!”

Further Information

If you are interested in Business Management, you may also find the following Guides useful:

• “Introduction to Change Management”
• “Introduction to Personal Development”
• “Introduction to Project Management”