In this article in a series of articles, Introduction to the Business World, we will talk about managing small business projects, and how to do so, by mentioning some important points that should be taken into consideration in order to ensure the smooth running of the project and achieve good control over its management. We will also point out the most prominent pros and cons of the small project.
Managing a small business
Why does a small business owner face insurmountable challenges?
Managing a small business represents a significant challenge, and whether you establish the project from scratch, or buy an existing one, you must maintain its continuity, and the owner of the small business must remain ready to solve problems as they arise, and move quickly in the event that conditions in the market change .
A commercial plan is indispensable to keep the small business owner aware of all aspects of his project, and other important responsibilities entrusted to that owner are employing people in his project, training them, and managing them, because the owner’s role in the project is subject to change over time; As the company grows, other people will make day-to-day decisions, while the owner focuses on managing employees, planning for the long-term success of the company, and on the owner – also – constantly evaluating the company’s performance and policies in light of changing economic and market conditions, and he must develop new policies according to As the case may be, and he must – also – be careful to ensure a continuous flow of ideas, to maintain the growth of the project, a growth that may lead to a change in the type of employees required, as a larger company may need more administrative talent and technical expertise to balance the project at its inception.
The use of consultants from outside the company
The use of consultants from outside the company is one of the means to reduce the burden associated with managing it, and almost all small businesses need certified public accountants to help keep project financial records, make related decisions, and tax planning, and an accountant who works closely with the owner is – To assist in the growth of the company – a valuable addition to the project, and a lawyer with experience in laws governing small business projects can provide legal advice, drafting contracts, and basic documents, and can also seek the assistance of consultants in the field of marketing, employee benefits, and insurance, when needed. . Other sources of advice that the business owner can use include: External directors; Those with business experience, then, the external resources that we mentioned – above – help the project owner to devote himself to, and focus on medium and long-term planning, and on managing the daily operations of the project and keeping pace with them.
Some aspects of the commercial project can be outsourced, and specialists will be assigned the task of dealing with them, and among the departments that resort to outsourcing the most is the IT department, marketing, customer service, meeting their requests, employee salaries, human resources, and an external company can be used – which is often A small project – to save money, because the buying company does not buy only the services that it needs, and does not resort to expensive investment in the world of technology, and the management must review the jobs and tasks that it has outsourced to external sources, coinciding with the growth of the company, because at some point The age of the company, it may become more cost-saving, bringing those jobs into the organization, rather than resorting to outsourcing.
Hire and retain workers
It is important to know the size of the expenditures that are used to employ people, in order to ensure that the company can pay those expenses, so it is the matter of employment, advertisements that require employees, and the expansion of the company’s space to accommodate new employees, in addition to the taxes that are involved in that. To increase the rate of between 10 to 15% of the expenses related to employment to the salaries of those employees, and employee benefits will add a heavier burden on the owner of the business, and it means the use of new employees, an increase in the work assigned to you, which requires you to train them and take over the management of their affairs . So, you are in a vicious circle; Because you need to hire more people; Grow your business, but moving from a single worker, to being the boss of an employee group, can be emotionally stressful for you.
Attracting competent employees is a difficult task for small companies, which, unlike large companies, may not be able to pay higher salaries, better benefits, or achieve expected growth. Therefore, small companies must be on a level of creativity, that enables them to win the right employees and convince job applicants to join them, and as soon as these small companies succeed in hiring one of them, their owners must make the satisfaction of that employee a high priority, in order to keep the good ones. Among the techniques that help small businesses retain their employees: Establishing a culture that provides a comfortable atmosphere for them, flexible working hours, benefits programs for them, opportunities to help them make decisions, shares of company ownership and profits.
Duane Ruh found a way to start a $ 1.2 million company in a town of 650 people to show that the lesson was in dealing well with employees. Little Log Co. in Sergent, Nebraska, prides itself on its preferential employee policies that you usually hear about, but hardly ever touch on the ground. . Duane Roe provides his employees with flexible schedules, giving them ample time for their personal lives, and during the recession that prevailed, Duane Roe reduced his employees’ working hours; Instead of being laid off, at a time when there were not many job opportunities in that part of Nebraska; For this reason, he refused an offer to buy his commercial project, which had the consequences of pushing him to close his facility, while remaining in his position, in exchange for a salary that many dream about. Rowe encourages his employees to look for additional work, or during the summer, if they want to make more money, and assures them that their jobs with his company will not be affected by any change.
Orientation to the global market through export
An increasing number of companies are realizing the benefits of heading to markets outside the United States, as the global market represents a great opportunity for American companies, small and large, and there are many factors that drive small commercial companies to make an export decision, including:
The desire to increase sales, and reap more profits, low prices for American goods for buyers in markets outside the United States, in the event of a decrease in the value of the dollar against foreign currencies, this provides an opportunity for American companies to sell their products and services abroad. Among other factors that encourage US companies to export: the economic conditions inside the United States, such as: recession, foreign competition for American companies, and new markets that appear in foreign countries.
Making an export decision requires careful planning, just like any commercial decision of great importance, and small companies can use international trade consultants, or distributors, to start selling their products and services globally. These experts possess the time, knowledge, and resources that small firms lack, and export trade firms buy goods at reduced prices from small firms and resell them globally, while export management firms work on behalf of a company; In exchange for fees ranging from 5 to 15% of net sales, and contracts spanning many years, export management companies undertake all aspects of exporting, including finding consumers, billing, shipping, and helping companies adhere to the local regulations of the countries they export to.
There are many resources available on the Internet that help you find potential markets for your goods and services, as well as reduce the difficulties associated with preparing to sell in a foreign country.
The Small Business Association’s Office of International Trade has many links that connect you to valuable websites, and the US Department of Commerce provides services for businesses that want to sell abroad.
Small project, big impact
What are the positives and negatives that small business owners experience?
An unstable economy has not prevented people from establishing new companies, and reports of the National Federation of Small Businesses show that 85% of Americans view small businesses as having a positive impact on their lives, and this is not surprising if you look at the reasons why Standing behind the flourishing of small businesses in the United States, including:
Independence and a better lifestyle: Big companies no longer represent job security, or provide a shortcut to professional opportunities, as was the case in the past, and mid-career employees leave the corporate world, either voluntarily, or because companies reduce the number of employees, and that In search of new opportunities provided by self-employment. Many recent graduates avoid the corporate world, with the aim of establishing their own companies or looking for work with small companies.
Self-satisfaction with work: Many small business owners put this factor at the forefront of the reasons that lead them to establish their own companies, as they love what they do.
The best path to success: Business ownership provides better advancement opportunities for women and minorities, and this is what we will talk about later in the course of this chapter, and it also allows business owners the possibility of making profits.
Rapidly changing technology: technological advancements and lower costs allow individuals and small companies to compete in the commercial areas in which they operate, which were previously out of reach for them.
Reducing the number of employees by large companies, and restructuring them: These factors drive many employees to search for work or other professions, and these factors may provide an opportunity to buy a business unit that a company no longer wants.
Outsourcing: As a result of reducing the number of their employees, American companies may contract with others outside, to obtain services that were previously provided within the company requesting outsourcing; Outsourcing provides opportunities for smaller companies that provide these specialized goods and services.
Small businesses are resilient: they are able to respond quickly enough to changing economic conditions by refocusing their production operations.
Why do you keep your business small?
Small business owners acknowledge that the small size of their businesses provides them with a number of advantages. The high flexibility and simple company structure allows small enterprises to respond more quickly to changing market forces, and innovative production ideas are scalable and reach the market more quickly, using fewer resources and personnel than the larger companies need. The commercial enterprise more effectively, can reduce costs – as well – and small companies can meet the needs of niche markets that may not be cost-effective for larger companies. Another advantage of small businesses is the opportunity to provide a higher level of personal service, and that care provided by small projects will attract customers again to them, such as: high-end restaurants, health clubs, resorts, small clothing stores, and travel agencies.
Steve Niewulis was a Major League Baseball player, before he suffered an injury to one of the rotator cuff muscles. His idea was inspired by an issue baseball players face with keeping their hands dry; So he created a bag of pine gum powder that attached to the player’s wrist and helped him dry his hands while separating the other player’s throws, and in less than two years, Steve sold his Fort Lauderdale-based company, Tap It Inc. (Fort Lauderdale), in Florida, has thousands of that product called Just Tap It! Steve’s product – which has a retail price of $ 12.95 – is used by baseball players, basketball, tennis, golfers, and even rock climbers. So what’s the secret of Steve’s success? The answer: The secret lies in finding a small distribution network that allows success for small companies that have only one production line. On the other hand, the small size of the project may not always be an advantage. Their founders may have limited administrative capabilities, or they may face difficulties obtaining adequate funding, or potential obstacles may hinder their attempts to grow their small businesses. Moreover, adherence to federal regulations in the United States is more costly for small businesses; Those with less than 20 employees spend on each employee – as a result of adhering to these laws – twice the amount paid by larger companies, and establishing and managing a small business requires greater commitment on the part of the owner, and long working hours and the necessity of business owners To accomplish a large part of the work themselves, and the tension associated with their personal responsibility for the success of the project, that it causes them significant damage.
However, the burden of managing the company in its growth stage should not be placed on the shoulders of one person, an example of this is: Drink Works, which today is called Whirely Drink Works, which is a company that manufactures drink cups according to The request, and the owner of that company – called Richard Humphrey – worked a hundred hours a week, and he says: “I was afraid that if I had not been in the company all the time, it would inevitably collapse.” This led to illness, weight loss, and breakdown His engagement, then an emergency situation involving one of his family members forced him to leave the company in trust in the hands of five of his employees, and after his return to the company, he was amazed at how well they managed it in his absence. Describing what happened, he says: “They accepted the challenge, and they succeeded in it, after which the whole company witnessed a state of balance.”
Translated -and-Acting-of the chapter (Entrepreneurship: Starting and Managing Your Own Business) from Introduction to Business