"I found I had to become a business person,
something I didn't realize I was going to have to do. I had to learn a lot
about accounting, about bookkeeping, about the banking business."
In addition to knowledge of a specific field, small business
owners need to know the basics of managing a business -- for example, the
principles of accounting and bookkeeping, production scheduling, personnel
management, financial management, marketing, planning for the future, and more.
Many owners feel they were under prepared in these areas, particularly in the
financial aspects.
One of the best management skills to have, according to a golf
equipment manufacturer, is fearless self-knowledge. "Be qualified to run
your business," he advocated. "Be aware of your own weaknesses and go
out and get help to make up for those areas...to get through that first one or
two years."
Other executive skills are also important. A computer-engineering
consultant stressed her need "to be able to do briefings properly,
comfortably, to gain confidence of groups of people...to quickly communicate my
capabilities and my company's capabilities."
Executive skills also include goal setting and decision-making,
and human resource development. This last aspect is important, noted many
owners, because it builds the future of a business. Not only must you find and
retain good employees, but you must continually train them to ensure that you
have a qualified staff as the business grows.
Another common theme expressed among the many small business
owners interviewed was the need for good sales skills. During start-up, many of
them found themselves sales people for the first time.
As a business grows, the need to further develop management skills
intensifies. In addition to such areas as managing people, the ability to plan
is an essential skill that builds the future of a company.
"Planning," according to one owner, includes the idea of
budgeting not only for your present conditions, but also planning for the
future." Anticipating what your industry will be like several years down
the road, where the competition is directing its efforts, what customers will
want in the future, and where profits should be reinvested are some samples of
what must be included in planning efforts.
To help with ongoing planning during the life of their businesses,
many owners develop a formal business plan before starting or purchasing a
company.
"We did a lot of planning before we started," recalled a
publisher. "We did the whole business plan and marketing plan, and planned
out how much revenue we were going to receive for the first year and how much money
we were going to need to get us through."
Business plans usually include projections of fixed and variable
expenses, and analyze of the company's break-even point (the amount of sales
necessary to cover expenses), competition, and projected sales. A business plan
also includes strategies for marketing and growth.
This establishes a permanent but flexible "game plan"
that provides guidance when difficult decisions must be made. Other planning
tools, such as annual marketing plans, spell out specific steps to be taken to
reach short-term goals.
During any kind of planning activity, outside consultants such as
accountants and lawyers, and agencies such as the Small Business
Administration, can provide valuable expertise.
Finally, one of the most important but often overlooked aspects of
planning is how or when to leave your business. A successful financial service
business owner insisted that this should be included in the initial business
plan. "By the time many people are ready to sell their businesses,"
they're so personally involved in the business that they cannot make an
objective decision. The decision to divest oneself of a business is a highly
emotional and difficult one. By establishing early-on the conditions under
which a business will be sold, you can make a better decision."
See my new "The Small Business Management Guide"
