Research into the failure of small businesses in Australia has shown that in more than 90% of small business failures, the lack of appropriate management skills has been identified as the main cause of failure. One way of compensating for this lack of management skills is to have them outsourced to experts. For most small businesses, this is beyond the reach of their limited budgets. A more realistic option is to develop the skills needed to manage their business activities. Let’s examine the key competencies you will need.
Skills to undertake relevant business research should be developed, including the identification and location of relevant business information, analysis of data in order to define an appropriate strategy. Then develop the ability to communicate this strategy effectively in a formal way, such as a business planning document, or informally communicate it, if necessary, to your employees or other stakeholders.
Sales and marketing management
Strong sales and marketing skills are essential to promote your small business and its products and services. You need to be able to undertake market research to help you determine where your markets are located, the total market size and the size of each of its key segments. You should also be able to identify the profile of customers, identify their needs, desires, behaviors, and ambitions, and communicate information to powerful and effective marketing campaigns and sales techniques that will help increase sales revenues.
You need to be able to keep a finger on the pulse of your customers’ ever-changing requirements and the business environment in which you operate, and identify threats and opportunities that may affect your small business. The inability to adapt to changes in the market has been identified by market research as one of the key skills missing in small businesses.
Many entrepreneurs pass the responsibility for managing their company’s finances on to their accountants, which is a mistake of newcomers. As a business owner, you have to take responsibility for managing your finances.
The first basic requirement is the ability to maintain an accounting system that complies with current tax requirements such as MYOB or Quickbooks. These systems provide a range of automated processes, including the provision of key financial documents such as balance sheets, income, and expense statements and cash flow forecasts.
You need to develop basic skills to keep your business running as more and more companies fail due to lack of cash and not due to lack of profit. You also need to make sure that your business has enough capital to continue as a going concern. Financial planning and management skills are also important for the survival of your business, and you need to develop working relationships with accountants and tax specialists.
It is important that you develop an awareness of your rights and legal obligations. You need an in-depth knowledge of the laws, regulations, codes of conduct and licensing requirements that your company must comply with. Taxation is only one of the complex legal elements you will have to face.
Which ownership structure you choose for your company also brings with it further legal rights and obligations. Being able to fully understand and manage the impact on your business is important.
You need to develop operational management skills in order to develop the systems and processes through which you deliver your products and services. The more efficient and effective they are, the more “productive” your business will be. Basic operational skills include planning, management, communication, and effective system design.
Your staff may be your most valuable business capital – or the most expensive, depending on your employability. Developing appropriate policies and procedures, as well as developing introduction, coaching and mentoring programmes can help to develop a productive workforce.
Your personal organizational skills can be the key to the success or failure of your small business. You need to be organized, productive, able to communicate and manage your time. You need to be able to negotiate effectively, motivate employees and be able to cope with persistent levels of stress.