Main menu


Effective business management: 7 main principles

 Effective business management

Effective business management: 7 main principles

Business in layman's terms is “the exchange of goods or services for money with the main aim of making a profit. Such an exchange involves taking risks and investing time, ideas and finances.”

"You can manage any business well if you can manage one well. ." 

Any business, be it small, large or online, cannot be created without proper management of time, human resources, finance, technology, new and creative ideas, and the interaction between all of the above. The client is the most crucial player in your business, therefore keep that in mind.*

A successful entrepreneur not only attracts new customers, but also maintains old ones by constantly interacting with them so that he can maximize profits by providing the best products and services in accordance with the current requirements and needs of his customers. One frustrated customer can turn many more customers away from you. Thus, this leads to the risk of losing regular customers, and as a result, to a decrease in profits, to a decrease in market share and company value.

But an entrepreneur should not only think about his clients, he must take care of the human resources in his business, that is, the people working inside the organization. Companies need to keep track of the satisfaction of their employees as they can be an important business asset.

Ideas, planning, management, control can be ideal and enable you to achieve high results in the future through the optimal use of resources, however, if employees are dissatisfied and dissatisfied within the organization, the implementation of these planned ideas can go in the opposite direction.

Therefore, business does not involve the production of goods and services, their exchange for money and profit. It is associated with great risk, and a businessman must be active and flexible in order to take into account the changing needs of customers in a constantly changing market. And with that in mind, we can define a business more clearly, which is providing the customer with the best product or service, as well as effective, low-cost after-sales service, which retains customers and brings good profits.

Effective business management is carried out through proper planning and strategy, competent resource management (people, money, materials and equipment), as well as predetermined short-term and long-term goals aimed at making a profit and retaining and attracting more customers, which further leads to increase in market share and company development.

How to effectively manage a business?

1. Effective communication . Communication is important for any business. Proper communication is essential for best results, so you should make sure everyone in your company gets the same messages. Direct communication is the most effective way, which not only makes the message clear, but also creates a sense of trust, responsibility and belonging to the employee, which allows him to achieve better results.

Communication is a two-way process. When discussing the plan and delegating responsibilities, it is important that everyone is on the same side, which means that everyone should have the same understanding of the plan and its implementation.

2. Timely brainstorming . Brainstorming is an activity that involves getting ideas from all the employees in a company. In large companies with a hierarchical management system, this is done at different levels in the form of mini-teams, and finally, ideas are discussed with top management. And in a small business, an entrepreneur can arrange a meeting with all of their employees and get an idea of ​​a particular situation.

The most important thing about brainstorming is that people have the freedom to speak their mind without being judged, as long as there is a logic behind the idea expressed. This results in all employees sharing innovative ideas , whether they are experienced employees or new talents, which gives each of them a sense of confidence and belonging, as well as working hard to achieve the best results in the company.

3. Dynamic environment . Any business that is at rest in an ever-changing environment cannot expect to develop or maintain the same market position that it had at the beginning, because adapting to the latest trends helps it move forward and cope with the demands of customers or end consumers.

Therefore, businesses need to adapt to changes, whether it be manufacturing technology, product mix, customer preferences, or anything else that may affect the business itself. Any enterprise, large or small, must be flexible and dynamic in order to effectively manage the business. Employees should be trained from time to time to reflect new trends or new technologies.

It's not just about end-user demand or needs, it's also about new technologies that businesses have to deal with. We live in a technological society, and therefore, you should always be aware of all technological developments.

4. Power and Responsibility . A business can only be effective if there is an appropriate delegation of authority and responsibility. There must be a balance or balance between "power" and "responsibility" as they go hand in hand. If the empowered person does not delegate responsibilities constructively, this can create a problem throughout the work system because with empowerment comes responsibility.

It is very important to delegate some authority to the person to whom you are delegating responsibility, as this gives them the opportunity to make the necessary decisions , rather than chasing bosses to get permission. At the same time, it gives them the freedom and confidence to make decisions, and thus develop them as effective employees.

5. Effective planning. It is very important for an entrepreneur to have two or three good plans (A/B/C) so that if one plan does not live up to expectations, there is always an alternative plan ready to give optimal maximum results.

The best way to effectively manage a business is effective planning . You can easily do this by planning a specific business strategy. First, you need to choose a great strategy that should focus on both the positive and negative outcomes of the potential business plan. The best way is to prepare for failure rather than success, since most early ventures have limited chances of success.

Planning processes can lead to increased productivity, improved quality, and improved efficiency in the execution of important business tasks. The purpose of planning as a process is to improve and optimize the company's business practices, such as:

  • lower costs due to fewer staff required to perform the same process;
  • increase efficiency by eliminating problematic process steps such as cycle times and bottlenecks;
  • greater accuracy through the introduction of milestones and success metrics to ensure that every step of the manufacturing process is completed accurately;

better understanding by employees of the goals and objectives of their team, as well as their contribution to success.

6. Teamwork. A team is a group of people with different backgrounds, skill levels, knowledge levels, and mental processes. Business performance is determined by the result of the actions of employees and managers. If they demonstrate efficiency in their workplace, it will definitely help in achieving high quality results. Customer satisfaction and a company's reputation often depend on the effectiveness of the team , which includes the way they promote the company's service or product.

All team members work together to achieve the same goal and demonstrate their best qualities. This is possible only if there is cooperation, absolute understanding, fruitful communication and a positive atmosphere in the team. It is likely that different ideas can create conflict within a team, but the hallmark of a strong and productive team is working together to achieve a common goal.

7. Resource management. There are four main resources in business - people, materials, money and equipment. These are the most important resources that any organization should not only possess, but also optimally use.

People refers to the human resources both inside and outside the business, including employees, stakeholders, wholesalers, customers, and anyone else directly or indirectly involved in the process. It is very important to consider and take care of the needs of every person who is part of the business.

Materials include unfinished products, work-in-progress, raw materials, and services.
 The timely management of materials is critical as they are the input products that will further determine what the final product will be that needs to be delivered to end consumers.

Business starts with proper use and distribution of finances and cost management. Thus, it is the most important resource for starting and maintaining any business. Hence, the business must have a reliable source of funding and maintain healthy relationships with all financial groups such as banks, financial institutions, stakeholders, etc.

In this concept, money means not only the available funds, but also the associated costs. This means that in order to effectively manage finances, it is also important for a business to reduce costs without compromising the quality of the product or service delivered to the customer. You can read about cost management in our article “Basics of doing business. What an Emerging Entrepreneur Should Know.

equipment or technology. For any business to survive in the long term, an important factor is to update equipment and production technologies by training employees to keep up with changing market trends. Thus, it is very important to be a pioneer as it will help the business to take a leading position in the market and create a benchmark for other organizations in the industry.

Effectively managing a business is usually not a skill that a person acquires in a short period. Business management is a job that necessitates not just in-depth industry knowledge but also managerial abilities and an understanding of how businesses operate.

It is a learning process in which methods and approaches may change many times over the course of a career. However, the basic principles of business management, which always remain unchanged, include the ability to successfully motivate and manage employees, work to develop the business , participate in its management, and follow business laws.

Time management is key to running a business effectively, as it plays an important role in every business activity, from planning to properly executing those plans, which further produces effective results:

  • preparing the best plan that produces optimal results with minimal use of resources;
  • organization of funds not only for the implementation of the plan and the daily functioning of the business, but also for any unforeseen situation;
  • an effective marketing strategy, including market research, advertising, promotion, sales and after-sales service;
  • allocation of appropriate resources for various activities;
  • changing approaches to market trends and updating technologies;
  • assuming risks when investing in or starting new company ventures.

All of these activities mentioned above require effective time management or your business risks becoming inefficient.

"Since there are never enough hours in the day for entrepreneurs, it's critical to maximize your time whenever you can. "

Thus, time management and the above points help a businessman to manage his business in a very efficient and effective manner, which leads to excellent results by increasing profits and increasing customer base.