What is Business Management?
Updated: Jul 1
Business management handles, coordinates, supervises, and organizes business activities to meet business goals and objectives. Managing a business covers producing goods or services, cash management, physical equipment and resources, marketing, and cultivating innovation.
Business management is an umbrella term that encompasses the management of various business departments and activities in any industry. The process of overseeing company systems through proper leadership and collaboration creates a healthy work environment where employees want to work to their best potential, which are essential elements to a successful business.
The main functions of management include:
Planning
Organizing
Leading or Directing
Controlling Resources
The ultimate responsibility of business managers is aligning resources with business objectives and achieving financial goals.
What Does Management Do?
CEOs, Managers, and Directors have the expertise, empowerment, and authority to oversee an organization and make business decisions. Management teams are sometimes solo entrepreneurs or founders or a team of managers across multiple businesses worldwide. In well-established or publicly-traded companies, the policy is defined by the board of directors and carried out by the CEO.
Effective management consists of building teams, continuously improving, and collaborating across departments to meet company standards and achieve business goals. Here are some of the methods or tools business leaders use to meet achieve results:
Identify issues and take action to resolve them
Setting clear expectations and boundaries for staff to perform at high levels.
Participating in business activities to streamline processes
Collaborating with lower-level managers and developing future talent
Consistently tracking performance and variances to goal/budget.
Listen to feedback and implement procedures that improve workflow and employee relations.
Interact with industry leaders, competitors, and partners in the value chain to uncover growth and expansion opportunities for your business
Standardized reporting and communication channels to eliminate redundant meetings and emails
Data analysis and reporting to align resources
Business management comes to building successful teams that fit with the company culture. More importantly, successful managers are constantly evaluating and driving efficiency improvements to organizational resources:
Financial: cash, assets, liabilities, and investments
Human: recruiting and retention, training and development, and flexible work structures
Physical: inventory, real estate, equipment, and other tangible assets
Technological: intellectual property, patents, software, databases, consumer information, private data, and internal systems
Effective Business Management
Business managers develop systems, procedures, and processes known as controls to deploy resources effectively, meet profitability goals, and guide decision-making.
Internal controls provide a foundation for tactical and strategic business decisions when forecasting, growing, and operating your business. Effective managers meet organizational objectives by satisfying customer needs and expectations consistently and repeatedly. In addition to this, effective business management also requires adapting to changing business trends and industry requirements. It furthermore includes fostering solid relationships with customers and service providers and promoting a positive workplace culture. Business management is about understanding and managing business activities to improve growth and revenue.
Business controls ultimately devise a business management system by monitoring the current performance of finances and staff, planning, and forecasting for the future, and receiving customer feedback. Skilled managers challenge the status quo by utilizing their controls' data to improve the business continuously. Robust controls will provide managers with current snapshots of financial data, KPIs, employee performance, inventory levels, customer service scores, and the overall company scorecard.
Business management systems allow managers and companies to store critical data from their core business activities in an accessible channel for all authorized parties. Regardless of the function, these systems are crucial to meeting deadlines and sticking to your annual plan.
The primary responsibilities of management include:
Leadership:
Setting a clear vision, providing guidance, and motivating employees to work towards company goals.
Strategic Planning:
Developing long-term plans and strategies to achieve business objectives, considering the latest trends, and market research, and formulating a strategy for competition and internal capabilities. Managers must be skilled in leadership, communication, and problem-solving and be able to make strategic decisions that drive the organization's success.
Organizational Structure:
Establish an efficient structure defining the company's roles, responsibilities, and reporting relationships. Organizational design is a crucial element of internal control.
Operations Management:
Another key element of business management is technological operations, as it helps streamline various business processes and improve productivity. Managing day-to-day activities and processes to ensure efficient production, delivery of goods or services, and customer satisfaction.
Financial Management:
Managing financial resources, budgeting, financial analysis, cash flow management, cost management, financial communication, and making strategic investment decisions. Financial management is a critical aspect of business management, and developing finance experts can help individuals become influential leaders and achieve long-term success for their organizations.
Human Resource Management:
Overseeing employee recruitment, training, development, employee engagement, and performance management to ensure a skilled and motivated workforce and other HR functions. These responsibilities are crucial for creating and maintaining an organization's skilled, motivated, and productive workforce.
Marketing and Sales:
Developing a marketing strategy that aligns with company needs and values, understanding customer needs, and managing sales activities to promote products or services and generate revenue. A small business consultant can work with sales and marketing teams in some ways. For example, they can develop a digital strategy, a marketing campaign, or work on the web development or training side of things.
A marketing consultant is also an option for a business plan; they advise small businesses on using marketing campaigns to connect with potential consumers. They may perform research to identify consumer behaviors and assist with creating strategies to target consumers on various channels, such as social media. A marketing consultant may specialize in various areas of the industry, such as Email marketing, Search engine optimization (SEO) marketing, Content marketing, Digital marketing, Social media marketing, Influencer marketing, Print marketing, and Event marketing.
Risk Management:
Identifying, assessing, and mitigating risks that may impact the business, such as financial, operational, or market risks. To understand decision-making criteria, businesses must identify business goals, conduct market research to find better alternatives, analyze data, and consider the consequences to make informed decisions. Outsourcing and cost saving into long-term value creation help businesses maintain a competitive advantage.
Business Consulting
Small business consulting is a service that provides valuable support to small business owners who are seeking to grow, improve, or overcome particular challenges in their businesses. You can work independently as a small business consultant with a consulting firm. These services range from general business advice to specialized services like marketing, financial management, and human resource management.
One of the main reasons that companies hire small business consultants is for project management. Let's say a company has a new product or launch coming up, but they aren't sure how to strategize for it because there are only five employees, and none of them work in project management. That's when a consultant could come in and either train your employees on how to prepare and take action on executing specific business goals or provide services with their specialized expertise in strategic planning, problem-solving, operation management, and proficient organization skills. The level of commitment, both on an hourly basis and duration of engagement, vary by role and company needs.
Small Business Consulting
Management consultants help small businesses facilitate change management and other strategic initiatives. Clients needs vary based on their industry, market, and stage in the business life cycle. Small business consultants provide the expertise and practical experience to develop and manage strategy formulation and execution.
A strategy consultant comes in high demand by clients management team to increase business performance. For example, a consultant can be hired to revamp and reengineer the accounting operations for its client. Consulting firms can help analyze data, increase sales, develop human resources, and provide project management.
Careers in Business Management
Management consulting covers a broad range of industries and business needs. Management consultants almost always need a bachelor's degree, and many hiring organizations look for candidates with a Master of Business Administration (MBA) or other graduate-level education. Given the industry's broad scope, needs and expectations vary by company and job. Some management consulting firms look for new hires with computer science or economics backgrounds, while others want graduates in health care or public administration.
Some consultants specialize in nonprofits, health care, or finance. Some work on diversity and inclusion, while others focus on information technology (IT). The importance of IT is that it has become a critical component of almost every industry. Many businesses rely on Information Technology for their day-to-day operations, including financial transactions, customer service, and inventory management. IT advancements have also led to the development of new products, services, and business models, transforming various industries.
In conclusion, irrespective of the career path, business management is a core skill that will help one advance in their career. However, as the business environment changes and consumer demands evolve, business management trends and skills will likely change. If you enjoy research and problem-solving, management consulting may be rewarding.
Learn more about the Advantages of Annual Planning here.
If you are ready to receive an assessment of your business management practices and internal controls, reach out to us today for a free consultation! sales@westportbusmgmt.com