Small business management
What makes a good small business manager? Take a look at these tips and key skills to become a great
leader.
Top tips for managing a small business
When you start out your business is likely to be small with very few staff, if any. But as you grow and need
more staff to develop your business, here are some practical small business management tips to provide
a roadmap and help you manage your small business:
Create a business plan
To understand where your business is headed, you need to create a business plan. Outlining your
business ideal, business goals, and financial objectives will help you gain a better understanding of your
business. Writing a step-by-step guide will also help you streamline things and help achieve your
business idea.
When you create a solid business plan, you’ll be able to assess the threats your business is facing and
then allocate resources properly for your business to grow better. The biggest benefit of a good business
plan is that it facilitates sound decision-making as you understand all of the key aspects of your business
much better as a result of going through a detailed planning process.
Determine your business structure
An important part of setting up a new business is choosing the right business structure. The three
structures are sole proprietor, partnership or corporation.
You’ll also need to register your business, but how you register depends on your business structure:
- Sole proprietors and partnerships: If you plan to operate your business with a trade name,you’ll need to register it in the province where you plan to do business. Sole proprietors using their personal name don’t need to register their business. You may also have to apply for a federal business number, permits, or licenses. Check the registration requirements for sole proprietors in your province.
- Corporations: When you incorporate your business, the process will include your business name registration. Unless you incorporate federally, you will only have exclusive use of your business name in the province where you are registered.
To pay tax, you’ll need to register with the Canada Revenue Agency (CRA). You may also have to pay
provincial and federal sales tax. Some provinces automatically send you a business number and tax
account when registering. Others do not. In order to pay your employees, you’ll need to have a business
number from the CRA before you register for a payroll program account. To set up an account, you need
to know:
- your payroll schedule, eg, weekly, biweekly
- the number of employees you have
- the payroll software you plan to use
You can’t hire any employees without a business number and payroll program account number.
Hire the right people
For your business to grow and thrive, you need to hire the best people. This is more than finding the most
qualified staff. As well as having the right skills and experience, consider factors such as cultural fit and
workplace culture.
Making the wrong hiring decision, or hiring someone who leaves quickly, can be very costly. One recent
survey found that employee turnover costs Canadian companies an average of $41,000 per year, taking
into account lost productivity and the cost of hiring replacements.
As a leader, you can provide benefits to your staff to keep them happy and motivated. For example, one
research study found that offering retirement benefits decreased the chance of an employee leaving
after their first year by 40%.
You can also arrange flexible schedules and team-building activities to retain your employees. A good
manager can retain staff, making your role as a business owner much easier.
Train your employees
Any job takes time to learn the way things are done. Even for experienced people, it’s helpful to receive
training when they start a new job. Create a training plan as part of induction during the first week or so to
support your new employees. Include opportunities to observe and shadow you or another staff member,
before they are expected to take over.
Training your employees will:
- help with employee retention
- improve employee job satisfaction
- increase higher productivity
- provide more consistency in key areas, eg, customer service
- bring about better alignment with company values
- increase innovation
- increase the return-on-investment (ROI) in the employee
Learn to delegate
As a small business owner, you have many roles and responsibilities. As your business grows, you can’t
continue to do everything. Delegating allows you to work on your business, not in it, which can be
important at business-critical times. A key part of delegation is time management, and being able to
maximize your time effectively. It is an important part of resource management.
Delegating tasks helps you get on with more important tasks, such as strategic planning. It can also help
prevent your burnout by not stretching you too thin. There will be times when you or your family may fall ill
or have to travel, and by delegating and training your staff, they will be able to take the reins and keep
business progressing.
In addition, it’s important that your team members know their job responsibilities and what they are
expected to achieve. This will help keep things from falling through the cracks and save you time in the
long run.
Build communication into your processes
Good communication skills are one of the most important skills of a small business manager. It influences
all aspects of your business, from staff to clients, suppliers, and colleagues.
Developing clear systems is essential so that critical actions can be performed by staff other than a
manager. Good communication is both written and oral. Documenting your procedures and processes,
and providing answers to company FAQs will help you to easily delegate tasks with confidence.
By building good communication into your processes, you’ll:
- build better relationships between all stakeholders
- allow for increased management transparency
- contribute to business growth
- build effective and functional teams
- facilitate innovation
Poor communication from the top down risks poor sales, unhappy staff, and reputation damage. It is vital
to put time into improving the communication strategies in your business. While it might seem
time-consuming, it will save you time and money in the long run.
Plan for the future
A large part of a successful business is planning for the future. Making strategic decisions should be
short-term (now, and a few months in the future), medium-term (a year ahead) and longer- term (three to
five years in the future).
As part of your planning, analyze revenue streams, identify your ideal customers, and learn from your
competitors. This kind of research can inform many of your future plans.
When you plan, it helps you stay the course because you understand why you are doing particular
actions. You create a shared vision for your team, which helps maintain motivation by having a common
goal. It is also easier to pitch outside investors when you understand your goals. Financial institutions
may want to see your financial plans and your business plan when you ask for a loan or a business grant.
To learn more about how Xero can support your small business, explore our Small Business Guides or
check out our website.