Magazine article The National Public Accountant

Small Business Management; Ensuring Your Client's Success

Magazine article The National Public Accountant

Small Business Management; Ensuring Your Client's Success

Article excerpt

In the past few years, the United States has experienced a major trend that promises to leave a permanent impact on American business and industry, that is, the tremendous number of people creating new, individually-owned small businesses. Coming at a time when large corporations are streamlining operations by laying off thousands of employees, this small business boom is good news indeed. The bad news, however, is that managing these small companies is no easy trick, and about 80% of them will fail within five years! The focus of the following discussion, then, will be on how to successfully manage a small company The characteristics of successful entrepreneurs, common reasons for company failures, and general rules for smart business operations will be examined.

The small business area, as mentioned earlier, is becoming increasingly important as an employer. Government statistics show that over one-third of our gross national product and over one-half of all non-government jobs are now in the small business sector. Significantly, several studies have shown that all of the net employment increase in the past 10 years has been caused by companies outside the Fortune 500. With more than 600,000 new businesses being created by entrepreneurs each year, however, there is also a startling failure rate. The 80% failure rate described earlier is caused in an overwhelming number of cases by a basic lack of management skills. The successful entrepreneur becomes the exception to this grim statistic by learning the basics of small business management and by studying the winners and losers.

The entrepreneur is described as one who organizes, manages and assumes the risks of a business or enterprise. Those who fit this description do so for a variety of reasons. Many people start a business to seek greater fulfillment and to build self-worth. Others desire more independence than they have as an employee. Some people want to be rewarded for their determination and guts to see results for their personal efforts. This same attitude is reflected by others who start businesses because they feel frustrated or dissatisfied with big corporate America. A similar opinion is expressed by some as feeling victimized, used, or unappreciated by their employers. The desire to make more money is also cited as a reason, though not by as many as popular theory holds. Finally, some entrepreneurs are motivated to start businesses simply because they can't find a job they like; so they custom create their own.

The successful small business managers also shared a number of personal characteritics, some of which show up in almost all entrepreneurs. Common characteristics found in these managers include high energy and good health (to work long hours), strong self-confidence (to survive repeated rejections! ), optimism, initiative and self-motivation. other characteristics shared included flexibility, good "people skills", creativity and a problem-solving ability, emotional maturity and a realistic view toward risk-taking. For all small business leaders, the need for substantial managerial know-how is indisputable; one study showed that the average manager faces two major decisions and 10 minor decisions each and every day ! To prepare for the demanding task of managing a small business, a number of suggestions are commonly recommended. First, a potential entrepreneur should learn as much about the general business world as possible through newspapers, business periodicals, lectures and educational programs (ranging from a half-day seminar to a full MBA program). This same approach should also be applied to the more specific business area that the company will be dealing with. Many people also got a valuable "education" while still working for someone else, by closely examining different management approaches. Another common recommendation is to try running a small, low risk, existing business to gain "hands-on" experience. This is often a part-time job held while still employed. …

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