Once you have decided to start up a home-based business, there are several issues to be handled before the business can begin making a profit. The management of a home-based business is the sole responsibility of the business owner and knowing how to manage the business is of paramount importance.
Successful business management, for a business of any size, requires a focus on five critical management issues: money management, business management, human resources management, resource management and time management.
1. Money Management
Money management is the top priority for any business. The success of your home-based business is fully dependent upon how well you manage your money and investments. Accounting, cash flow management and financing are all important aspects of money management.
Accounting – Keeping track of money spent and earned is the first step in money management. Accounting software is a great tool for a home business and there are many programs available in the market. Often the software is simple and straightforward which allows the business manager to keep track of all financial data and produce financial reports, helpful tools in planning future budgets. Simply Accounting and QuickBooks are two great accounting software packages for home businesses.
Cash Flow Management – Cash flow management is the process of monitoring, analyzing, and adjusting the cash flow of the home business. Once you have your business accounting handled you are ready to manage the cash flow. The most important aspect of cash flow management is the avoidance cash shortages, which can cause a gap in the inflow and outflow of cash in a business. Many accounting software programs have built-in features that make cash flow analysis easy.
Financing – Every business needs money to survive and thrive. Various forms of investment and financing are available to make a home-based business a profitable venture.
2. Business Management/Planning
Business management plays a vital role in how well a business does and there are two aspects of business planning that require attention. One aspect is managing the goals of the home business; the other is crisis or disaster management.
Every home business owner needs to create long-range goals and objectives for their business and make a plan to achieve those goals. Setting goals allows the business owner to be come proactive about improving the business, instead of reactive when a problem arises.
Crisis/Disaster Management is vital for any kind of business. Having a crises/disaster management plan in place prepares your business to avoid most problems and give you a means to resolve any unexpected problems. It should be understood that crises and disasters are two separate entities. A crisis is a situation of extreme difficulty or danger, while a disaster is an event that results in damage and possibly death. In the event of crisis or disaster you need to have a plan in place that will help you identify the problem and arrive at a solution, or at least a means of recovery. Crises and disasters will occur at the most importune times so it is important to maintain a level head, try to control the situation and minimize damage. Preparing a crisis/disaster communication plan is important because it helps you solve the crisis/disaster with whatever help is necessary and available.
3. Human Resource Management
Human Resources Management is an important aspect of business. With a home-based business, you need to know how many employees you can accommodate in your home without sacrificing too much personal space as well as how many your budget can support. Recruiting, retaining and dismissing employees, employee training and employee motivation are all part of human resource management. Remembering that employees are your number one resource will help you more greatly value your workforce.
4. Resource Management
Resource management means managing the physical resources of a home-based business such as data, equipment, supplies and inventory. Data management involves setting up a filing system, dealing with receipts, email management, file management, document management and records management. Every home business has data that needs to be protected, such as consumer records, marketing plans and financial documents. Using computers to store your data makes it easier to archive your information and help your business run smoothly.
5. Time Management
People often mistake time tracking for time management, but keeping track of time is not the same as managing it. Time management is about handling the way you spend your time so that your business will run efficiently. Effective time management requires that you keep track of your daily activities, analyze how you actually spend that time, making sure that there is no wastage and eliminating what waste exists to effectively manage your work.