Read this if you want to know what the key tasks, duties and responsibilities are of a small business owner.
The key roles and responsibilities of a small business owner is to maximize revenue, profit, cash flow, income and long-term net worth, by consistently producing greater results and performance from the same time, the same effort, the same activities, the same people, and the same money invested in your business. Secondly to continually reduce cost, and neutralize or eliminate weaknesses, risk and threats and develop a strategic competitive advantage to combat increasing competition.
Focus on the 6 key business drivers.
The business owners' day to day responsibility and success will come from your ability to identify, analyze, plan, implement and manage the performance of these simple but very important 6 business drivers or top-key-success-factors.
- Management - Manage yourself every day
- Money - Financial Management
- Marketing and Sales - Management sales, marketing and customers service
- People - Management of productivity, training and development of employees, suppliers and partners
- Product and Service - Your Operations. Manage quality and quantity, price, packaging, display, stock, distribution ...
- Process and Systems -Management daily operations, Admin, bookkeeping
Every one of these 6 business drivers have their own numbers. It is your job and responsibility to identify them and measure them to be able to manage them.
"Great success and mastery in any field always go to those who are brilliant on the basics"
- Brian Tracy -
Strengthen the company on the inside
The key role of a business owner is to contribute, looking for ways to become an ever more valuable person in every area of your business. Including to employees, partners, suppliers and your customers. Part of business owner job description and responsibility is to strengthen the business on the inside while expanding the business on the outside.
Clearly define the mission, goals and vision of the company.
Find the best people for the job and train them into a great team.
Keep control over finances and focused on the fundamentals of business - making money and generating cash.
Improve bottom line and maximizing long term profitability
Keeping focused on the fundamentals of business - making money and generating cash.
Building a unique business model that supports customer loyalty, trust, with a continuous stream of innovative products, added value and improved quality and quantity of service
Expand the company on the outside
Defending and maximizing market and wallet share
Focusing financial strategies on identifying sources of funds
Making investments to build company assets and long-term net worth
Exploit existing resources and develop or acquire needed resources
Spot trends and opportunities and neutralize or eliminate threats and weaknesses
Developing competitive strategic advantage on established market niche to combat the increasing competition.
The 3 most important things
Some of them have a greater responsibility and a bigger impact on your business depending on where the business is in the growth cycle. For instance for a new start up business Money, Marketing/Sales and Product is very important, As the business is growing and becoming bigger the other factors like developing the Owner, Team and Systems also becomes very important. Although every one of them is just as important as the other one, the most important ones in general will always be:
- Money - Financial Management
- Marketing/Sales and
- Your Operations - Your Product/Service.
Marketing/Sales and Money is the small business biggest task and responsibility. But the one key success factor and responsible for most success and failure, and the main responsibility of a business owner is Money - Financial Management. You can read the article "
In Brian Tracy's book - The 100 absolutely unbreakable laws of business success, the "Law of Three" says that there are only three things that you do each day that account for 90% of the value of everything that you do. There are only three things that account for 90% of your sales, profit, income and your success in the future. This Law of Three is applicable to every job, responsibility and area in your business.
In Sales, we now know that the three activities that account for 90% of your value are: Prospecting, Presenting, and Closing.
In business Profits, we know that the three most important things are: Sales, Cost and Profit margin %(or markup %)
In business Revenue, we know that the three most important things are: Lead generation, The %, of Leads Converted into sales and the Average Amount customers spend every time they buy from you.
The three most important things In Marketing are: The right target, The right message, and The right Medium.
These are just a few basics and as a business owner it's your responsibility to identify and focus on the big three important things in your business. Your other activities are also important, but not as important as the big three.
Financial responsibilities of a business owner
In Financial Management, the three areas are: Financial Record keeping, Financial Controls, and Financial analysis, forecasting and planning
1. Financial Record Keeping
Bookkeeping – This includes maintaining your business financial records like invoices, delivery notes, customers details, accounts receivable & accounts payable, and keeping the accounting system up to date. It also includes keeping records of bank statements, legal documents and tax related documents.
2. Financial Controls
Financial controls are the rules, policies and procedures that are implemented to insure control over the in, and out flow of money in the business. The purpose is to eliminate theft, corruption, and misuse or unauthorized spending of money. It's also to control client credit approval, credit limits and collections from clients.
3. Financial Analysis, Forcasting and Planning
Business Financial analysis refers to a valuation of the current and future viability, stability, and profitability of a business. It includes the evaluation of the business financial performance to determine the overall health and business using information taken from its operational activities, accounting and historical financial statements.
Business financial performance is the overall financial measure of how well a business can achieve its financial objectives, using its assets to generate revenue and profit over a given period. Signs Of Poor Financial Performance in a business may indicate that the business may be under pressure, at risk, or in financial trouble and may be going out of business in the near future. Signs of financial distress in business are merely symptoms of different causes that are responsible for a business in financial trouble.
Take a close look at your business and divide it up in different areas of responsibilities and success factors.
Search for the three things that account for 90% of your success in the future in all the different areas like: growth, sales, profit, income, cash flow, employee satisfaction, customer service, quality .....
Identify the 3 big areas that will account for 90% of your success and make that your primary focus. Don't neglect the rest, they are all important, but most of your time should be focused o the BIG 3.
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Lead and Lag Indicators For Small Business: With Examples