Your guide to successful small business management

Key takeaways

• Managing a small business comes with diverse responsibilities, from financial planning to reputation management
• Small business managers often need to make difficult decisions like when to scale a business up or down and when to hire new employees
• You can improve your small business management skills by tracking your results and regularly updating your business plan

According to the Small Business Administration (SBA), 99.9% of American businesses are small businesses, creating millions of jobs and strengthening local communities.

Small business owners play an essential role in our society and an even more critical role in their companies. It can be challenging to manage a small business—–owners take on many responsibilities to help their business thrive.

It’s no secret that running a successful small business can require a lot of work. More than half of all small business owners report working more hours this year than in previous years, according to the U.S. Chamber of Commerce.

Find out what small business management requires and discover skills that can make managing a small business easier.

5 components of small business management

Being a small business owner is like working in every department in your company simultaneously—from finance to marketing to human resources. Here are the primary responsibilities of small business managers.

1. Planning and scaling

The planning phase begins the moment you have an idea for your own business and continues throughout the life of your business. After you launch, getting caught up in your company’s day-to-day operation can be easy, but you might also need to step back and consider the big picture.

When you start a new business, you’ll likely need to do some upfront planning—how much depends on your industry. For example, suppose you’re launching a digital marketing agency. In that case, you may be able to start as a solo entrepreneur and hold off on major business decisions—like deciding on your company structure and hiring your first employee—until you’ve grown your client list.

In contrast, there’s a lot more planning to do before you start if you’re opening a family restaurant. You’ll likely need to register your business, get a food and beverage license, write a business plan, rent business real estate, and hire and train new employees before you open your doors.

Your initial planning may be even more involved if you’re preparing to launch an ecommerce startup. It could involve conducting market research, incorporating, pitching to investors to get funding for your business, working on product development, creating a mobile app, and setting up your supply chain before you can ship your first order.

When running a business, you must regularly revisit your long-term goals and business strategy. Grow your business by reaching new customers, adding new products or services, opening a second location, or expanding your service area to nearby suburbs.

But don’t mistake business growth for success. Planning for the future and scaling your business can mean scaling up or down, depending on the situation.

For example, it may make more sense for you to eliminate one of your products or services (or locations for in-person businesses) if you find that the reward isn’t worth the company resources it requires. That way, you can focus more resources on your more successful products or locations.

The key to a successful business isn’t growth—it’s happy customers and a healthy cash flow. Keep those goals in mind as you plan for the future.

2. Financial management

Managing your business finances and planning for your company’s future go hand-in-hand. Before you invest in new product development or hire a new employee, you must ensure you have the cash flow to support that business decision now and into the future.

It’s beneficial for small business owners to have financial management skills and occasionally review their business’s books themselves. Even if you have an accountant or bookkeeper who does most of your invoicing, conducting a review quarterly or semi-annually can help you catch problems early.

For example, according to Verizon’s State of Small Business Survey, 80% of small businesses reported increased costs in 2023. If you notice a spike in costs early, you can look for a new supplier to decrease your expenses, or you might raise your product pricing to ensure your business remains profitable.

Understanding your company’s finances can also help you with high-level decision-making. 

For instance, you may notice that your original product or service offering—one that used to be highly profitable—has become one of your least profitable products due to changing customer demand. This information could indicate it’s time to update or discontinue that product.

Checking your books might also help you identify unpaid invoices, allowing you to contact those customers earlier to find out why they haven’t paid.

This process can help you discover a problem in your collection process or get customer feedback about why they aren’t paying their invoice (which might help identify a problem with your business product or customer service). It can also help you collect payment, so you don’t have to write off those unpaid invoices.

3. Reputation management

Small business reputation management is essential for success. If you have a good reputation, it could draw potential customers in. If you have a bad reputation, it could scare potential customers away.

Creating a consistent and professional online presence is the first step toward developing a positive brand image. This is also one of the most critical steps in developing your small business marketing strategy.

Ensure your website, social media profiles, and business listings on online directories have a consistent tone. Don’t forget to claim your business on sites like Yelp if you haven’t already. Your business name and basic information should be identical across every platform so potential customers know they’re looking at the right company.

Even if you’re not ready to start social media marketing, creating accounts on as many social media platforms as possible can help your online reputation management strategy (ORM). This process prevents someone else from creating an account under your business name and ensures your preferred name is available whenever you are ready to use social media sites.

You can also build trust and a positive online reputation by creating business profiles on online review sites and platforms. Online business platforms like Yelp allow you to add or claim your business page. Then you can start collecting customer reviews and engaging in review management, which is when you respond to reviews to address customer feedback.

The best business reputation management strategy is to provide top-quality customer experiences to everyone you serve. Customers might feel inspired to leave a review when you provide exceptional service. According to a survey by BrightLocal, 81% of customers say they’re likely to leave a review if they feel a business went above and beyond to ensure a good experience.

Try responding to positive and critical reviews for better brand reputation management. That same survey found that 88% of consumers would likely use a local business that responds to all reviews. That’s much higher than the percentage that would use a business that only responds to critical reviews (60%) or only responds to positive reviews (55%).

Entrepreneurs and small business owners can further their reputation management strategy by using search engine alerts to track brand mentions anywhere online, from social media to forums to online publications. You’ll get notifications right away if someone mentions your business. This lets you respond immediately, address critical feedback, and thank loyal customers for positive feedback.

4. Project management

In addition to keeping an eye on the big picture of planning, financial management, and reputation management, many small business owners are also responsible for the day-to-day business operation of their company. Whenever you take on a new project, you may need to plan out all the steps needed to complete the project, the amount of time each step will take, and the employee most qualified to do the work.

In addition to doing this work on the micro-level by planning individual projects, you may need to do it on a higher level by establishing company workflows. This includes establishing which team members are responsible for which tasks.

For example, you may have a team member who handles sales and customer service. But that employee may need to pass customers off to someone else if they need a custom product or service, have a billing question, or are upset about an interaction with your business.

When you establish a workflow, your team members will know who to pass the customer to in each scenario.

You can also use your project management skills to streamline different areas of your business, reducing the time you and your team members spend on busy work and increasing the time you have for more important tasks.

For example, you might use automation to schedule client follow-ups and add them to your calendar. Or you might create a sales template to make providing a consistent customer experience easier.

It’s nearly impossible to anticipate every business scenario, but viewing project management as an ongoing responsibility can help. Whenever you discover an inefficiency in your business model, you can work on streamlining it.

5. Human resources management

Once your business needs to hire its first employee, you become the head of human resources. You’ll likely need to determine your hiring budget, determine the salary and benefits you can offer, write a job posting, recruit employees, and train them on your company and products.

Most small business owners play some part in managing employees. Even if you plan to have a hands-off management style, you’ll still want to teach your employees about your business and workflow. (Even experienced employees will have to learn about your company, regardless of how much they know about the role they’re stepping into.)

You may need to create a company handbook and training materials to streamline employee onboarding. Once your employees have been on the job for a while, it also helps to provide regular employee assessments. This allows employees to learn what they’re doing well and where they can improve.

It also helps to ensure your employees contribute to your small business’s success. Hiring employees is one of the most important investments a company can make. Reviewing employee performance is similar to reviewing your financial statements—it ensures your company is making smart investments.

Also, consider developing an employee retention strategy when you have good employees. The Verizon State of Small Business Survey found that 45% of small businesses struggled to retain top talent in the last year.

According to the Society for Human Resources Management, employers estimate hiring a new employee can cost three to four times the job’s annual salary. The cost of recruiting, training, and lost productivity while the new employee learns the role all contribute to this high price and are why it’s much cheaper to retain a good employee than to find a new one.

So as a small business owner, giving your team members the resources they need to feel happy in the workplace is essential.

5 skills that are essential to managing a small business

It can be challenging to balance all of the responsibilities of a small business owner. But by developing a few essential skills, you could improve your and your company’s performance. Here are five small business management tips to help you handle your diverse role.

1. Manage your time carefully

As a small business owner, there will be many different demands on your time, and it’s easy to get distracted from your big-picture responsibilities by your company’s day-to-day operation.

Frequently switching from one task to another and back again can also drain your productivity because it takes time for your mind to refocus. Consider these time management techniques to ensure you have room in your schedule for your biggest priorities.

• To-do lists: Keeping a prioritized to-do list helps you stay on top of your goals and move more menial tasks to where they should be: the bottom of the list.
• Time blocking: Carving out blocks of time (anywhere from 20 minutes to a couple of hours) and assigning different tasks to each allows you to focus on one task at a time without constantly shifting your attention.
• Day theming: Devoting each day of the week to different responsibilities (e.g., Monday for financial planning, Tuesday for reputation management, and so on) allows you to divide your time but not your focus.
• Flex time: Making sure you have the time to address unexpected tasks or problems keeps you from getting off schedule whenever something comes up.

2. Know when to outsource

The responsibilities of managing a small business are so diverse it’s nearly impossible for one person to know it all. The most powerful thing you can know is when to get help. There are multiple ways to take some of your responsibilities off your plate.

• Automation: There are software tools that will help you automate repetitive tasks—from sending new customers welcome emails to scheduling appointments—to allow you to focus on big-picture thinking.
• Sub-contract: Enlisting subcontractors, like a CPA to handle your accounting, a public relations firm to handle reputation management, or a virtual assistant to help with business administration, allows you to get short or long-term help without the commitment of a full-time hire.
• Hire: Hiring employees can provide you with long-term help, and employees are typically more invested in your company than subcontractors. They also have the time to develop a higher level of company-specific knowledge.

3. Invest in your education

It’s hard to learn everything there is to know about every facet of running a company. But the more you educate yourself on things like how to manage small business finances, the better.

The more you know, the easier it is to make informed decisions about each area of small business management.

When you hire an expert, you’ll get more out of your conversations with them and be better able to combine their expert advice with your management style.

You can increase your knowledge by subscribing to industry publications, attending conferences, or signing up for business management courses.

4. Track your ROI

As a small business manager, everything you do is to improve your company, whether you’re trying to increase your earnings, improve your customer experience, or reduce employee turnover. You can (and should) measure all of these things.

Send out surveys to customers or employees. Track your marketing efforts to see which ones bring in the most customers. Break down your profit margin by products, services, or locations.

The more you can measure, the more you can make informed decisions about which of your efforts are working and which aren’t. And once you know, you’ll be able to shift your resources toward the things that are working and away from those that aren’t.

5. Stay flexible

If you’ve measured the ROI of different areas of your business, you can make informed decisions about what to do in the future. Some of those decisions might be intimidating at first—like discontinuing one of your products or shifting most of your marketing budget to a single platform—but if the data supports it, don’t be afraid to make those hard decisions.

You’ll likely need to adapt many times to run a successful small business. Customer demand can change, new competitors can enter the market, and costs can rise. Make the changes that you believe will protect your business. Then, measure the results of those changes and change again when you need to.

Small business, big job

Small business management requires you to take on a lot of responsibilities. Planning your business roadmap, staying on top of your budget, scaling up or down, managing your business reputation, and hiring new employees all fall on the small business owner.

It’s a big job, but there are plenty of resources to help you do it. Learn how to prepare for your small business startup costs, grow your small business, and market your small business to get started.