Managing a business is a time-consuming, intensive effort, and the individuals responsible need to have a good grasp of all areas of a business. Even though delegating is very important, managers who are out of touch with a business won’t have the opportunity to fix problems as soon as they surface.
A business is a living, breathing organism, and it will eventually run into problems. The quicker that problems in a business are targeted, the cheaper they are to solve and the less likely that a problem will develop into something serious. Here are a few examples of common problems that management can encounter, and how to solve them.
Managing cash flow
Businesses often experience a gap between when cash is needed to pay suppliers and employees, and when cash is received for completed products or finished projects. Managers need to be careful to coordinate cash flow correctly; it is not uncommon for businesses to fail not due to a lack of profitability but due to a cash flow problem. Plan carefully, arrange loans and overdrafts in advance if necessary,and think about invoice factoring.
Regulation and compliance
We live in a world where changes in the marketplace are common. These changes go along with adjustments in regulation and new issues around compliance. Managers cannot simply sit back and ignore regulatory hurdles – if your business is subject to new compliance issues,you are best advised to prepare in advance so that your business can make adjustments in the cheapest way possible.
Dealing with contract workers
Many businesses require flexibility when hiring workers and at times need to top up permanent staff with contractors. Hiring contractors can cause a variety of issues as they are dealt with differently from an employment law and taxation viewpoint. To avoid tripping up on contractor employment problems, and for help with IR35, think about hiring your contractors through an umbrella company.
Threats by competitors
Almost all companies are subject to a competitive environment, and management should be attuned to what their competitors are doing. Whether a competitor is developing a better product that can be manufactured at a lower cost or sacrificing profits to gain market share, the competitive threat is always there, and management teams should be proactive about competition and the implications that it carries.
Planning for the future
Proactive management can be difficult when management teams are already very busy, but a lack of planning is one of the biggest causes for problems in businesses. Instead, you should set time aside in your management workload to look at the future, thinking about how you plan on growing the business, which risks and threats are on the horizon, and how the profitability of the business can be maximised.
It is not uncommon for management teams to feel overwhelmed by the problems in a business, but systematically tackling any issues and not waiting until the very last moment is key to reducing the overall burden that problems in a business can cause. Instead of avoiding any issues that arise, take care of any problems immediately – and try to foresee problems lying in the future.