What is business management, what are its benefits and how to do it

“From now on, you are the manager”. Once someone tells you that or you say it to yourself when taking over the reins of a business, a series of processes, responsibilities and a lot of work begins, as well as a doubt: how to do good business management?

According to the IBGE, 6 out of 10 companies close in the first five years of activity and one of the main reasons for this scenario is precisely the bad management of these businesses.

To prevent something like this from happening, the first step of proper management is to understand its concept, as well as tips that should be put into practice in your routine. This led us to produce this article and we invite you to read it to the end.

What is business management?

We call business management the strategy in which a business is conducted in order to achieve its objectives and generate results for the organization.. For this, it is necessary to have a good control of the processes executed by all the departments that have a manager: administration, service, finance, marketing, human resources, among others.

For this reason, the owner or manager of the company needs to know it very well to manage it in general, in order to optimize the performance of each sector and demand the best results from them so that the organization continues to grow.

Therefore, as much as your work is focused on performing administrative actions, it is essential that you are aware of everything that happens in the company as a whole to constantly optimize it. After all, if you don't, surely your competitors will. 

What are the types of business management?

Now let's see what types of management in companies are so you can identify which one best suits yours.

meritocratic management

It is an asset management process, in which the company's employees receive due recognition on account of their performance at work. Therefore, this type of management makes the work environment very competitive, as all employees will want to be recognized for their performance.

Democratic management

Also called participatory management, the manager gives his subordinates the possibility to participate in decision-making within the company. After all, everyone can have great ideas that contribute to the growth of the business, regardless of the positions they perform.

authoritative management

This is a type of management in which the manager is the decision maker within the business so that all planning, strategies and projects need to receive your approval. The reason why we mentioned a few lines above the importance of knowing all sectors of the firm well is precisely so that you are able to even carry out this type of management if necessary.

value management

This modality is linked to the value chain (a term coined by Michael Porter in the book “Competitive advantage"), hence its name. Thus, the purpose of this type of management is to generate value and competitive advantage based on the offers that your company has.

innovation management

For your business to go through a digital transformation, it is necessary that its processes are constantly renewed. By adopting innovation management, you start to consider agility regarding all actions involving your products or services as well as those of competitors.

excellence management

Do you know the ideal image you have of the company, as you defined it when creating your mission, vision and values? This management focuses precisely on the vision strategy to achieve the path of excellence, which explains its name. Basically, this management is based on the PDCL cycle – Plan, Do, Check, Learn.

Management with a focus on processes

In process management, the tasks guide what must be performed in this type of management. Also, considering that, unlike projects that have an end date, processes are continuous. Therefore, their managers must constantly seek improvements in their application.

Management focused on results

What is result? The answer to this question may vary from business to business, as a Small business that is starting now certainly sees sales as a result, while a startup might see scalability as a primary outcome. By determining which one is yours, you can adhere to this type of management.

Why is business management important?

As we have seen so far, business management is related to all processes within your business that are executed based on a strategic planning results previously done so that employees reach their goals calculated based on the objectives of the firm as a whole.

Each of the sectors to which they belong must also follow a set of good practices defined by management. After all, as much as the business culture may be focused on serve customers very well, for example, this cannot cause employees to work overtime for compliance.

Working more than you should, spending more than your billing, trying harder and seeing smaller and smaller results are indicative that business management is failing.

Examples of companies that practice good management

Here are some examples of businesses that have reached the success by applying good management that brings together points that we have mentioned so far. Shall we meet them?

Imaginarium

Recently acquired by Lojas Americanas, Imaginarium became known in the market for presenting creative and differentiated gifts that its founding couple began to produce at home to play with their daughters.

Therefore, paying attention to all marketing concepts and trends has become one of Imaginarium's strongest points to be followed by its members, making it internationally recognized as a result.

Magazine Luiza

The company founded by Luiza Trajano and Pelegrino José Donato has become one of the retail giants and its differential is interactivity and proximity to customers.

This habit began with the choice of the name of the company that was formerly called A Cristaleira and was renamed Magazine Luiza after a local radio contest in which the public could choose the best name.

This shows that attention to the public has been part of its organizational culture since the beginning, so much so that, nowadays, when you buy a product at Magalu, your virtual attendant, Lu, gets in touch via WhatsApp to inform the progress of the product delivery.

Handmade Burger Garage

The gastronomic scene can be a red ocean in terms of business, as there is strong competition in the most varied niches. As we said earlier, you need to know the market well to stand out in it. That's what Gilson de Almeida, founder of Handmade Burger Garage.

To open the business, he used the knowledge he gained from other chefs of various nationalities. In addition, knowing that he needs to master the other sectors of the company well, he had the support of a financial consultancy to make him grow.

The result made it one of the best hamburgers in Belo Horizonte.

⚠️ Also check out these related articles 👇

➡️ Learn about the main types of business management model
➡️ Know what marketing management is and how to do it in your company
➡️ Small business management: how it works and tips to do it right

What are the benefits of business management?

Now that the concept of business management is clear, let's go to the main advantages of its correct applicability.

better communication

Failure in internal communication is capable of generating fatal errors in any type of company. 

If you send an important message about a new course that everyone should follow, but it doesn't reach all departments and members, failure to comply with those who didn't receive it can cause problems.

However, this scenario hardly occurs when management is done properly so that communication is clear and reaches everyone.

Good knowledge of customer profile

Once you know your company well as a whole and also the market in which it operates, it becomes easier to know what your customers' needs are.

We remind you again that they don't buy your offer because they like it or your brand, but because they see that it is capable of solving a problem they have.

Thus, your marketing and service actions will become more efficient by knowing the reasons why customers seek the company. 

More procedural agility

By performing good management, you will know what tools are needed to streamline internal processes.

A document management is a classic example of this. When you mismanage them, you end up having difficulty finding them at necessary times, such as closing a deal or an unannounced company audit.

By having a tool that allows you to sign documents electronically like the ZapSign, you can access them within the platform itself.

Clarity on business differentiators

Some people may not see the difference between a Nike shoe and an Adidas shoe just as there are those who consider McDonalds and Burger King to be the same thing. Therefore, in your business management, it is essential to show what are the differentials of the business.

When the customer chooses which solution to hire, he will take into account what each company has to offer. 

This will be clear to him from the way his organization's members explain precisely what it does. Therefore, for the public to know its differentials, it is essential that employees know what they are in the first place.

Increase in results

The consequence of all the above benefits could not be other than the growth of results. 

It is highly recommended that you take a moment a week, fortnight or month to analyze these numbers and thus make sure they are increasing in a planned way.

If they are below expectations, it is important to adopt an action plan to fix this problem as soon as possible.

What are the areas of business management?

Until then, we talked about the importance of business management involving all sectors of the company, which may have led you to ask yourself: what are they?

Below we point out the main departments and how you should pay attention to them.

People

Managing people is essential to making your business successful. Even if you have a human resources manager, getting to know employees and their needs is also part of your job.

So, pay attention to what motivates your employees to work at the company, how to make the work environment better and retain talent.

Operations

Employees who work in the operational part are responsible for making the business work from the development of the product or service to delivery to the customer.

To manage this part well, it is necessary to have full knowledge of the tools used and the performance of those who operate them.

Financial

When we talk about the financial sector within a company, two points must be considered: profit and value.

As much as the billing is positive, your team or financial officer must take into account all expenses to reach the profit obtained and, thus, know if the company is also in the green.

Regarding value, the pricing of the product or service needs to be linked to the value that will be delivered to the final customer. After all, if your offer is very good, it doesn't make sense for it to be very cheap, does it?

Strategy

Every strategy brings together the necessary means to achieve some objective and the same goes for the business environment.

When you perform a good management to the point of knowing well the internal and external characteristics of the company, your strategic vision becomes bigger and the actions more effective.

Decision making should not be based on guesswork, but on points you raise after well architecting your strategy.

Marketing

As some companies outsource their marketing services, their managers think that marketing is not part of the management of the business. Although, Yes he does.

Marketing it is not just about making campaigns filled with beautiful advertising pieces, its planning must gather the necessary actions to make these means make the company reach its objective.

Even if you hire an agency to do your marketing, it is essential to be aware of the services they provide and how they will help the organization to grow.

How is business management applied in each type of company?

Management can be applied in different ways according to the companies' tax regime. Here we highlight how it works.

How is the management of small and medium enterprises?

Although some entrepreneurs believe that, because they have small or medium-sized businesses, their administration is simple and worry-free, this thought is wrong.

As it is not always possible for small and medium-sized entrepreneurs to place managers in each area of ​​the company, they are the ones who must take care of these departments and make sure that they are all working well.

How is the management of large companies?

When a company is large, its processes are more complex, which requires a greater number of people involved in them.

For this reason, bureaucracy is high in companies of this size, as their actions must go through a series of protocols that reduce risk margins.

After all, large companies must be accountable to different figures in the market, from their employees to investors and shareholders who bet their chips on the success of the business.

What are the main business management tools?

The tools we list below are essential for efficient management, helping to shape strategies, improve communication and operational efficiency, as well as maximizing performance and competitiveness in the market.

SWOT Analysis

Essential for understanding a company’s competitive position. This analysis evaluates Strengths, Weaknesses, Opportunities and Threats, providing a clear view of the internal and external points that influence the business.

Business Model Canvas

O Canvas provides a comprehensive visual perspective of key business elements. Using a map, it highlights areas such as revenue sources, value proposition, customer relationships and cost structures, which are vital for developing or refining business models.

Matrix BCG

Offers a graphical analysis of the company's product or service portfolio. It classifies them based on their growth rate and market share, providing guidance on the best strategies for each item.

5W2H

A practical methodology for planning and executing projects. Clearly defines objectives, responsibilities, resources and schedules, facilitating the implementation of strategic actions.

GUT Matrix

Prioritization tool that helps with decision making, classifying tasks based on Severity, Urgency and Trend. It is effective in project management and solving organizational problems.

Balanced Scorecard (BSC)

Performance management methodology that balances financial and non-financial objectives. The BSC helps align operational activities with the company's vision and strategy, improving internal communication and performance monitoring.

5 Porter Forces

A competitive analysis model that helps you understand the business environment. The five forces – rivalry between competitors, threat of new entrants, threat of substitute products, bargaining power of suppliers and customers – are fundamental to developing efficient market strategies.

Digital tools

In addition to these classic tools, digital transformation has brought new options to improve business management:

• project management tools: as Trello, Asana and Monday, which facilitate planning, communication and monitoring of tasks;
• online chat services: as WhatsApp and Telegram, important for maintaining effective internal communication;
• cloud storage services: examples include Google Drive and Dropbox, which provide secure and accessible data storage;
• journey control systems: digital tools that facilitate registration and time management of employees.

Check out 8 tips on how to put business management into practice

Moving on to the practical part, we have separated 8 tips for managing your business.

1) Know your business scenario

to make a good business management, it is essential to know your company very well, from the most basic sector to the most complex administrative task.

In addition, you should also be aware of what is happening in your niche. After all, when making decisions, it is necessary to take into account not only internal factors, but also external ones.

The good knowledge of your company it also involves being aware of the mistakes and successes to define the most assertive paths and anticipate problems in order to avoid them.

2) Be the leader

This tip may seem illogical. After all, every business owner or manager is consequently a leader, right? Wrong.

A leader needs to focus on the goal that the company wants to achieve as well as the people who will get it there, that is, the employees. Keeping them motivated to reach their personal goals and also those that are essential to make the organization grow in the market is also the role of a leader.

This makes the work even better and everyone feels proud to be part of the organization.

3) Know your market very well

The fact that you know your company well and are aware of the area in which it operates does not mean that you have full knowledge of the market in which it operates. 

To give you an idea, if you did a market research last year and you don't know what has happened since then, you're behind.

All niches are updated daily in terms of trends, tools and solutions. That's why it's essential to stay on top of everything that happens.

A good way to do this is to follow news sites and blogs specific to your area, in addition to posting alerts on google concerning the most important matters in the field of your company.

4) Consider the risks

As much as every company is founded with the intention of achieving success, risks that prevent it from getting there exist and should not be ignored.

When doing business planning that involves the strategies and actions of all departments, take into account both the business opportunities and the factors that may threaten it, such as the structure of the company. SWOT analysis.

Once you consider the existing risks, your decisions become more strategic, as they bring together what the company wants to achieve and also what to do if something prevents it from getting there.

5) Let your processes automated

In the same way that a electronic signature it is more convenient than a physical one because of its agility and automation, the same happens with other processes in your company.

Therefore, it is recommended to acquire tools that make your administrative tasks more automated and less manual, such as a program that connects all the organization's processes in a single system.

Also pay attention to each specific sector, as they may need even more specific solutions, from the accounting from the firm to customer service. 

6) Ensure a good working environment

Do you know what your company's biggest asset is? Wrong answer if you have thought about your product or service as they are nothing without a valuable team behind them. Therefore, you must ensure the well-being of your employees, which leads you to first have a good working environment.

Therefore, try to build a clear organizational culture with which all members of the company can identify. 

As the concept of culture involves a set of customs that make up a group, once your company has values ​​to be followed, your culture as an organization will be very solid. For example: prioritizing customer needs; by signing this, all departments start to follow this precept.

Another important point is to establish excellent business communication, especially between departments. If someone from the commercial gives a discount to the customer that has not been approved by the finance department, this would create tension that would harm the good working environment.

7) Invest in marketing

As much as your product or service is very good and your development team behind it is exceptional, the results will not come if your company is not seen. That is why, investing in marketing is essential.

By exposing your offer on media channels, people get to know you. Of course, not all of them will buy, but the greater the number of people reached, the proportionally greater will be the number of those who will buy.

When doing this promotion, take into account the problems your audience has and how your company can solve them. After all, no one buys a product or service because they think it's beautiful, but because they know that it will solve their problems once and for all.

8) Always be well informed

Nowadays, information comes to us constantly on the most diverse channels: websites, social networks, television, radio, etc. We talked above about the importance of being up to date with your market, but here we point out the need to be well informed.

Even if in the country and in the world there are situations that have no direct connection with your company, some have indirect connections and, for this reason, must be taken into account.

For example: if your company performs online service and a news item points out that the next update of the Zoom will bring a function that benefits this type of activity, you can now prepare to optimize your service from there.

By following these tips that we have separated, you will be able to manage companies efficiently with a trained team and the right tools.

Speaking of tools, one that cannot be missed is the ERP, a program aimed at organizing all business processes and data. To find out how it works and what to consider when hiring one, check out the article we wrote on the subject!