“The entrepreneur is essentially a visualizer and actualizer. He can visualize something, and when he visualizes it he sees exactly how to make it happen.” - Robert L. Schwartz
A sneak peek into a business process would reveal that an entrepreneur has to come across different phases of management. At every stage, from the decision to run a business till expansion, the entrepreneur has to deal with many people. Therefore, I have developed the following Business Management Cycle to help an entrepreneur understand the different phases and important areas of management:
Phase 1: PIE – Planning, Initiation and Execution
At this phase, we plan, initiate and then execute a business process. It involves identifying what business we are going to do, how we are going to do it, when we are going to do it and where we are going to do it. This is not just the first step for a new business but a repetitive process for an on going business for its expansion and extension.
Phase 2: Financial Management
When we complete the first phase, we require finance to execute our plans. Without finance we cannot start a business and cannot do expansion of our business. This phase starts with organizing ample funds and investing them in business. For this, we need to have proper knowledge of Financial Management. When we understand terms like budget, incomes, expenses, profits, losses, assets, liabilities, debit, credit, interests and taxes we would be able to understand the financial statement which enables us to manage our funds. Once we can manage the finance, we can have better control over our investments and we can have higher returns on investments.
Phase 3: Human Resource Management
Once the above two phases are over the next phase is HR Management. This is a very important phase to run a successful business because we cannot run the business alone, we need to hire a team. When we start hiring people for the team HR management starts. It involves many things like job identification and job specification, interview process, selection, recruitments, trainings, roles and jobs assignments, targets, performance appraisals, HR development, working and exit policies and so on. The whole process is taken care of by the HR Management. So, Human Resource Management plays a vital role in the smooth running of a business.
Phase 4: Marketing Management
After hiring an effective team, we can introduce ourselves in the market, make people aware of our position there and can also offer these products or services. The next question that an entrepreneur comes across is how can we reach people or the client and make them aware that we are also in the market. We have to do this through effective Marketing Management. Marketing is a process that leads to sales. We must understand that marketing and sales are different terms and marketing itself involves Product, Price, Positioning or Placement and Promotion.
Phase 5: Customer Relationship Management
When the marketing is taken care of we start getting customers for the product or services that we are offering. When we start getting customers that means our business has started and to handle our customers, Customer Management is required. It
Relationship is another important aspect of a flourishing business. Customer Relationship Management helps us to understand the psychology of the customers, their requirements, their desires ad nauseam.
Phase 6: Operations Management
Finally, when our business starts, we have customers and we have to do multiple jobs. To do these multiple jobs Operations Management is required. Operation Management can be divided into two parts, Front Office Operations and Back Office operations. This is discussed in detail later in the book. This is the last phase, once we reach this phase we think about expanding the business, increasing the profit, customers and services and for that we have to start right from the beginning.
Once we think of expansion we again have to do Planning, Initiation and Execution. New investments and more funds are required so Financial Management comes into picture. Next, we can again hire a new team to expand or we can continue with the existing team by assigning those new roles and responsibilities that involves Human Resource Management. We again do marketing, which needs Marketing Management. Customer Relationship Management helps in retaining existing customers and adding more new customers. And finally, the strong Operations Management helps in carrying out the new ventures. So these are the six phases of Business Management Cycle that continue along with a normal business process. A successful Entrepreneur must have the skills to manage the entire process by understanding human psychology at every phase.