I remember a conversation with my dad years ago where we were discussing different small business management styles. He said, "There are three different management approaches that people take in small business; financial, operations and sales. None of them are correct or incorrect they are just different approaches." I can't say that this was the exact quote but it was along those lines. Years later after working as a part-time controller for hundreds of different businesses I totally get it. I have seen all sorts of different management styles in lots of different businesses; let's take a look at these three.
The numbers manager is my kind of guy. I get along with these types of managers because I totally speak their language. An owner that manages strictly by the numbers really knows the finances of their business. They scrutinize the numbers and read a P&L as if it were the gospel. It's in plain black and white; you are either doing well or you are underperforming. Financial manager types are also quick to notice issues as well as opportunities. They are masters of making little adjustments to get the numbers back in line. That doesn't necessarily always mean cutting an expense or making layoffs. Smart financial managers are typically great at managing expenses, so it has to be something else. If numbers look off financial managers will often look to sales to make sure they are keeping up with expectations or they may consider a price increase.
The operations manager may not care as much about financial performance, nor generating new leads. However, when a new customer comes into the business they will see to it that they have an exceptional experience. The operations manager is very customer service oriented and critical of the performance of their operations team. The operations manager type cares about the process, which is great. A solid business process is the key to scaling a small business.
The manager that is marketing and sales oriented is going to be mostly concerned with customer acquisition. Managers that focus on sales also tend to focus on numbers by nature. They obsess over hitting their sales quota, but may be less concerned with general business expenses and operations. While they are all about bringing on customers they tend to lose interest after the prospect has become a new customer. Sales manager types are great for generating new leads, converting leads to customers and keeping sales on track, but may need to be persuaded to look at financial reporting and customer retention rates.
So which management style is right for your small business? Is my dad right that none of the above is correct or incorrect? They are just a management style right? Each small business owner develops their own management style based on education, experience and personal beliefs. The best management style in my eyes is the all-a-rounder; the perfect mix of all three styles.
I obviously tend to be a financial manager and for some reason I learned a lot about marketing and sales through starting my own business. However, I want to plug being an operations manager for a second. As I said earlier having a solid set of business processes (the operations of the business) is the key to really scaling your business. If you focus too much on the numbers and the sales in the beginning you are really putting the cart before the horse. What good is pumping a whole ton of new customers into an operations system that doesn't work? If you do this you will soon be left with no customers and no financial data to measure and manage.
If I were starting my business over today I would take a simple three step blended management style:
1. Dial in the operations and business processes to get ready for scaling.
2. Drive sales through various marketing techniques.
3. Manage the finances and direction of your business.
This makes it sound real simple in the end but sometimes keeping things simple in your small business is the best approach.
What management style do you use and why?
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