This article is going to provide a useful checklist for small and medium enterprises (SMEs) to develop a comprehensive business management system.
Small and medium enterprises (SMEs) need to streamline their operations with an appropriate managerial system just like large businesses or MNCs (Multinational Corporations). The scale of operation and size of the organisation or workforce of SMEs are smaller but that does not rule out the fact they too have multiple processes and have to oversee everything for smooth functioning. A business management system (BMS) is hence inevitable for SMEs. Here is a guide on developing them.
Many organisations might consider having multiple management systems to take care of their every process and operate efficiently, However, it is recommended to have one comprehensive BMS integrated with many standardised systems like ISO 9001 (quality management system), ISO 14001 (environmental management system), ISO 27001 (information security management system) and whatever else needed.
The following section presents the crucial aspects to consider while developing an extensively effective BMS for your SME.
Business Plan
A plan is like the skeleton or framework for a system! You need a resolute business plan to design and formulate your BMS. A plan should be its starting point and must include the mission, vision, and goals of your small business. The plan should then describe well the crucial functional areas of your business and key results expected out of them. Descriptions of each functional area must be like the library of procedures, checklists of tasks, and roles of the staff. Some of the examples of functional areas are production, purchases, financials, quality controls, marketing and distribution, sales, administration., human resources, and risk management.
Benchmark Performance
For each functional area of your BMS, there should be a benchmark set that defines the performance criteria for each. For instance, how much sales are expected every month, fixed cost ratio, ROI, profit margin, sales per employee, acceptable error rate, and number of customer complaints are some of the metrics used for performance benchmarking. For each of the functions of your business, you need to set a realistic and achievable performance standard. At periodic intervals, you need to assess whether your BMS is efficiently helping to achieve the decided standards.
Roles of Employees
While the BMS defines the various functions of your business and their performance criteria, it should also describe how those should be executed and by whom. It should be describing the roles allocated to every employee positioned at different levels of the organisation. Description of their roles includes a complete list of tasks along with how they should be undertaken and what the timeline is.
Performance Assessment System
Your BMS should be capable of evaluating the performance of various functional areas. It can be done by assessing the results of each process against the decided performance benchmark. One of the key considerations for a BMS is hence performance assessment system which is necessary for driving improvements and growth in the business. Any inadequacies or lag in the performance of any process can be identified and addressed early.
Reporting System
A reporting system is the key driver of a BMS. Without a responsive reporting system, your BMS remains just as an operation manual that advises employees on the processes and their roles. The reporting system helps in measuring the performance and discovering non-compliance or errors in the processes against the plan and policy of the business. A reporting system is thus essential to prevent mistakes and failures and accelerate overall efficiency.
When you have all these elements incorporated into your business management system, you can run your business more competently without requiring managerial intervention or governance everywhere. Ultimately, you have an enterprise running on its own, ensuring minimal disruptions and maximum efficiency. The BMS guides you to manage and oversee every process so that predictable outcomes are achieved. In a nutshell, a BMS helps in the effective management of your business processes that ensure a rise in productivity, reduction in costs, and improvement of the bottom line.
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