What Is Entrepreneur Management? (With Principles)
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Entrepreneurs possess qualities such as innovation, critical thinking, crisis management, and passion, which can be crucial when setting up a business. Studying entrepreneur management and effectively applying those skills can help entrepreneurs efficiently and successfully run business ventures. If you're thinking of starting your own business, understanding the management skills required to manage your own company may help you as your skill set grows and the company progresses. In this article, we discuss entrepreneur management and why it's important to have a management plan.
What is entrepreneur management?
Entrepreneur management is when entrepreneurs combine the innovation, ambition, analytical skills, and bold decision making inherent to entrepreneurship with an effective and impactful management structure. It's crucial for new entrepreneurs to have effective management skills to deal with the various and often complex challenges of running a small business based on excellent ideas and a clear vision of the strategies and products that they want to implement and create.
Every new company or business venture is dynamic and managing them may require different methods, approaches, and principles to achieve the desired outcomes. Through entrepreneurial management, new entrepreneurs can effectively and successfully manage and scale up a growing business without limiting their creativity or passion for the business. Entrepreneurial management can help increase volume, create better quality products, and boost productivity.
Importance of entrepreneur management
Entrepreneurs can benefit from having effective management skills, which can help run a business efficiently. Following are some points that highlight the importance of possessing effective entrepreneurial management skills:
Helps establish clear goals
With an effective management skill set, you can clearly define the targets that you want to achieve with a business. These goals can include short-term targets, such as launching your first product, producing a set volume of products, and successfully managing your first round of sales. Long-term goals can include generating sustained sales over a period of time, establishing brand recognition and credibility, franchising, recruiting better personnel, and increasing profits. Having clear, well-established goals helps everyone involved with the business stay motivated and gives them a clear idea about what the business wants to achieve.
Helps coordinate actions
It's essential for everyone involved with the small business to coordinate their actions to accomplish targets and achieve goals. With these management skills, entrepreneurs can efficiently determine the steps, tasks, and actions required for the business to achieve its targets and which members perform those tasks. Setting up a detailed plan with a timeline of these responsibilities and the members responsible for these actions can also help you identify any missing elements before you start. It also helps ensure that you assign each action to the right member, focusing on their strengths.
Helps improve resource management
It's essential for small business owners and new entrepreneurs to use their resources efficiently and allocate them correctly. Doing this helps ensure that the business uses its limited resources to generate optimum output. Limited resources such as funds, personnel, raw materials, and time may be typical for new business ventures, as the owners are working to generate brand recognition and establish a customer base. Effective management skills help you determine where to allocate your resources before proceeding with the next step. This ensures you use all your available resources to achieve desired outcomes.
Helps create and set performance standards
An entrepreneur management plan can help you define desired outcomes, highlight the steps required to achieve them, and establish a timeline for them. You may choose to use this to help set up benchmarks for performance standards. A plan also helps determine if the business is on schedule to achieve its goals. If you set a goal to move your production unit into a larger facility within a year, you can check your progress and adjust your methods as needed, based on the plan.
Helps balance and mitigate risk
Effective management skills can help identify the risks involved in meeting a goal and highlight ways to mitigate those risks. It also helps an entrepreneur evaluate and balance their personal risk with the company. Learning how to identify, balance, and mitigate risks can help entrepreneurs take steps to prepare for any unexpected issues that may arise. For example, management skills can help outline how much money the entrepreneur can safely invest and if the risks involved are reasonable.
Principles of entrepreneurial management
Entrepreneurial management has several key principles which aim to give entrepreneurs ways to establish targets and achieve them. These principles also help entrepreneurs control the direction and success of their business ventures. Below are some essential principles of entrepreneurial management:
Mission and values statements
A mission statement describes why the entrepreneur established the enterprise or business. The mission statement's purpose is to help define why you started the business and can help you highlight all the goals you hope to achieve with the business. A values statement highlights and emphasizes the values you and the business embody. For example, a smartphone company that aims to create affordable smartphones for students may list values such as accessibility, reliability, affordability, and build quality. For entrepreneurs, some common values can include:
Entrepreneurial management can include identifying and setting specific goals for a new business venture. Setting specific goals can help entrepreneurs allocate resources efficiently and help manage their innovation to attain sustainable and optimal outcomes. Setting up specific targets can also help entrepreneurs analyze their business' progress and help determine areas that need improvement or additional resources. For example, an entrepreneur may establish a goal of generating 10,000 units of sales for their product by the end of the year. The entrepreneur would then allocate resources and funds to focus on marketing and research.
With an effective growth strategy, an entrepreneur can determine the steps they can take to help the business meet targets and reach goals. This involves analyzing the resources required and finding ways to use them to maximize potential and boost productivity. It's important for entrepreneurs to analyze all data and carefully create a strategy that uses the resources available efficiently and effectively. Common growth strategies for new businesses can include market penetration, increased production, marketing, and product lineup expansion and diversification. An ideal growth strategy can help new businesses demonstrate rapid growth and maximize profits.
An organization's structure can affect its productivity and workflow. An efficient structure that reflects the strengths of team members can produce ideal results for the organization. Allocating responsibilities efficiently is one of the key components of an ideal organizational structure. An entrepreneur may task the marketing manager to create a new advertising plan, who can then assign different tasks to those working in the marketing department. It's important for entrepreneurs to implement an effective and efficient structure for their business. An organizational structure helps highlight the chain of command and facilitates seamless communication throughout the organization.
High-performing team members
Recruiting the best personnel is an essential task for entrepreneurs to help create an efficient and successful team. As the business grows, entrepreneurs can delegate various responsibilities to the best members of their team to produce the desired outcomes and boost productivity. An entrepreneur's core team members are valuable assets and are important for the growth of the business as they help the organization accomplish its goals.
An effective financial management strategy is crucial for running a successful business. Effectively allocating limited funds to the right areas can help the business grow and expand exponentially. Creating a strong financial strategy can help entrepreneurs understand their financial status and help set targets. It also helps determine the various costs involved with running a business and can help you cut costs efficiently without sacrificing the quality of their products. It can also help you keep track of any outstanding bills and determine the total debt.
Explore more articles
- The Complete Guide to Online Risk Management Courses
- What Is Working Capital Turnover Ratio? (With How-to Guide)
- Shareholder vs. Stockholder and Stakeholder Differences
- Poka-Yoke Meaning, Importance, and Examples
- What Is a Voluntary Exchange? (With Importance and Benefits)
- Definition of RBAC (With Benefits, Tips, and Examples)
- Understanding the Most Common Types of Video Formats
- How to Write a Follow-Up E-mail (When to Write and Example)
- How to Use Endorsements in Marketing to Build a Strong Brand
- What Is a Client Profile and Why Is It Important?
- Guide to Data Science vs. Data Analytics vs. Big Data
- A Complete Guide to the Profitability Ratio Formula