Business management is defined as: the organization and coordination of the activities of a business organization in accordance with certain policies and achievement of defined objective. It is often included as factors of production along with machines, materials, and money. According to Peter Druker (1909-2005) the basic task of management is two fold: i.e. Marketing and Innovation. As a discipline, Business management consists of the interlocking functions of formulating corporate policy, organizing, planning, controlling, and directing an organization’s resources to achieve the policy objectives.
The size of management can range from one person in a small organization to hundreds or thousands of managers in Multinational Corporations. In large corporations the Board of Directors formulates the policy which is then implemented by the Chief Executive Officer (CEO)
Profitability can be regarded as the reward for providing great value of your customers or simple as the income realized in business especially after paying the running costs of the business.
From the foregoing it is realized that the key to profitability of any business organization is in the hands of management.
Also for the purpose of this paper, I will like to restrict my write-up and medium scale organization.
There are at least 10 important points that will enhance profitability in a business organization due to the activities of the management. Although this list is not exhaustive it will give us an insight into the topic.
Have a business Plan: A business plan is formal statement of a set of business goals, the reasons why it is believed to be achievable and the plans for reaching those goals. It is also useful when an existing business is to assume a major change or when planning a new venture. 3-5 years business plan is recommended.
Good Products: Business products are items that ideally satisfy a market’s wants or needs. The products must be of excellent qualities that are not inferior to other similar products in the market.
After Sales Service: Where the products are technical in nature, an excellent after sales service is important to serve as a back-up to all products.
Pricing: Pricing is the process of determining what a company will receive in exchange for its products and service. Pricing must be competitive and you must not cheat your existing and prospective customers by offering low quality products at high prices.
Channels of Distribution: This is the means used to transfer goods and services to the end user for a manufacturer, you may decide to use middleman (wholesaler/distributors) while for some products you may have your own in-house sales people. The decision taken by the management will depend on the type of products.
Sales Promotion: Is any initiative undertaken by an organization to promote an increase in sales, usage or trial of a product or service. There are several examples of those BOGOF, Trade-in, Sales discount etc.
SWOT Analysis: Every business organization must carry out a SWOT Analysis to evaluate its strength, weakness, opportunities and threats in business world. Simple definition of this is highlighted below.
Strength: characteristic of the business that give it an
advantage over others in the industry.
Weakness: characteristic that place a business at a disadvantage.
Opportunities: external chances to make greater sales or profits in an environment.
Threat: external elements in the environment that can cause trouble for the business.
Identification of SWOT is essential in order to enable the business move forward and increase profitability.
Employees’ welfare: Employee should be paid a fair wage within the limits of the capability of the organization and the Industry standard. They must be well motivated and giving opportunities to grow as the organization get bigger. No favourism to any staff and there must be policies to reward excellent contribution by staff and also punish sloppy performance by staff.
Accounting: A proper accounting system must be in place to capture sales, creditors, debtors, cash flow, stocks, and other related items. The information provided by the accounts department will enable management to know if any progress is being made or not.
God: This being the most important factor is left for now. A vision for any worthwhile business must start with God as the Alpha and Omega. A business relies on the grace and mercy of God to survive and increase profitability. Favour brings so many things into business that no management book can explain. The reason for this is that several times the best business strategy may not result in any worthwhile business venture, despite all the efforts and handwork, therefore the role of God cannot be over emphasized in the affairs of man Ecclesiastes 9:10-11.
Therefore management has to plough part of its profit into the work of God and also for corporate social responsibility.
