You cannot walk around in the same shoes for long; the sizes will change and sometimes you will get something less than comfortable but you’ll have to go with it. For this article, we want to address the dynamic environment that every entrepreneur must adapt to for enhanced prosperity. So here are 5 technical business skills that you must-have for consistent profitability.
1. Time management
When you are young, your health is your time. Nobody can pay you for the energy you have in your twenties and thirties. This is why successful people usually quit high-paying jobs to pursue their own goals at an early age (some a little later). The key is to start investing in your goals the moment you realize what you want to do with your life.
If you have already started your business or started pursuing your goals, you should remember that time (right now) is your most valuable asset. We cannot stress this enough. If you haven’t understood it, you are looking at a lifetime of time wasted on stuff that you could do without.
How to save time
Saving time is one of the most crucial technical business skills many few master.
Believe it or not, most entrepreneurs do not realize how important time is until it’s out of their hands. Successful entrepreneurs multitask. They know they can’t afford to waste time at any cost. Here are a couple of things you can do to save time:
A) Stop attending meaningless parties and gatherings
As an entrepreneur, the only events you should be attending are business events or relatives’ weddings. You need to prioritize and invest time in gatherings that could have a significant impact on your business and personal relationships. You cannot take either for granted. Getting together with friends should be once in a while.
B) Make a list of things that need your time
You should only be investing your time in tasks that are your utmost priority. Check in with yourself to make sure that you haven’t been wasting time.
As an entrepreneur, you will need a lot of time for experimentation. That means that you need to have a buffer time where you can experiment and grow; see what works, what doesn’t. So keep that in mind when you head out for another night of partying. Use a time scheduling app to list down things that need your time. For example:
– Dinner with mom
– Suppliers’ meeting
– Quality assurance check for delivery
– Buy additional supplies for office
– Finish reading The 4-Hour Workweek
When you list down tasks, you can check them off one by one as you complete them. List down everything, even drinking coffee and eating meals. If you have the habit of stepping out of the office for a 10-minute walk, put that on the list.
At the end of the day, you can look back at that list and see how you spent your time. What tasks you accomplished with that time. If you didn’t spend your time wisely and on meaningful activities that can directly impact your family and business, then you would be able to see it and change your ways so you can correct that in the future.
C) Use time management tools
Time management tools like time tracker apps are a great way to keep on a schedule and discipline yourself so your time is utilized in the best way possible.
How to manage employee time?
While it’s a challenge to manage your time between family and work, managing your employee time is another mountain that you have to move.
When you are paying employees per hour, you must make every cent count. Your employees should have a profound awareness regarding the time and its value.
Now here’s the most tricky part: you can hire some of the best guys in the industry and still not have the time efficiency that is required for your business.
In most cases, it is not your employees’ fault. Understand that as their leader, it is your responsibility to make sure that they are guided about the company resources. Time is the biggest and most expensive resource of all.
There are several ways you can help your employees use their time efficiently so that the overall productivity of your team increases for better future outcomes. You can:
– Invest in time management seminars to educate your employees
– Use time tracking tools to track employee time
– Check in with employees and inspire them to use their time wisely
2. Money management (budgeting and finance)
While time is your most valuable asset, your money is your next big asset. If time is the galaxy, money is the sun. It’s hard to cover everything related to money management in one post, so we’ll just cover the basics here.
Money management allows you to set up goals for your finances, spend money on profitable investments, and track expenses so you have a clear picture of where your business stands financially. Without deliberate money management, you can lose track of expenses, fail to set goals for investment opportunities, and lose big in the long run.
Entrepreneurs who make money management their priority never face periods of negative finance. Here are a couple of things you can do to make sure your money is managed well and that you never have to experience financial problems.
A) Always pay on time
Make sure that you always pay your bills on time. This increases and strengthens your credibility with suppliers, vendors, and even banks. Financial institutions love to give loans to people who they see as credible.
So by paying your credit card bill on time, you are strengthening your bond with the bank. This ensures that you can count on your suppliers, vendors, and bank for money or loans when the hard times strike.
Use payment management apps to track and monitor your payments so you are always on time.
B) Monitor every penny
Spending money is easy, earning requires moving mountains. Little money spent over days adds up to thousands of dollars over a month. Keeping track of every expense allows you to see whether the funds are used right or have been misused.
You can use transaction tracking or expense tracking apps and tools to keep a log of every transaction. This will play a key role in helping you understand your spending habits and how to change them for better savings.
C) Keep track of accounts receivables
You need to keep an eye on both the money that goes out and the money that comes in. By tracking accounts receivable, you can make sure that you have received your rightful payments from the customers.
D) Have a separate business and personal accounts
Even if you are not required to have separate accounts, always make sure that you do. Keeping both your business and personal funds in the same account can only lead to a disaster. How will you track your profitability for the business? How will you track your expenditure?
So when you start with your new business, always start with separate bank accounts for both personal and business use. This will immensely help with the taxes too!
E) Only spend when you have the cash
It is a common practice to buy stuff with a credit card. It makes you feel like you have the money, but you don’t. Successful entrepreneurs only spend when they have the funds. Spend within your means so you don’t run out of cash for essential things.
Ignore the non-essential stuff, it can wait. Develop patience and maturity to use funds wisely. For example, if you need to get a new coffee machine for the office, tell everyone that they have to wait till next month. It won’t kill anybody to wait for another month.
F) Create a budget at the start of the year
The budget outlines an estimate of your income and expenses. Create one at the start of the year to make sure you are on track in terms of saving and spending. If you see that your expenditures are more than your income, find ways to increase income or cut down expenses.
Never try to use funds thinking you’ll earn more. That’s imaginative money that you may or may not earn. Make decisions based on what you have in your hand at the present moment. Even if your business is doing well today, it may not tomorrow due to inevitable reasons. So never spend more than you can afford to.
Always try to cut costs and increase revenue. You should always be in saving mode because things never remain the same. Saving will allow you to set up an emergency fund for tough times.
Ways to cut costs and increase revenue
When it comes to cutting costs, there are several things you can do:
– Skip the luxurious coffee in the morning
You can have some from the coffee machine at the office. This will easily save you five bucks. Now you may think, it is just five bucks, but five bucks saved every day equals one thousand and eight hundred dollars over a year. Now think about the ways you could have spent that money.
– Find cheaper suppliers
You should always be looking for better, cheaper suppliers around the world. Cheap does not have to mean bad quality. Look for suppliers that offer the best value for your money and are open to partners for the long term.
– Eliminate non-essential expenditure
Most people don’t know the difference between essential and non-essential expenditure, which is why they end up spending more than they have to. Essential expenditures are simply the expense of stuff that is essential for your personal and business activities. This can include monthly bills related to both business and family. The non-essential expenditure is the money spent on activities that do not significantly impact business or family. They are the things you can do without.
Deliberately eliminate non-essential expenditure to make sure you are only investing in what’s necessary. This is where budgeting comes in handy.
3. Inventory management
Inventory management is usually a problem when you are scaling up. Once you start getting more orders, the demand rises and there’s a greater pressure to fulfill customer demands. This is something you have to be prepared for rather than making adjustments when required.
What is inventory management?
In simple words, inventory management refers to keeping track of your stocked products to ensure that you have enough products to meet customer demand. Inventory management allows you to be prepared for when the products are short so you can quickly manufacture to avoid failing customer demand. Without inventory management, you could lose potential customers and potential profit.
Inventory management techniques
Inventory management techniques can help you save both money and time while ensuring that your business always stays afloat. With proper use of inventory management techniques, you can make sure that you don’t run out of stock or end up with negative cash flow. Here are some of the most commonly used inventory management techniques:
A) Economic order quantity
B) Minimum order quantity
C) ABC analysis
D) JIT management
E) Safety stock management
G) Reorder point formula
H) Batch tracking
J) Perpetual inventory management
K) Six sigma
L) Lean manufacturing and lean six sigma
M) Demand forecasting
N) Bulk shipment
Q) Fast, slow, non-moving (FSN) method
R) VED analysis
S) Material requirements planning (MRP)
The above-mentioned techniques are a bit complicated, especially for young entrepreneurs. We have simplified inventory management so you don’t have to waste time in understanding the many different inventory management techniques.
Inventory management allows you to avoid overstocking and understocking.
Why is overstocking bad?
When you overstock:
- The excessive inventory becomes out of style or out of season. In other words, it becomes dead. If it’s in stock for too long, you may have trouble moving it out.
- When you are unable to move the dead inventory out, you ultimately have to face substantial losses.
- When you have more on your hand, you have to bear additional inventory storage costs.
- Overstocking uses more resources with no return.
Why is understocking bad?
When you understock:
- You don’t have enough supply to meet the demand, and therefore, you lose customers.
- You not only lose sales in the short run but also lose your customer’s interest in the long run. Potential customers will eventually stop looking forward to your products.
- You can’t reach your profit goals and hence cannot attain busi9ness growth.
Understanding inventory management in simple words.
Inventory management is simply the art of managing your product supply in a way so it fulfills your customer’s product demand. Good inventory management will keep your customer happy and your pockets full.
Here are inventory management techniques that should prepare you for your first business.
Prepare for products by season
When you are starting a business, it is very important to consider the season of a product. For example, if you are in the clothing business, you want to make sure that you are stocking summer clothes in the summer and winter ones in the winter. This will eliminate overstocking out-of-season clothes that may lead to losses.
Track your sales and forecast future demand
To avoid overstocking of understocking, track your current sales and forecast future demand based on the current numbers. For proper sales tracking, you need to look at historical sales, identify customer ordering patterns, seasonal changes, product popularity, and product category. Some products just sell better than others.
Additionally, you need to look at the overall economy to learn how economic changes could impact your product demand.
Another important variable would be buyer search habits. For example, sports gear and clothing usually are high in demand during a game season. Look for what your buyers are buying in a certain season.
Have a centralized inventory management
Did you know that you can easily export/import products from one platform to another? If you are selling on multiple platforms such as eBay and Shopify, you can choose a central location for managing all your products and then use the export/import feature to add products across different platforms. Having centralized inventory management would save you a lot of hassle and frustration that comes with it.
Conduct inventory audit
Inventory audits can be monthly, weekly, and even yearly. But it is generally recommended to conduct a weekly or seasonal audit to avoid understocking or overstocking. One good way to conduct an audit is through ABC analysis where A represents high-value products and C represents lowest value products. Your high-value products should be high-priority products and therefore need a weekly or priority-based audit. This will help you ensure that you are not incurring any additional costs while storing and managing high-value goods.
Set par levels
Another good way to avoid overstocking and understocking is to set par levels. This will allow you to buy new products quickly before you run out of stock. You can set up alerts to remind you when a certain par level is met. Here, remember that your par levels can change based on buying patterns, so you will have to evaluate your par level based on demand.
Buy when required
Another time and money-saving technique is to only buy new products when there is a substantial demand. This allows you to make sure that your stock won’t go dead sitting in storage.
4. Human resource management
When you scale up, you will need to find the right people to work with. This is perhaps the most important aspect of scaling up. However, your job won’t be done with just finding the right people, after you have found your X-men, the real work will begin. If you don’t fully understand how to use talent, then nobody in your company will succeed and your business will eventually fade into obscurity.
What exactly is human resource management?
You may just think of hiring people when you hear the term human resource management. It is far more than that. Human resource management combines culture, diversity, talent, and leadership to promote healthy employee-leader relations for the long term prosperity of the company.
Key features of proper human resource management
A) Talent acquisition
When scaling up, the first and foremost goal of your company would be to find the right people. The simplest way to do that is through Linkedin or other similar platforms where you can place your job descriptions and attract potential talent. Your job description is the key part here. If not done right, it may attract a plethora of applicants that may not suit the job requirements. And not to mention the time it will take you to process those applications. Save yourself the trouble of going through hundreds of applications by creating unique job descriptions.
Here are the key elements of a unique job description that can help you find the right candidate:
– Job description
Effective job description: Atlas solutions, a software development company, is looking for a technical content writer with at least 5 + years of experience in SAAS content. Include SAAS related samples in your resume.
Not so effective job description: Do you love writing articles? Do you think you want to be a part of a growing company? If so, this might be the right job for you. We require articles for our blog. We develop software so the articles should be about software development. Send us your resume and tell us about your experience.
Notice that the first example precisely introduces the company and what they are looking for. The second example is all over the place. The applicants will have to dig for the actual job description. Make it easy for the applicants to know what you are looking for.
– Job expectation
Job expectations should outline the exact expectations from the candidate so they immediately understand work responsibilities and the commitment they need to make.
Effective job expectation: We are looking for a full-time employee (40 hrs per week). You will be required to work closely with our engineers who will provide research for the content.
– Opportunities for growth
Put yourself in the applicants’ shoes: if you were looking for a job, what would you want? All candidates want to work for a company that offers plenty of growth opportunities. If good applicants can’t see themselves growing in your company they would find another organization.
Effective “opportunity for growth” in a job description: Atlas Solutions is a leader in the SAAS industry with partnerships with Microsoft and other reputable companies.
Add the highlights of your business to the job description to let potential candidates know your reputation. Make it clear and concise.
B) Resource management
The next big step is to filter the candidate pool for the best person for the job. We have made a list of some uncommon questions that you should ask your candidates to gauge their capabilities. You already know to ask about their strengths, salary expectations, why they think they would be perfect for the job, etc. Take a different approach to the interview and try these uncommon questions.
After you have the right person for the job, the next step is to give them the role they are best suited for. Often, we have the best talent, but we fail to give them the environment where they would thrive the most. This is probably the most challenging part of human resource management.
Here are the most uncommon questions you can ask your candidates:
Q: What are your future goals?
This should be the first question you ask your candidate. Their answer will help you access their mindset and their attitude towards achieving goals. An intelligent and professional candidate would have his or her own goals and motivation to fulfill those goals. These kinds of individuals are highly motivated and usually make great employees. You will not have to work hard to motivate them to achieve goals; they will do so on their own because they want to excel in their careers. Learning about their future goals will also help you figure out where to place them in your organization. This will help the candidate find the right place where they think they can grow while you will be able to give them the right environment to grow.
Q: What is the most difficult failure you have had in your professional and personal life? And what lessons did you learn from that experience?
While it’s common to ask the candidates about their strengths and weaknesses, it is also important to ask them about their failures. This will allow you to assess how a candidate might react in a certain negative situation. It will give you a good idea about their personality and their ability to cope with testing times.
Q: If we offer you a million dollars in exchange for your commitment to never work again, would you take that offer?
A good candidate would reject the offer because there are certain things that only come with experience. Committing to never work again for a million dollars will not bring experience in the future. The money will get spent but your experience and skills will last forever. So a professional and hardworking candidate would probably reject the million dollars and choose to work. You never know how many millions you are going to make with the experience and skills you gather during your job experience.
Q: What is your salary expectation, and do you see yourself working with us in 5 years?
It takes a lot of time to find the right people to fit into your organization. So when you do find the right people you must discuss the future with them. Ask them about their salary expectations are and whether they see themselves working with you for the long term. Do not take talent for granted. Once you have put time and effort into finding the right people make sure that you put a little bit more effort to retain them.
Q: What are your most notable accomplishments not listed on your resume?
Most candidates would possibly brag about their accomplishments. You need to ask them about achievements that are outside of their career. This should show their participation and ability to be involved with multiple things in life. Professional candidates understand that there has to be a balance between work and personal life, so they would probably have things outside their work life. Get to know those things. For example, some people may like playing Golf or participating in business events. These things show that the individual is highly active and participative.
Q: Who was your role model growing up?
With this question, you have a chance to get a look inside an individual’s personality makeup. Great people look up to other great people. Eat to work with other great people that means that they have good role models to follow. You will see positive traits in people as good role models.
Q: Can you name some people you look up to today? And why?
This is a follow-up question.
The candidate must have a good understanding of the industry and its leaders. Those who have that understanding would know about the top players and would possibly like to improve their strategy for achieving goals.
Constant employee accessibility
Human resource management is an ongoing process that requires adjustments along the way. After you have your perfect team, the next step is to continuously assess your employees and their performance regularly. This will help you learn more about your employees and their capabilities to see where you can use them best. It is important to know that sometimes even the most talented individuals do not fully understand how they may not be able to add value to the company until they are guided. This brings us to the next step in human resource management.
As a CEO or the founder of the company, you have a lot of responsibilities but one thing that supersedes everything is your leadership abilities. As mentioned earlier, even the most talented individuals don’t have a comprehensive understanding of how to create and add value to a company. It is your job to make sure that you inspire and motivate your employees so that they have the necessary guidance for achieving company goals.
Qualities of an efficient leader
Leaders are not egoistic beings. You have to have a personality that is friendly, warm, inviting, and at the same time authoritative. Your employees should be able to come to you and discuss things with you without hesitation but at the same time, they should have a sense of accountability to you. So employees may not see you as a leader or may not work hard enough to achieve company goals if they don’t see their future in the company. This is why you have to ask them about their future goals, salary expectation and how they see themselves in your company. This should be addressed before an employee joins your company. Then they know their place in the company and know that their goals are tied to the company goals. They will automatically work hard to achieve company goals.
5. Interpersonal and communication skills
One of the most cogent technical business skills is interpersonal skills. We see communication skills as a subset of interpersonal skills as they both go hand in hand.
Why are interpersonal communication skills important?
Interpersonal and communication skills allow you to build affiliations that in the long run help you gain quality relations for both your business and personal life.
Entrepreneurs with interpersonal and communication skills are more likely to find and partner with people who can help them build their companies as compared to those who like to work in isolation. Nothing big ever gets accomplished in isolation. Can start on your own in your garage but eventually, you will have to work with other people to accomplish bigger goals.
How to build strong interpersonal and communication skills?
A) Always be positive
Nobody wants to work struggling to contain their emotional health. White to be around positive healthy people who have strong mindsets. If you like to complain all the time, eventually people will see you as a negative person. Also if you want to discuss your problems all the time, people may become annoyed with you. Now there is nothing wrong with talking about your problems but you have to do it positively to encourage feedback and advice. If you are going through a bad experience, put your negative feelings aside before you meet other people.
B) Be respectful of others
You don’t necessarily have to go out of your way to praise others. But you need to give credit where it is due and knowledge or other people’s expertise. If you ignore others and their achievements or expertise, they may not be willing to give you a helping hand when you need it. Never think that you are better than anybody else because it too will reflect in your thought and your conversations. People can tell if you are overly egoistic. So be humble and respectful of other people around you.. Treat your employees just as you would treat other companies’ CEOs.
C) practice active listening
When you talk to other people, make sure that you are actively listening to what they are saying. Be invested in their conversation by nodding or repeating phrases to let them know that you are paying attention. Be genuine and you will receive a genuine response in return. if you ignore other people’s problems, they will ignore yours.
The bottom line
When you are scaling up, you need to keep things in mind to create a balanced transition that does not impact your revenue. Quickly find the right people, give them the environment they need to thrive so they can help you with your goals, and keep on building new relations with suppliers, professional experts, and investors.
Understand that this is something you have to do for the rest of your life. So keep these 5 technical business skills in your mind regardless of your current business state.
Next, learn top business skills that they don’t teach at Harvard here.