People are the most critical resource in the present scenario. Managing them is the most essential skill. Human Resource as we call it is so diverse that many techniques have to be employed to manage it. People management skills are the most sought after skills at present.
Methods employed to manage people – Generally people or human resource can be classified into (1) Skilled (2) Semi-skilled and (3) Unskilled.
Skilled human resource are scarce and do not require much management. They are people who want to work in their domain and just basic monitoring and tasking is required for them working efficiently. One of the cons of skilled people is that they are aligned with a particular job. So Scientists and Engineers can work in their respective field and are less flexible.
Semi-skilled workmen are the most sought after. They can be put to many uses. They can also be made to learn skills and are more flexible. Management graduates can be termed as semi-skilled. They can mould themselves as project managers, finance managers or sales managers. They require medium level of monitoring and training.
Unskilled workers are the largest workforce. People management requires turning these unskilled workers into semi-skilled. Japan as a country has developed so much working to convert unskilled to semi-skilled. They will always require high level of monitoring and training.
So a good people manager will be proficient in grouping people into these three categories and the management then becomes very simple.
Coming next time the management of finances looking at all aspects from crowdfunding your business to taking out loans, to get you started you can read more here about online loans and crowdfunding.
Finance is for everybody who can understand numbers. Financial transactions are the most important part of everyday life. Every time you step out of your homes or now in e-commerce age even from the comfort of homes you are buying things. All these actions are financial statements. Simply speaking there are four kinds of financial transactions.
- Money goes out – Whenever you buy something or pay for a service, the dollars come out of your pocket. This is the most common kind of financial transaction. For example when you buy an ice-cream cone for $5 it is a financial transaction where money goes out of your pocket.
- Money coming in – Salary day is the most awaited day right! We are waiting for our bank account sum to increase. This is another common type of financial transaction. All kinds of transactions where you will get the money are of this type. For example you are taking a seminar and being paid a fees. The fee is money coming to you.
- Money supposed to come in – Sometimes the money is not paid instantly. The buyer will take some time to pay the money due. This is the money which is supposed to come in. For example if you are running a wholesale business you will have to give goods on credit to the retailer. This credit is the money supposed to come in.
- Money Supposed to go out – If you have taken a loan a monthly installment goes every month. This is the money which is supposed to go out every month.
Financial transactions entail only these four kinds. It is very simple. I will introduce the way these are used in financial statements which need to be prepared by companies next time. Feel free to ask questions.
One of the main things that differentiate smart business people from busy and hard-working people is simply the way they make business decisions. Busy and hard-working people will make business decisions based on assumptions, gut feeling and common sense which is not very common. On the other hand smart business people will make business decision after knowing the facts. They exactly know how a particular decision is going to impact their business. They will have Plan B and Plan C in case something in the original business plan doesn’t work. Busy and hard-working people, since they are busy and hard-working cannot think or visualize their business from a larger perspective. They make certain decisions and they pray and hope that after three months or six months the decision will bring profit to their business.
Let’s have a look at what are the main reasons why businesses fail.
- ASIC (Australian Securities and Investment Commission) report 2010 said that poor financial control, including lack of records was the main cause of business to fail.
- Rabodirect online Bank did a survey and found out that poor cash flow management has been blamed for 90% of small businesses to fail.
- A survey was conducted in Australia involving thousands of business owners. The major finding of the survey was that Businesses are most likely to fail because of inability to manage costs.
Friends all these reasons boil down to one main reason which is finance mismanagement. Does it mean that good Financial Management will guarantee success in business? Well I am not saying that. Think about this – Poor financial management can single-handedly bring down any organization within matter of time. Understand this – “Finance is the root of how business makes money”
Sometimes in 2014 I had read a report by Australian Securities and Investment Commission. It said that one of the main reasons businesses failed was because of poor financial control. That made me curious to do a research. I analyzed hundreds of financial statements of businesses heading towards bankruptcy, and of businesses making low profits. Very soon a pattern emerged. I compiled my research and came up with two common Finance mistakes made in Business.
Let me again explain in layman’s terms. Let us suppose there is a person called Tom and he is walking up the street. Suddenly he sees $1000 lying on the street. Tom takes that $1000 and puts it in his pocket. That $1000 has not cost Tom anything.
Now let us suppose there is a person called Nick, and Nick needs $1000. He approaches Tom and asks if he could borrow $1000 dollars from him. He is ready to pay 10% interest on it. Tom knows that if he keeps the $1000 in his pocket, even after one year it will still be $1000. On the other hand if he accepts the offer of giving the $1000 at the rate of 10%, after one year he would have $1100. @11100 is $1000 plus 10% interest earned by it.
Let us suppose there is another person called Harry. Even Harry needs @1000. Now harry approaches nick and asks if he could borrow $1000 from him. He is ready to pay 5% interest. Do you think Nick would say yes? Definitely he will say no. Now Harry says that he was willing to pay 19% interest. Nick would definitely say No simply because it is costing him 10%. Nick may say yes if Harry offers to pay him 15 – 20% interest.
More to come in the next post….
When I was a six-year-old , my father used to give me a one dollar note in a week. He would then check with me casually what I did with the money. I did not understand that he was actually teaching me how to manage money. The next step came when he bought me a piggy bank and started giving me coins. He would come daily after office and whatever was change in form of coins he used to give me. Again he was teaching me to manage money, and also how to save money. Taking cue from the way he taught me to manage money, this post will contain some basic and easy things you can try instantly.
Today I will discuss various techniques to make your child learn some basic financial management skills just like my father taught me.
- Pocket Money – As soon as your child is big enough, provide him some cash as pocket-money to start with. Pocket money management will help him learn about managing cash. He will learn basic skills like where to keep cash and what to do with it. It will also show him how hard it is to earn the cash.
- Opening a bank account – When he has learnt to manage cash, he also need to learn how a bank runs. The best way to learn is to open an account for your child and let him handle it. He will learn how to deposit money, withdraw money and use of debit card as well. Banks do facilitate the child to open a bank account. They are their future customers is it not?
- Earning Money – After learning about bank, teach your child to earn money. The practical way is to make him earn money by doing holiday jobs.
So these are few tips to teach your children financial freedom. More will come next time.
The most common definition of management is – ” Dealing or controlling people, process or ideas”. But is it true? All the time we are actually using management to make our lives easier. Let’s first see what professionals’ view is on management. Some definitions which try their best to put their own views are:
- “Management is to get people to work together to achieve an organizations goal – An Organization’s perspective.
- “Getting the maximum out of minimum resources” – A manufacturers view.
- “Management is a group of people who take responsibility” – An outsiders view
- “Management is a process that keeps an enterprise running” – A manager’s view.
- “The organization and co-ordination of activities in business” – A business person’s view.
In the above definition we see that all people say different things about management. Are they all true? Yes of course they are true, but they are only touching the tip of the iceberg. Management is present in all our lives. When we start our day we start managing. We manage time by getting up early and doing our daily chores. That is Time Management for you.
We start early to get less traffic and unconsciously do our bit for manage traffic by avoiding peak hours. When we reach office we park our cars properly so that people coming later will not face trouble. Invariably we are managing the parking space. We carry lunch and avoid outside food to protect ourselves from infection. This is self-health management. On holidays we make contributions to the home ( Women do that all the time along with work – Hats off to them) and manage our homes. So management is not about studying a book or following some instructions. It is more about life. I will be sharing many facets of management in the coming blogs.