Management_and_Finace

Management and Finance Management and Finance are two areas of business that is vital to someone who is trying to operate a business. Most businesses operate with more than one person. There is typically at least one manager and few persons/employees. Therefore, management is a very important area for a business. Most business managers need to have some basic financial understanding. Balancing a checkbook and reading financial statements are important. Even though most people (unless they have a CPA license) hire someone to prepare and manage their books. If a manager does not understand what they have prepared they cannot tell if they are doing it correctly, nor can they properly use that information to run their business. Knowing adequate knowledge of management and finance areas a good manager needs to help his or her business function. All businesses use some form of management. Some use a more traditional management approach. Some have ventured off into trying new management techniques. Regardless of which technique, management has one thing in common across all businesses; management involves managing people. To be an effective manager, one needs to have strong values. Values can be defined as general beliefs about the importance of normatively desirable behaviors about the importance of normatively desirable behaviors or end states (Edwards & Cable, 2009). It is through one’s values that their techniques in management can best be demonstrated. Management goes beyond leading and directing people. It includes knowing how to talk to and get along with people. Good managers need to know how to work with people of different races and cultures. Diversity is very important. The implementation of organizational diversity practices has been shown to be linked to a number of positive diversity outcomes (Konard, 2007). Often manager’s, especially front line managers interact not only with his or her employees regularly but with the businesses customer’s regularly. Those interactions can make or break a business. If a manager cannot successfully interact with customers, those customers may decide to take their business elsewhere. Furthermore, they will share with their friends and colleagues who will continue to spread the word that the business has awful customer service. A business cannot survive without its customers. Retaining current customers and attracting new customers is how a business stays in business and grows. Interaction between a manager and their employees is just as important as their interactions with the customers. The people a manager oversees are often the people who operate the business daily. If a manager is always mean or mistreating their employees than those employees will not be good employees. They may be less likely to keep employment there. This creates a higher turnover for the company. This not only can be expensive between continuously needing to hire and train someone; this also creates a bad reputation for the business. If people know there is high turnover rate, they are less likely to apply to work there. This also becomes a problem because the qualified applicants will look the other way for employment. Which means you’ll end up interviewing and hiring unqualified people, because that is all that applies for your company because of its turnover rate and reputation. Managers, especially managers of small business need to have some understanding of general finances. Most managers deal with the company’s money to some extent. It may be managing that department’s budget. It may be monitoring the financial transactions between the customers and your employees. It could be managing the money to pay bills. Some managers even process the payroll for their employees. Managing a business’s budget includes money needed for office supplies, office activities and, functions. Office supplies are the basic supplies you need to run your business. These supplies can vary from different types of business. For example an office would hold supplies such as pens, pencils, paper, stapler etc. It is important that a manager recognizes the need for these supplies. Furthermore, they manage their monthly budget to include the purchase of these things prior to them running out. Also some businesses hold different activities and or functions to attract new customers and some activities to show employee appreciation. Generally speaking, the money for these functions come out of the monthly budget. Customer activities may be a grand opening, new product launch party or customer appreciation. Employee appreciation may be things like employee of the month/year/week, lunch for your team, goal bonuses, etc. Again, it is up the managers to balance the money out each month. A manager must know how to balance a checkbook and make a budget. If they miscalculate they could overspend and hurt the business financially. In small business, especially managers also control the budget and money for that business. This includes calculating the revenue and expenses. The revenue is the money the business earned from the selling of goods and services. Expenses are what it cost for the business to operate. Understanding this helps a manager to learn where their focus needs to be more or less at in different aspects of their business. It also helps them calculate what products or services are generating the most business and those that are not. The expenses side of it shows if they are spending too much on something that is not bringing forth enough money. The expenses side also shows if there is a flaw with someone spending money unnecessarily or is stealing money. Expenses also include payroll expense. Understating the business payroll expense as a manager shows how much is being paid out to the employees and if those employees are underpaid or overpaid. It shows if an employee needs to be let or if another one can be afforded. The payroll can help you understating staffing needs for a numbers perspective. This is important to managers because they generally do the hiring and firing of employees. Again, although in some businesses an accountant usually handles the preparation of the financial statements, they only prepare them. It is important as a manager to understand them. Those statements, is how a manager interprets the financial state of the business. Understanding that helps them to run a functional business. Understanding these statements is very critical to a manager. Conclusion: Management and finance are two important areas for a functioning business. They are very instrumental to the life of an everyday manager. An efficient manager understands how to manage the business and the people who work in your business. Understanding the finances of your business helps you to run the business more efficiently.