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Managing a Small Business Essay


Establishment of a business venture is just the first step in making an investment. Reaping long-term benefits from the investment lies squarely on effective management practices .This encompasses mainly the disbursement of funds to the various sectors in the business, limiting unnecessary expenses and making savings geared towards expansion. Therefore the most demanding of all expenses should be taken care of first, and gradually other less demanding expenses be addressed, in order of priority.

In the light of these managerial practices, the business manager should thus possess at least some skeleton knowledge of how to run a business of that nature, either from experience or from extensive consultations and keen observation of the day to day activities around the business environment. The following, therefore are the various practices that should be carried out in so far as utilization of cash is concerned.

 Appropriation of revenue

Since the business is of a service delivery nature Initial capital outlay must have been required for setting up the business. This capital must have been used for securing a physical location, renting or buying a delivery van/vans, and initial advertisement to create awareness about the existence of the business, and other less demanding but necessary miscellaneous expenses,

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for example renovating the physical premises to a particular taste.

(a)Servicing the initial capital.

The initial capital may have been borrowed, and therefore must be serviced. Thus a repayment strategy in line with the borrowing contract must incorporate into the business returns budget.

If the business can’t service its initial capital as indicated in the terms of lending then it is highly likely that the business is not feasible

These are necessary day today, weekly or monthly payments that the business needs to make in order to run efficiently. These include   fuel for the vehicle, workers ’salaries rent, water bills, electricity bills and many others .These must be factored in the business budget, and the business must be feasible enough to service them.

  1. Book keeping

All payments and receipts that are carried out by the company must be documented. Thus business accounts must be kept to keep on record the profitability of the business. Thus a miscellaneous expense account, a petty cash book and a receipt book must be updated religiously and examined daily to know the welfare of the business, so that trivial decisions pertaining to its operation can be made in the long run.

Some accounting knowledge is necessary for this practice. Periodically, these accounts must be subjected to critical examination, for they are the most important indicators of the progress of the business. Decisions ranging from minimization of some expenses to the dismissal or hiring of more employees have to be made in line with these records.

  1. Savings and banking services.

Regularly, the balance remaining after taking care of daily miscellaneous expenses should be kept in a designated business account with limited access .It is from this account that payments which are made after a given time span for example payment of salaries, servicing of loans, rent payments and other payments are made. These payments should therefore be made from a current account.

After all payments have been made, remaining money, which in this case is the profit, should be channeled to a savings account. It is from the balance in this account that business expansion plans and other monetary allocations, not pertaining directly to the business in question can be made, for   example, servicing another business. If   no profits are realized then effectiveness of the business management should be examined critically and appropriate measures taken to keep it in operation. Idle money should be wisely channeled to affixed deposit account.


Day to day running of a business is a continuous learning process, with all gathered knowledge aimed at maximizing profits and attraction and retention of customers. The effective management of a business is the key to its success. In this regard it becomes necessary to use the resources of the business prudently in a bid towards maximizing profits and reducing cost as a strategic means of ensuring success and sustainability. This will mean employing good fiscal decisions that will ensure that the business is successful and will in the future remain profitable.


MacAdam, M. (2003). My own business: An Entrepreneurial Guide. Retrieved February 16, 2009, from http://www.myownbusiness.org/s1/.

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