Competences and Management Skills for a Small Business Owner/Operator

Based on the tourism small business operator standard and various other management standards, accreditation and certification processes nine competency blocks have been identified under which the management skills for a small business owner/operator are developed. Below is a brief description of each one of the competency blocks and their skill sets.

Each competency block has one or more skills under which are performance criteria and/or knowledge criteria are identified. All of these performance criteria would be sub-divided into smaller tasks to be performed by the business operator. To be competent in a specific area there are skills to be developed with specific performance measures to achieve. All of these performance measures are identified in Appendix 1.

To grasp the scope of activities under various competencies defining some of the terminology, as "need to know" knowledge in each area, is a useful starting point. Knowledge criteria are also important in the overall development of skills and are identified separately form performance measures. The knowledge criteria focuses on the "need to know" and helps in the development and understanding of work as a business. Many small business owner/ operators have to make the transition from an employer/worker to a business/owner or technical skills focussed to management skills focussed.

The use of management competencies and skills among the Sector Councils is most likely to be with existing owner/operators although it could be used in the development of management programs in various institutions and education. Application of the competencies and skills will help assess management strengths and weakness of an owner/operator and help identify the importance of certain skills at different stages during the business cycle.

1. Business Planning

   Skill Sets

   1. Define Business Plan
   2. Determine Market Feasibility
   3. Develop Operation Plan
   4. Determine Financial Feasibility
   5. Evaluate Business
   6. Prepare Business Plan
   7. Business or Product/Service Start-up

This is the most comprehensive competency block since it contains elements and an understanding of all the other competencies and skills.

Generally there is a need to put the business into perspective and develop a simple strategic planning approach so that the business owner can define goals and objectives that could be the basis for a business start-up, business expansion or new product development. Something as simple as stating the mission helps the business focus on its niche market; an important factor in the survival of small businesses. For the purpose of planning there is a need to identify the feasibility of an idea or business opportunity through many of the firms activities such as operations, finance, marketing etc. For example, doing the feasibility of the operations reveals the firms strength and weakness and its internal capabilities and helps evaluate a business opportunity.

2. Marketing/Sales/Service

   Skill Sets

   1. Define Marketing/Sales/Service Terms
   2. Prepare Marketing Plan
   3. Plan Public Relations Activity
   4. Develop Sales Strategy

Essentially the marketing plan focuses on identifying the target market and knowing what the needs and characteristics of this market are through marketing research. The success of many small firms is to be able to effectively sell and provide the necessary service to meets the needs of a niche market. A marketing plan is developed along with identifying promotional activities, sales support material and advertising. This also includes the development of a public relations strategy to market the concepts and ideas to the target audience.

3. Financial Management

   Skill Sets

   1. Know Financial Accounting Terms
   2. Prepare Budget
   3. Manage Accounting and Cash Control

Research indicates that , apart from entrepreneurial skills, success and failure are often determined by poor cashflow management and a lack of a simple accounting process. That is why under skill set 3, Manage Accounting and Cash Control, there are several performance measures for the establishing all the necessary accounting procedures to manage cash. Cash management helps the small business owner get a better handle on the source of financial problems.

4. Human Resource Management

   Skill Sets

   1. Hire Staff
   2. Train Staff
   3. Supervise Staff
   4. Administer Payroll and Benefits Program

Human resource management is part of every management function irrespective of the size of the organization. All the standards and management programs reviewed contained various aspects of human resource development(tables 5,6 and7). The performance criteria were similar in most standards and programs. The addition introduction of a remuneration plan under administer payroll and benefits was felt to be an important consideration for employee motivation and the movement to more flexible income arrangements.

5. Business Operations

   Skill Sets

   1. Manage Office Operations
   2. Perform Administrative Duties
   3. Manage Risk
   4. Manage Products and Services
   5. Develop Negotiating Skills

Setting up operations is critical to the success on the financial side for cash management. The need for inventory and production control measures and a system for accounting for dat to day operations leads to better cash management and the ability to make better financial decisions and identify working capital requirements. Weakness in these areas have been associated with many business failures.

One management skill that was identified frequently in the RANA study was the need for negotiating skills especially for the signing of leases and negociating with suppliers and customers. Therefore, negociating has been included as a skill set under operations.

6. Professionalism

   Skill Sets

   1. Exhibit Professional Skills
   2. Communicate Effectively
   3. Interact with Customers
   4. Manage Time

Many of the performance measures of professionalism are connected with good interpersonal skills and leadership. These factors rank high for success among small business owners, such as, good customer and employee relations, and developing a good rapport with suppliers and your bank manager. Along with demonstrating these skills is the need for professional develop to continue to maintain high professional standards that influence attitudes and motivate employees to be successful.

One additional skill set that is included in this competency is time management. More than just a performance measure it is seen as a skill necessary for the effective functioning and management of the complete business. This was mentioned frequently as a skill in many other programs. Many of the aspects of business operations depend on effective control of time for the various tasks to be completed.

7. Technology

   Skill Sets

   1. Definition of Relevant Computer and Communication Technologies
   2. Using Computers

In todays competitive environment technology for communication and management purposes is an essential factor. Owners need to know how to operate and integrate computer technology into their operations. This is particularly important for financial management (accounting packages) inventory control and communicating externally with modem on Internet which provides access to other information and the ability to communication with suppliers and clients. Besides using specific software products what is important is to know what is available to make a timely strategic decision about the use and integration of different form of technology into the business.

8. Industry Awareness

   Skill Sets

   1. Know and Promote Industry

For the purpose of understanding an industry in the context of its size, scope, people it employs, contribution to the economy and the impact on the economic and social environment is important to be able to promote the business in the community.

9. The Business Cycle

   Skill Sets

   1. Understanding the Business Cycle

Understanding where a business is in its development (the business cycle) is essential to making good judgement about purchasing an existing business, expansion growth, and financial and management decisions. Key factors in small business failures were lack of experience and form an entrepreneurial perspective bad judgement. The Australian Standards for small business competency standards is built on the business cycle approach so that all the aspect of growing a business are well understood. While intuition, creativity and initiative are an important entrepreneurial attribute for success knowing what is happening in a business as it is going through various strategies for growth and development are likely to assist in better judgement.