Business Forum

Understanding Money, Management and Marketing: The 3Ms of Successful Small Business Venture PART 2
by Prof. James Gaius Ibe, Ph.D.

In this three parts series we explore the 3Ms of successful small business venture. Please bear in mind that the following are merely guidelines and in no way constitute formal business advice. They are designed to provide general information regarding the subject matter covered. Laws and practices often vary from state to state and are subject to change. And because real-world situations differ markedly, specific illustrations may not be applicable. Please consult a competent professional for specific business advice. A preliminary review of failed small businesses indicates a common pattern: Lack of attention to the 3Ms of business enterprise: Money, management and marketing.

Understanding Management: The key functions of a manager include planning, organizing, coordination and control. Management success is gained through accomplishment of mission and objectives. Managers fail when they do not achieve their mission and objectives. Success and failure are tied directly to the reasons for being in business, i.e., mission and objectives. However, accomplishing mission and objectives is not sufficient. Success requires both efficiency and effectiveness. While efficiency refers to producing at the lowest cost possible, effectiveness is getting the mission and objectives accomplished. For example, cost overruns are indications of inefficient operation. Planning is key function of a manager. T he ultimate measure of management's performance includes: execution-how well management's plans are carried out by members of the organization; leadership- how effectively management communicates and translate the vision and strategy of the organization to the members; and delegation-how well management gives assignments and communicate instructions to members of the organization.

Effective management requires the development of a business model. This is an integral part of any enterprise. A business model is a path to a company’s profitability, an integrated application of diverse concepts to ensure that the business objectives are accomplished efficiently and effectively. A business model consists of business objectives, a value delivery system, and a revenue model. The path to shareholders’ value maximization goes through customer value maximization, so delivering value to the customer is absolutely crucial. An effective revenue model consists of a set of revenue streams that contribute to the company’s profitability. The company must maintain a well balanced portfolio of multiple revenue streams without losing focus of the core business. Indeed, without a clear vision and effective revenue model, there is no clear path to profitability. For additional information please go to http//:www.sba.gov.

Additionally, effective contemporary management requires a global perspective. Globalization produces a tension between standardization and customization. Adaptability is not functional when it is not purposeful and informed by environmental scanning, environmental analysis and costs/benefits analysis. Note carefully, that for every strategic choice a company makes, there are costs and benefits. The pertinent question is: do the benefits justify the costs? Successful companies choose the optimal strategy that maximizes the net benefit to the enterprise. Globalization and technology have intensified competition in all markets and depressed profit margins in most industries. However, some successful companies such as Wal-Mart and Walgreens continue to perform well. The key is to think globally and act locally. The tension derives from pressures to reduce cost and pressures to be locally responsive. In balancing standardization and customization, successful companies formulate and execute appropriate and optimal strategies pursuant to its strategic mission and objectives. At global level, companies choose international, multi-domestic, global, or transnational strategy. At corporate level, they choose diversification-related and unrelated executed through internal new venturing, acquisition or outsourcing. At business level, they choose cost leadership, product differentiation or niche/focus strategy. In part three, we will summarize the principles and mechanics of marketing.

ABOUT THE AUTHOR: Dr. James Gaius Ibe, is the principal of Global USA: Marketing and Management Consultants; and a senior professor of Economics and Marketing at one of the local universities.

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