SME-tailorManageBizMany Small and Medium-size businesses in Tanzania are being held back by current levels of management and leadership skills.

MSMEs stakeholders have consistently being identifying poor management skills especially entrepreneurship skills as hampering their growth.

The following are some of the management/guidelines which can help MSMEs improve their operations

Employee Management

This involves recruiting, maintaining and termination of employment for employees. Below is the description of required essentials in each stage:

a) Recruitment

Basin on United Republic of Tanzania, employment of employees must adhere to the already established guidelines. In this, there are basic three laws that are guiding the process and one need to adhere to:

  1. Empowerment and Labor Relation Act

  2. Occupational Health and Safety Act

  3. Vocational Education and Training Act

  • Guideline for employees recruitment

  1. You must have the required standard for employees in terms of

  1. Age

  2. Education level

  3. Profession

  4. Salary

NB: the government in the country sets Age and Minimum salary for employees

  1. You must have an actual number of employees that one requires

  2. Plan the overall benefits/incentives that will be offered to the employees to attract them e.g. paid vacation and health plans

  3. Make sure to crosscheck all the necessary documents before hiring

b) Maintaining employees

Maintaining employees in an organization solely depends on the overall working environment that the workers are subjected to. There are many strategies that can be employed in order to maintain employees for longer time. In some business creating good working environment and provision on incentives to hard worker are usually among the strategies that are employed.

Basic ways to keep employees

  1. Making them comfortable in their roles within the business. This can be done through regular review and suggest boxes to understand this

  2. Provide incentives/ rewards for extra efforts. This can save as motivation for employees

  3. Regular verbal praise for good performers. This can also be a form of motivation but without involving any financial costs for the business.

  4. Having in place a mechanism to control office misunderstandings for reducing burnouts

c) Termination

As in the recruitment of employment, termination of employees is in most case a legal matter. Terminating a contract usually requires reviewing of the necessary clause that is present in the contract so as to avoid legal actions against your firm.

Things to consider when firing employees

Note 1: Understand the legal issues associated with employee’s termination

Note 2: Put in place the benefits that one will receive after termination

Note 3: Collect all the company accessories that the employee had in their possession

Note 4: Make sure to have a lawyer in place to oversee the whole process

Causes of Failure of Small Businesses inTanzania

Wrong business ideas.

The good business idea is the one which is able to satisfy a customer need, or formulated based on available opportunity. During the idea generation concentrate on what the customer want not what you want, for instance in the area there are a large number of restaurants but all of them do not satisfy customer needs, that is an opportunity to start a restaurant that will satisfy them perfectly.

No business plan.

There is an old saying’’ if u don’t know where you are going how will you get there’’? A business plan will show you a proper direction you can head to. Many small business owners start their business without having a proper business plan, which at the end it contributes to their failures. Planning will give you the insights on marketing, operations, human resources, finance. It will also alert you about business risk so you can prepare corrective measures.

Sample Business Plan Template

Components of a Business Plan

Lack of reserve capital

As an entrepreneur make sure you keep enough reserved cash which will be used in case of emergency such as during tough time, seasonal and when sales slows down. Not having enough reserve capital may cause failure to your business.

Poor choice of location

Do not let cheap lease tempt you into choosing wrong location for your business, in choosing location you consider accessibility of the place, availability of customers in the area, legal place for a business according to Municipal or city by-laws, number of similar business located near-by

Employing poor staffs

As business owner you should employ staffs according to their competencies and experience. Employing staffs who are not good in their positions can be one of the aspects of the failure of the business. Employ proper staffs, communicate their responsibilities, monitor their performances and improve where necessary.

Ineffective marketing

In current world people can not do business with you if they know nothing about your product or service, so put an emphasize on effective marketing. As a small business owner you can start marketing your business using the ways you can afford, e.g you can use fliers, door to door marketing, testimonial from satisfied client, short massages, phone calls, also advancement of technology become very usefully in marketing through social media such as whatsap, instagram, tweeter, website and facebook

Under estimating the competitors

Never under estimate your competitor no matter size of his or her business, always make sure you are steps ahead of your competitors, also if possible have knowledge of their plan by using legal ways such as asking questions to the competitor, staffs or to the customers about their opinion concerning the product or service that you provide compare with others , this will help to have proper strategies that will be used to beat your competitor

Basic Record Keeping Template

Failure to separate family and business issues

Do not mix these two aspect even if it is a family business, it is advised to set boundaries in order to avoid misunderstandings later on, income and expenditures should be clearly separated. And also things like who will manage the business, responsibilities of each other  should be clear.

Those are some of the factors that may lead to the failure of any business, as a business owner you should take them into consideration to avoid the consequences.

Source: TAPBDS Co. Ltd

1. Financial Management

Among the most important qualities of a successful entrepreneur, is having the ability to manage business finances. Effective management of finances is essential as it provides people with options for savings that later can be used in further business expansion.

For effectively managing your business, there are several things that need to be  considered. These are finances, human resource and operations as elaborated below:-

Having multiple sources of income

This is a very crucial aspect when managing finances for business. Although it might be hard for starting entrepreneurs to do this, it is very crucial for one to have multiple sources of income. Once this is done, it becomes very easy for a business to prosper as the funds running the business are from diversified sources. This is good in a sense that failure of one source will not result into business failure, as the other source will be available to cover the occurred losses.

Saving for bad/underperforming months

Another issue which entrepreneurs needs to be aware of is having actual savings for those months where business is not good (underperforming months). In this, one needs to have at least 6 months expenditure amount as savings so as to avoid instant failure in case of sudden underperformance of the business. This will be essential in allowing other functions to continue while an entrepreneur is searching for options to reduce the impact that was caused by the underperformance.

Separate business funds from personal funds

This is also a very important item that entrepreneurs need to know. When operating a business, an entrepreneur need to separate business funds and personal funds. They also need to separate business expenditure and personal expenditure.

Keeping personal and business funds and expenditure separate is very crucial because combining the two will result into business failure to realize profit as personal expenditure will consume the expected profit and at the end even the actual capital can be consumed which eventually will result into business failure.

 

Always negotiate for better offer

Negotiating when purchasing goods or services is another way that can be used in overall managing business finances. In this, one can always ask for better prices for the provided goods or services – this in a long run, will provide savings for the business.

 

Always be in control of the income and expenditure of the business

MSMEs are supposed to be in control of all financial matters related to their businesses, They need to personally control both income and expenditure. Never allow any unauthorized person to manage your income or spending as this may lead to confusion which may in a long run lead to losses.

 

 

2. Human resource management

This involves recruiting, maintaining and termination of employments. Below is the description of required essentials in each stage:

a) Recruitment

Basing on the existing laws, employing workers must adhere to the already established guidelines. These guidelines includes:-

  1. Age – 18 years and above

  2. Education level

  3. Profession

  4. Salary – The government in the country sets Age and Minimum salary for employees

Other Important tips

  • Consider having a few employees depending with your needs, never employ too many people as you will end up paying them for nothing.

  • Plan the overall benefits/incentives that will be offered to the employees to attract them e.g. paid vacation and health plans

  • Make sure you crosscheck all the necessary documents before hiring

The following are the laws that govern recruitment procedures.

  1. Empowerment and Labor Relation Act

  2. Occupational Health and Safety Act

  3. Vocational Education and Training Act

 

 

 

b) Maintaining employees

Maintaining employees in an organization solely depends on the overall working environment that the workers are subjected to. There are many strategies that can be employed in order to keep employees for a long period of time. In some businesses, creating good working environment and provision of incentives to hard-workers are usually among the strategies that are employed.

Basic ways to keep employees

  1. Making them comfortable in their roles within the business. This can be done through regular review and suggest boxes.

  2. Provide incentives/ rewards for extra efforts. This can save as motivation for employees

  3. Regular verbal praise for good performers. This can also be a form of motivation but without involving any financial costs for the business.

  4. Having in place a mechanism to control office misunderstandings for reducing burnouts

c) Termination

As in the recruitment of employment, termination of employees is in most case a legal matter. Terminating a contract usually requires reviewing of the necessary clause that is present in the contract so as to avoid legal actions against your firm.

Things to consider when firing employees

  • Understand the legal issues associated with employee’s termination

  • Put in place the benefits that one will receive after termination

  • Collect all the company accessories that the employee had in their possession

  • Make sure to have a lawyer in place to oversee the whole process

3. Overseeing employees and business activities

Any entrepreneur needs to have a clear way of maintaining and controlling employee’s performance in the business. Preparing a special roaster that will contain the names, activity assigned and the indicator for measuring performance can do this.

4. Operations supervision of the business

Finally, after having the finance and employees management in place, the next step is to have an operational plan. Operation supervision is very essential as it provide a business with a means to oversee the intended activities of the business and make sure that they are done in proper standards.

Characteristics of a good Supervisor:

  1. Most supervisors start supervision role as an employee in the business they now supervise.

  2. You must possess technical skills important for the supervised business.

  3. You must possess superior technical skills compared to other employees

  4. You may be given supervision role based on your experience and seniority

  5. You must possess good work habits and leadership skills.

  6. You may have contributed to a big change in an employee’s work life

  7. You may need to change the personal relationships with subordinates.

Who is a Supervisor?

Supervisor is a manager at the first level of management, which means the employees reporting to the supervisors are not managers. Operational Supervisor is tasked to the business is meeting its’ goals. He/she also ensures that employees are performing their jobs so they will contribute a share of the accomplishment of goals. Operational Supervisor oversees daily business problems and goals.

Supervisor should possess the following skills:

  1. Management Skills

  2. Technical Skills

  3. Human Relation Skills

  4. Idea developing Skills

  5. Decision Making Skills

General Functions of the Supervisor include:

  1. Planning – this involves drawing up plans of actions that combine unity, continuity, flexibility and accuracy given the organization’s resources.

  2. Staffing – it is performed by all managers depending upon the nature of business, size of the company, qualifications and skills of managers. In small companies, the top management generally performs this function. In medium and small scale enterprise, it is performed especially by the personnel department of that concern. Staffing helps in recruitment, selection, placement, training and development, providing remuneration.

  3. Leading – this involves the social and informal sources of influence that you use to inspire action taken by others. It helps supervisors understand their subordinates’ personalities, values, attitudes, and emotions. 

  4. Controlling – this involves identifying performance weaknesses and errors by controlling feedback, and conforming activities to plans and instructions.

Responsibilities of the Supervisor

Supervisor must be prepared for change as fast as their employees do.

Supervisor must be accountable to business practice by imposing penalties for employees who fail to adequately carry out responsibilities and provide rewards for meeting expectations.

Tips for Supervisors

  1. Set limits on your behavior! No gossip participation.

  2. Do not be a “rescuer”. Train employees to improve performance, do not do it for them.

  3. Figure out how to measure success. Know when people are not on track to meet goals.

  4. Communicate with everyone. Talk with each subordinate regularly.

  5. Be firm. You will be tested on rules and standards.

  6. Learn from others. Find other bosses who will share their wisdom. Seek people inside and outside the organization. Create a business network.

Preparing for the Job

  1. Avoid fear of failure

  2. Be ready to carry out supervision role

  3. Be fair to your subordinates

  4. Focus on accomplishing goals.

  5. Learn as much about the job both while working and away from the workplace.

  6. Continue to learn once promoted.

  7. Get to know your employees.

  8. Observe work habits and discuss goals with subordinates.

Supervisor’s Power & Authority

  1. He/she must have power, ability and right to do certain things.

  2. State your expectations to your subordinates.

  3. Work towards the group becoming a team.

  4. Be interested in hearing about work related problems.

  5. Do not rush to make changes.

  6. Build support for change by introducing it gradually.

A Successful Supervisor is the one who

  1. Bring a positive attitude to the workplace.

  2. Be loyal to the organization. Listen to employees and discuss problems, but they must be clear that you are loyal to the organization.

  3. Fairness. Do not be perceived as playing favorites.

  4. Develop good communication skills. Your time will not shift from task to people orientation.

  5. Be able to delegate and give up control.

  6. Must accept the challenge and seize the opportunity for success.

A Successful Supervisor is the one who

  1. Bring a positive attitude to the workplace.

  2. Be loyal to the organization. Listen to employees and discuss problems, but they must be clear that you are loyal to the organization.

  3. Fairness. Do not be perceived as playing favorites.

  4. Develop good communication skills. Your time will not shift from task to people orientation.

  5. Be able to delegate and give up control.

  6. Must accept the challenge and seize the opportunity for success.

Why Profit and Loss account is the most important document for SMEs

Most small businessmen do not prepare, read, understand or analyze their profit and loss account. They think this document is required mainly by big companies and is not necessary for small businesses. As a business grows year – on – year the issue for most businessmen is, how can one determine their income tax obligations? How can one avail, loans for bankers?  And finally the most important concern is how to forecast their revenue and expenses while setting yearly targets.

Click here to read why profit and loss account is the most important document for SMEs