You use management tools to qualify the results of your company? If he does not, you’re missing good opportunities. There are tools that can provide valuable contributions to decision-making and development strategies in various scenarios. And the best: perfectly cater to small businesses.
In this article, you will give:
- The importance of management tools
- As the Business Model Canvas helps with your business
- BCG Matrix: what is it and how to apply
- 5W2H: what it is and how to apply
- SWOT analysis: what it is and how to apply
- Six Sigma: what is it and how to apply
- Matrix GUT: what it is and how to apply
- PDCA cycle: what it is and how to apply
- What are the 5 Porter forces and how to apply them
- As technology further qualifies management.
The use of management tools for small businesses
You’ve certainly read or heard the results of some research which highlighted the high mortality rate of small businesses. In one of the latest, published in 2015, the Brazilian Institute of Geography and Statistics (IBGE) showed that 22.8% of businesses opened in Brazil do not exceed the first year of life.
If you wonder about the reasons for the early closure of many companies, it is worth noting that the Brazilian Service of Support for Micro and Small Enterprises (Sebrae) pointed out in his study Conditioning Factors and Mortality Rate of Companies in Brazil .
It is hardly surprising that most of them are directly related to the management. Check out:
- Working capital insufficient
- Struggling to cope with the high tax burden
- Low number of customers
- Difficult to face competition
- Low income and financial hardship
- Default in fulfilling its obligations.
See for this relationship that among those that contain activities in less than 12 months after start them predominate common challenges to any company.
Thus, it is correct to believe that the problem lies in the way its managers faced such obstacles. After all, a careful entrepreneur has a strategic plan set to the positive and negative scenarios . He knows that the life of a company is not only made for periods of fat cows.
And if you think that managing a business is difficult to devote the financial control is tedious and there is no time for planning decisions ahead of her, you run the risk of going at least way.
The good news is that your task can be made easier by management tools. Much of those actions in which you find difficult or disinterestedness reveals why can be realized in a practical and easy way. Just resort to aid instruments that have helped countless entrepreneurs.
As you will see in the rest of this article, for every problem, there is a specific solution.
8 tools to qualify the management of your company
If you need to set priorities in the company lacks elements to design your future or to position on the market, use the tools at their disposal and the better the results of the business.
Business Model Canvas
What is : visual analysis tool of the main areas of a company.
The Business Model Canvas , also known as Framework Business Model is a management tool used especially in planning a company to be created . It may also be useful to analyze whether the current project behaves as expected.
Its main feature is the projection on a visual map of the areas of the business and the relationships between them. This is an exercise that seeks to answer what are the sources of the company’s revenue, which it offers to the market, with what resources and partnerships account and who are your customers, among other issues.
As ideas arise, they should be applied with adhesive stickers in order to allow them to be moved between the nine frame blocks:
- Customer segment : what your target audience and their needs
- Value proposition : What is the competitive advantage of the company
- Channels : by what means the client must be met
- Customer relations : how will be built ties with those who deal with you
- Revenue sources : how the company will make money
- Key features : how the company can create value for the customer
- Main activities : what actions are required by the value proposition, building canals and maintaining relationships
- Main partners : what alliances will be established
- Operating costs : What are the costs inherent in the business model.
What is : graphical analysis of the company’s value, its products and services.
With help : determine the strategy adopted for each product, service or the business itself.
In assessing the company, build a BCG Matrix can give the entrepreneur subsidies sufficient for decision-making. This is a graphical representation that identifies the time and project the future of what the business offers.
Your application starts to put on paper all that the company delivers to the customer , whether products or services. Then you must enter the current volume of sales of each item and the volume recorded a year ago.
As a next step BCG matrix is to be found the growth rate corresponding to the following formula: volume current – previous volume / volume prior x 100%. For example, if a product now sells 50 units per month, and a year ago sold 45, the calculation is: 50 – 45/45 x 100 = 11.11%. Then, sort the items in ascending order.
Then, you must find the percentage that corresponds to the market share of each product or service. For example, if the goods generates R $ 10,000 in sales per year and market it trades to $ 100,000 in the period, its share will be 10%.
Since the relative share performance compared to the competitor closest. The idea is to divide its value by him, that is, if you sold R $ 10,000 and R $ 8000 it will be 1.25%. Already he sold R $ 12,000, will be 0.83%.
Not tired yet, as you will see how all these calculations will be worth it. Now, make a graph of the Cartesian type , one L-shaped in the vertical line, will the growth rate; horizontally, the market share.
The point where the lines intersect will be responsible for framing the item in one of four classifications possible:
- Stars : good growth rate and good market share.
- Question marks : good growth rate, but low market share.
- Dairy cows : low growth rate, but still good market share.
- Pineapples : low growth rate and low market share.
From these results, you can decide better basis whether it is time to invest in increasing the market share of the item in its preservation or withdrawal from the market, which can be immediate or short-term planned.
To facilitate your understanding, see the chart below, authored by Arnaldo Rabelo , as the BCG Matrix is built.
What it is : check list of activities related to a project.
With help : plan actions for implementation and achievement of goals.
Despite the odd name, 5W2H is among the tools of management, one of the easiest to understand and apply. It refers to a sequence of planned actions , whose strategy depends on the answers to seven questions. Five of them begin with the letter W (in English) and two by the letter H – is hence the origin of its name.
The best way to use the tool is creating a spreadsheet in Excel or Google Drive, define a column for each question to answer, and then fill with the goals and actions that will be part of your planning.
See which are seven questions and then an example of its application:
- What (what) : What is the goal to achieve
- Why (why) : What are the reasons for the goal of the proposition
- Where (where) : where local or company area the goal will be accomplished
- When (when) : What are the deadlines for achieving the goal
- Who (who) : who will do what to meet the steps to the achievement of the goal
- How (as) : As the actions for the achievement of the goal will be developed
- How much (as) : what is the cost of achieving the target for the company.
Example of application of 5W2H:
- What : reduce the fixed cost of doing business by 10%
- Why : To set a lower selling price than competitors
- Where : in all sectors
- When : reach the 2% reduction in costs at 1 month, 5% in three months and 10% in six months
- Who : it will be the financial manager to implement the cost reduction actions
- How : will be raised all fixed costs, identifying savings opportunities
- As : the only expense will be the goal in time and commitment of everyone involved.
In this example, we set the goal of reducing costs , but could be the launch of a product, pay off outstanding debts, open a branch, increase customer base, increase revenues, everything what is a priority for your business.
What is : scenario analysis tool and strategic planning.
With help : identify strengths and weaknesses of the company to strengthen its market share.
Another of the essential management tools, SWOT analysis enables the manager to identify strengths and weaknesses of the company in the present and to project a vision of the future, to evaluate what are the opportunities and threats for its growth in the market.
Its purpose is to highlight potential , establish a competitive advantage and correct weaknesses before competitors. Therefore, the manager must answer four questions, which form the acronym SWOT, as the tool is known in Portuguese:
- Strengths : the strengths of the business (think on its competitive advantages)
- Weaknesses : weaknesses of the business (all that leads him to lose sales or increase costs)
- Opportunities : opportunities for business (as their indicators and targets)
- Threats : the risks to the business (as competition can act to reduce their sales or raising their costs).
What is : quality process management model.
With help : test new processes, products or services and qualify the old.
The Six Sigma is a tool that offers an objective analysis of the company’s performance. It seeks to measure how often an imperfect process is repeated, establishing a waste rate and defining an acceptable standard for the use of resources on a task.
His quest is for greater efficiency , economy and quality in the company, which can be reached from two different methodologies:
DMAIC – aimed at improving active processes :
- Set : what process needs improvement
- Measure : assesses the performance and cause waste
- Analyze : proposes corrective strategies
- Increase : puts into practice the solutions proposed
- Control : check the results and if there is need for further adjustments.
DMADV – aimed at new products and processes :
- Set : sets a goal as the company’s strategy
- Measure indicates what is expected of the product or process
- Analyze : evaluates how to get to the desired level
- Draw : tests the feasibility of the project and plan implementation
- Check : puts into practice and monitors the results.
What is : task prioritization matrix.
With help : define what is most urgent among the demands of the company.
If your challenge is to prioritize actions , there is no escaping the Matrix GUT , which considers the seriousness, urgency and process trend towards less harmful decision-making and more assertive for the company.
It is a relatively complex tool, but accurate results . To apply it, you need to put together a table with five columns: Action, Gravity, Urgency, Trend and GUT.
Then list the tasks in the Action field. Then set a score from 1 to 5 for each activity in other fields, and the number 5 indicates a very serious task, which requires immediate action and whose trend suggests that may worsen quickly .
GUT in the field, will be the result of multiplying the score recorded in Gravity, Urgency and Trend. The task highest GUT is the priority.