What Is Business Administration?
Business administration encompasses everything that involves overseeing and supervising your company’s business operations. In a way, business administration is the nerve center of your company, and it brings everything together to smoothly run your activities.
Some people might think that business administration is just paper-pushing and note-taking. It’s way more than that. Business admin keeps your machine well-oiled and ensures essential processes run the way they’re supposed to run. If your business admin is well-managed, you can focus on tasks and efforts that directly impact your bottom line easier.
Why Business Administration Is Important for Startups
Business admin is important for startups because it helps them grow. Implementing good business administration and management from the get-go ensures your startup begins on the right foot.
Key business administration skills like strategic planning, risk management, and resource optimization are especially important because most startups don’t have a big safety net. That means you likely need to scratch and claw your way to the top, conserving what resources you can while avoiding big risks to prevent massive losses that can sink your company.
Businesses That Benefit From Good Business Administration
The words “business administration” might conjure up the image of a big corporate office space filled with cubicles and people typing away on their computers. However, business administration can benefit all kinds of businesses of varying sizes. Whether you’re a small startup with a small handful of employees or a massive multinational company, business administration helps you excel.
Small Businesses and Startups
Small businesses and startups are typically associated with conserving resources and making the most out of what you have. I understand that with all the difficulties of trying to grow your business, business admin can fall by the wayside. Every minute you spend on paperwork and other admin tasks is a minute not spent on selling products or finding new customers.
However, a well-structured business administration process can save your business. Having good business admin means you can account for your resources better and avoid costly missteps that can sink your company.
Medium-Sized Companies
If your company has grown larger than a startup but not quite large yet, business administration can get a bit tricky. Processes need to scale as your company grows in both size and complexity. Financial oversight is also even more important because there’s likely more regulatory scrutiny that requires you to be more vigilant about compliance.
Because your business might be put under a microscope, that means you need a strong business admin presence. It can help untangle some of the complexities while keeping your company compliant and away from hot water.
Large Companies
In large companies, business administration is usually sectioned off into departments like HR, finance, legal, and compliance. Every department has its own responsibilities, and you’ve likely hired experts for each field to assign to these departments.
With all the administration happening in large companies, sometimes things can get stuck in red tape. For instance, budget approval for a promotional video shoot can get stuck for days because it needs multiple people to sign off on it. Here’s the tricky part: too much red tape can stifle new ideas and creativity, while not using enough red tape can lead to overspending and resource issues. It’s a tough balancing act that has no definite answer because how much red tape you need highly depends on your company.
Elements of Business Administration
There are a lot of moving parts to business administration. Here are the most important elements of business administration and why they matter.
Financial Management
Financial management keeps track of your costs, revenue, cash flow, and everything else that relates to money. For a small business, the bookkeeper usually works on financial management. As you scale, you may end up with a full-blown finance department and a CFO.
Financial management helps you plan and acquire funds, as well as guides you in how to use and allocate them. It’s an essential part of making the right financial decisions and helps you reach financial stability.
Generally, financial management has several functions. The most common functions include:
- Accounting: Tracking and recording monetary transactions to create an accurate financial history.
- Procurement: Acquiring goods and services for business operation.
- Tax: Ensuring your tax responsibilities are fulfilled.
- Treasury: Managing capital, cash flow, debts, and investments.
- Financial planning & analysis: Forecasting and budgeting/
- Risk & compliance: Mitigating risk and ensuring obedience to financial regulations.
For a closer look at this element of business admin, you can read my guide on financial management.
Project Management
Project management is exactly what the name implies: the effort of taking projects to the finish line. It’s probably a skill that you’ve been applying in everyday life without even realizing it when you plan trips, weddings, house renovations, and other similar things.
Project management usually involves breaking down a task, assigning responsibilities, establishing timelines, and handling any unexpected issues. In a work context, project management is essential because you want projects to be on time and on budget, even when issues show up.
There are a lot of project management methodologies available, from Scrum to Waterfall. But whatever the methodology, project management follows similar stages:
- Project conception and initiation: The initial phase, where you identify the project’s purpose and feasibility to ensure that it’s worth doing in the first place.
- Project planning: Here, you’ll map the project roadmap, outline the work, assign deadlines, and other tasks related to the project.
- Project execution: Here’s where the work kicks into gear. Depending on how you handle the project, you may do regular check-ins to ensure everything is chugging along as it should.
- Project performance monitoring: Monitoring generally happens alongside execution. Key metrics here include the budget burn rate and task completion.
- Project close and review: The project finishing doesn’t mean your work is done. After the project, it’s a good idea to review what went right and what went wrong to ensure the next project goes better.
For more on this topic, check out my comprehensive project management guide.
Process Automation
Business process automation is the process of using technology to simplify and streamline repetitive tasks, like sending automated reminders and revamping your supply chain. If you’re just starting out, automating business processes may not be a big priority because you can do everything manually. But it will grow more important as your business scales, so why not start early?
Automating business processes can get costly and take a lot of effort, especially if you’re a new company. But here are the various ways it can help you:
- Reduce workforce costs
- Minimize human error
- Make room for business scaling
- Enhance employee productivity
- Improve accountability
Not all business processes can be automated, though. Make sure to properly identify time-consuming manual processes to ensure you don’t spend time and money automating something that shouldn’t be automated. Check out my guide on business process automation to learn more.
Team Management
Many people think that building a dream team is about forcing your employees to fit a specific mold. Building a dream team is actually about bringing together diverse strengths and directing them toward a shared goal. That’s what team management is for.
Team management is a staple skill in just about any business setting, from small mom-and-pop shops to large multinational companies. A well-managed team helps your company succeed because they’re often happy, dedicated, and productive.
Team management is a skill in itself, but you also need other skills to support it. Let’s take a look at the essential support skills for team management:
- Strong communication
- Active listening
- Growth mindset
- Goal setting
- Time management
- Delegating
- Problem-solving and decision making
- Leadership
Effective leaders extend trust to their team first, setting the tone for a mutually respectful relationship. They’re also flexible, foster a sense of ownership, and accommodate team members’ working habits (reasonably.) Most importantly, leaders lead and don’t control.
Learn more about how to build better teams in my guide to team management.
Hiring & Interviews
You’ll probably hire employees at some point to grow your company. Finding the right employee can be hard since there’s no way you can know for sure if they turns out to be a valued member of your team or a ticking time bomb waiting to explode in a firestorm of arguments. So, finding and hiring highly motivated and well-rounded team members are essential.
Building a proper recruitment process is important because it reduces the risk of hiring wrong people, improves recruitment efficiency, and raises existing employee happiness.
How do you do that? Let’s take a quick look at how to build your recruitment process:
- Identify role requirements and craft the job description.
- Spread the word.
- Interview and select.
- Make the offering.
- Review the process.
When you recruit, keep in mind that you should find people with a personality that meshes well with your team, a good ability to learn, and the skills and experience to do the job.
For a more in-depth look at how to find the best employees, read my guide on hiring and interviews.
Business Legal Compliance
I know the words “legal compliance” might strike fear in your hearts. Dealing with these things can be scary and frustrating, but it won’t be if you have the right knowledge. Essentially, legal compliance is the process by which your company adheres to rules and policies that regulate your business practices.
In bigger companies, you may have a compliance officer or a whole department dedicated to staying compliant. However, if you’re just starting out, you may need to keep an eye on these things yourself. Whether you’re working with a compliance officer, a whole department, or doing it yourself, here are the steps involved:
- Identify rules that apply to your business.
- Write compliance policies and procedures.
- Educate your employees.
- Implement internal controls.
- Monitor vendor compliance if applicable.
- Build a reporting system.
- Audit compliance regularly.
Check out my guide on legal compliance for a more in-depth look.
Building Business Administration as a Startup
Looking to start building your business admin as a new company? I’ve got you covered. Let’s go over the key steps to starting your business admin on the right foot.
1. Identify Your Needs
Knowing what you’re administering is the essential first step. Take a look at your business operations and define what elements of business need administrating. For instance, you may need to track invoices, work orders, and purchase requests.
2. Outline Your Budget
As a new company, you may not have a lot of funds to dedicate to business admin. Allocate what you can to get it up and running first, and then you can consider expanding further as your business grows. What’s important is that you need to identify essential expenses like staff pay and software subscriptions.
3. Define Administrator Roles
Next, it’s time to build your admin team. This is especially important if you have more than one administrator. Poorly defined roles often lead to double work and wasted efforts.
4. Research and Choose Tools
Picking the right tools can help make your administration processes much more efficient. Look into all the tools available on the market and pick the ones that fit your business.
5. Implement and Review
The next step is to implement, but your job isn’t finished after the system is up and running. Regularly audit and review your business admin process to fix inefficiencies and address issues.
The Best Business Admin Tools for Beginners
Business admin tools can help you streamline and automate tasks involved in running a business. There are so many different tools out there, from hyper-focused tools to Swiss Army knives that offer different functions in one package.
Let’s take a look at some essential tools for beginner entrepreneurs, most of which come with free versions or trials so you can try them before buying:
- Trello: A simple, easy-to-learn project management tool based on the Kanban concept.
- Gusto: A small business-centric online platform that can handle payroll, HR, tax filings, onboarding, and more.
- HubSpot: A CRM platform that places email marketing, content management, sales pipelines, and more under one roof.
- Slack: A real-time communication platform with robust features and integrations with other tools like Trello and Google Drive.
- Clockify: A simple time tracker and timesheet app that helps team members log work hours across projects.
This isn’t an exhaustive list, though. Check out my list of top business admin tools for more recommendations.
Business Administration Best Practices
Just like how a healthy mind leads to a healthy body, good business administration helps all other aspects of your company. By following tried-and-true best practices, you’re well on your way to building a great business administration structure for your company.
Make Clear, Unambiguous Workflows
Ambiguity and lack of clarity lead to misunderstandings and mistakes. When outlining your workflows, make them as clear and unambiguous as possible so your team can get right into work without having to figure things out beforehand.
Automate Repetitive, Time-Consuming Processes
Doing things manually might be fine if you’re just starting, but consider getting on the automation train early. The sooner you automate repetitive processes like invoice generation and expense tracking, the more time and money you can save.
Digitize Your Documents
Unless you’re extremely well-organized (or just have a photographic memory), paper documents are harder to search through when you need them. Consider implementing a digital document management system to keep your records in one easily accessible place that you can pull out every time you need something.
Practice Efficient Bookkeeping
Financial discipline starts with keeping complete and comprehensive transaction records. Making this a habit since you start your business ensures you have complete records going back from when you start operating, in case you need to show them to a regulatory body.
Common Mistakes in Business Administration
We’ve talked about the dos of business administration. Now, let’s go over the don’ts. Mistakes are normal and can even help you learn. But rather than making them yourself, why not learn from mistakes made by others? You’ll still get the lesson, and it’ll save you a lot of trouble.
Failing to Record Information
Proper documentation is essential because you never know when your team will change and when you’ll need a piece of information. If you have a business administrator who knows everything but doesn’t make notes, you may be in big trouble if they leave the company or are otherwise unable to work for you anymore.
Proper documentation ensures the transfer of knowledge happens as it should, preventing the loss of knowledge that happens when people leave or somebody simply forgets things.
Ignoring Your Finances
I know it’s frustrating to grow your business with financial constraints, but it’s a “necessary evil” because overcommitting your resources is a good way to sink your startup company. That’s why ignoring finances as a startup owner is like shooting yourself in the foot before going on a marathon. You could make progress from the start, but you’d probably end up out of the race not long after.
Hiring the Wrong People
Hiring the right people is extra important in a startup setting because your teams are usually smaller, which means team members are more likely to interact with each other more frequently. Hiring people who can’t work with the rest of your existing team is like throwing a spanner in the works, turning a well-performing machine into a sputtering mess.
It might not happen immediately, which makes it even more dangerous. In some cases, resentment and conflict can simmer for months before eventually blowing up in your face with a big confrontation that ends up tanking morale.
Conclusion
Business administration is often overlooked, but it’s still an integral part of your company. Without proper business administration, your startup might find itself in dire straits sooner rather than later.
What did we learn today? Let’s summarize:
- Businesses of all sizes can benefit from proper administrative processes.
- Business administration has many elements, from financial management to hiring and interviewing.
- Unambiguous workflows, automated processes, document digitization, efficient bookkeeping, and other best practices for business admin can support your business’s success.
This is just your first step in learning the ins and outs of business administration. There’s still much more to learn, and you can read my other guides for deeper dives into each individual element of business admin.
But before I close this out, let’s do some reflecting: take a look at your company’s business administration process and make a list of what’s good about it and what can be improved. From the list of potential improvements, list the action items you need to address those. Voila! Now you’re one step closer to optimizing your business admin.
