From the outside, owning and operating a business often seems like an all-in-one job. However, as anyone with business experience can tell you, business ownership and business management are two completely different beasts. But what is business management, exactly?
For a business to be successful, it needs to perform its services accurately and efficiently (whether that be serving food to customers, handling valuable data, selling retail products, and so on). It's very unlikely, though, that this will occur naturally.
Instead, a successful business must rely on a structured hierarchy of tasks and oversight. This ensures that the company stays organized and united toward a common goal, no matter the size or geographical reach of its staff.
At first, these contexts might seem abstract and a bit confusing. So what is business management? What does it look like in the real world? And how exactly does business management differ from business ownership?
What Is Business Management?
Business management involves organizing and coordinating the day-to-day and long-term operation of a company to achieve its goals.
These goals can include a variety of things. Most often, though, they revolve around increasing the business' profit and growing the business' brand power.
In many cases, business management also involves making major decisions that affect the entire business (or at least a large portion of it). These responsibilities may also be spread out across multiple levels of management staff, with responsibilities increasing as you work your way up the ladder.
Although business management, as a concept, is present in all organizations, it isn't always done correctly. For instance, making impulsive business decisions or failing to communicate company goals to staff members are examples of poor business management. But they are examples of business management, nonetheless.
Obviously, business owners want their companies to function efficiently, provide quality services, and reach their goals. Using effective business management is crucial to all of these goals. And knowing the answer to "What is business management?" is often the first step to learning these skills.
Business Ownership vs. Management: Understanding the Difference
Business ownership and business management aren't necessarily mutually exclusive. But they don't always overlap, either.
Technically, a business owner is simply the individual who holds majority legal ownership of the company and provides funding. This person may or may not spend any time working with the business itself.
In many cases, especially with up-and-coming or small businesses, the business owner and business manager are the same person. At this stage, the business owner is often the individual best equipped to make decisions for the company and steer it towards its goal.
As a company grows, though, the owner often ceases to be the primary business manager. While they will probably still be involved in making big decisions, they won't be responsible for basic management tasks like hiring, overseeing staff, scheduling, and quality control.
On the other hand, though, many owners will stubbornly hold onto management responsibilities and refuse to trust anyone else with them. It's often to the detriment of their business as a whole.
Does business management require a specific degree?
Obviously, business management is an extremely broad and nuanced concept. You'll see this term used in the context of a business management degree quite often.
What is business management education good for out in the professional world?
Technically, effective business management doesn't require any formal education or degree. Countless people have the skills and intuition needed for business management without any training at all.
However, a business management degree can be extremely useful. That's especially true if you're an individual looking to be hired by a business owner to run their company.
Business management degrees range from a two-year associate's degree to a Ph.D.
Even if you don't strive to be a top-level business manager, the skills and knowledge taught by these programs can be extremely useful in all facets of the business world.
Should you hire a designated manager?
There are two main reasons to hire a designated business manager as a business owner: Either you don't have the time to devote to managing your company, or you don't have the professional skills needed to manage your company.
In both cases, investing in a skilled and qualified business manager are often best for both your mental sanity and the health of your company.
As a business owner, it can be difficult to draw the line between what is business management responsibility and what is ownership responsibility. Without a designated business manager, many owners find themselves working long, unsustainable hours, and experiencing emotional burnout.
By hiring a business manager, you can allocate your time to things you are best suited for and not the ones someone else could complete.
For example, a hands-on business owner might be better off developing new product or service concepts than dealing with human resources concerns or financial planning. Without a business manager separate from yourself, you would be responsible for all of these tasks and more.
Some owners choose to step away from their business entirely. Instead of being a part of the business, they simply retain legal ownership and receive profits. In these cases, the lead business manager (whatever their official title may be) is often the final decision-maker and company authority.
Do you need more than one business manager?
Business management, as a concept, can technically be practiced by any member of the company's staff. The amount of authority an individual has will determine how much business managing they can actually perform.
Very small businesses will often function with only one designated manager. Whether the owner is present in the business' day-to-day operations or not, this manager will be responsible for most business management tasks.
Most companies, though, function with a management hierarchy. While an owner or business manager sits at the top of this hierarchy and orchestrates the responsibilities of the managers below, all of the managers will have some role in the overall business management.
Businesses with multiple geographical locations, even if these locations have quite small staffs, will frequently have managers at each location. But, assuming these locations don't operate entirely independently, there is typically a manager to which each of these locational managers reports.
Different Levels of Business Management
What is business management like in the real world?
Well, with various levels of business managers comes a range of different roles and responsibilities.
Each company will have different needs and a different preferred hierarchy system. Some will have one manager. Others will have dozens, if not hundreds.
In general, though, there are a few popular management levels you'll see in most companies.
From highest authority to lowest, here are some business manager positions you'll find in the average mid- to large-sized business:
A top-level manager must be able to look at the big picture, both inside and outside of the business organization itself. Not only do they need to understand the company's needs and goals, but also the changing market in which the business operates.
If a business owner acts as the primary business manager, then this is the position they typically replace. Regardless of its size, all of the company's employees ultimately answer to this management position.
However, administrative management isn't always handled by just one person. In many larger companies, especially in high-volume industries, the administrative position is handled by a board of directors.
Since the board of directors of a company has so much power, these individuals are typically elected by shareholders.
Any hiring or firing decisions related to other top-level managers, just below the administrative manager or board, go through this management level.
The executive management level tends to be much more hands-on than the administrative level. While administrative business managers make plans for the company, the executive managers put these plans into motion.
One of the most important functions of this business management level is communicating information between the administrative level and staff below.
Executive business managers inform the general workforce of the company's rules and expectations, including enforcing these rules when necessary. Many executive managers are also responsible for most hiring and training within the organization.
Supervisory or operative
What is business management like for regular employees who keep the company going each day? For these staff members, their direct contact with management is normally a supervisor.
The primary function of the supervisory (also sometimes called the operative) management level is to direct and oversee the business' groundfloor staff. Since these staff members do the majority of the tangible work, whether that be providing services, handling data, or manufacturing products, the supervisory managers ensure that the business meets its production goals.
Unlike the management levels above them, supervisory managers need to look at the smaller, day-to-day operation within the company.
In other words, they break the plans and directions from upper-management into bite-size pieces for the general staff to complete. A single staff member might play a small role in the business as a whole. But the supervisory managers ensure that this small part meets expectations.
Some businesses rely on a variety of independent departments to complete their goal. Typically, these departments exist to develop new products for the consumer market.
One of the best examples of this is an engineering company like 3M, which has separate departments for things like air travel, health care, and more.
In many ways, these departments function like their own miniature company. Part of this includes the presence of department-specific management that operates only within this department.
The topmost management level of a department is often called the functional business manager. Most of the responsibilities of this manager resemble the administrative and executive levels, but on a smaller scale.
Below the functional manager of a department is the project manager. This manager works directly with the product development staff to maintain deadlines, assign tasks to the appropriate employees, and advocate for financing and other resources from higher up in the company.
What is business management like at the project manager level?
The day-to-day work of a project manager varies greatly depending on the department and industry they work within. But most will be extremely experienced in their field on top of having management experience or natural talent.
Which Business Management Method Is Right for Your Company?
Owning and operating a business is never easy. One of the most difficult aspects of business ownership is finding the perfect balance between too little and too much management oversight.
Business management degrees can be useful. But secondary education is often expensive and isn't always for everyone, anyway.
Fortunately, there are plenty of resources, both here and outside of Business Café, to help you navigate the world of business management. All you need is the will to branch out and learn!
What is business management like at your business or other organization? Let us know your experiences in the comments below!