Ultimate objective of any business is to earn profits and maximize shareholder’s wealth. It requires a lot of professional commitment on the part of company’s management to ensure that business activities are carried out in accordance with established plans and guidelines.
Any kind of deviation can have a serious impact on functioning of the company. In order to achieve business objectives, it is important for the management to hire appropriate resources and develop necessary infrastructure. For developing infrastructure, management is required to make arrangement of funds from different sources. Therefore management, employees and finance can be considered as three most important aspects of any business.
3 Most Important Aspects Of Business
Management acts as a representative of the board of directors of the company. Management is responsible for ensuring that the directions given by the board are followed by all the employees in the organization. It is the responsibility of management to ensure that the plans, policies and procedures developed by senior management /board of directors are implemented as intended.
Further, management acts as a channel of communication between employees and senior management. Management is also required to report serious business issues and threats to the senior management. Management is also responsible for handling business relationships with various external parties (such as vendors, government authorities and so on).
It is must for any organization to hire talented employees. Irrespective of the level of automation within the organization, it is impossible to carry out day to day business activities without the involvement of human beings in business operations. For Instance, an organization can acquire and implement a new accounts payable management system to reduce invoice processing time.
However, involvement of employees is essential to ensure that only correct invoices are uploaded in the system. Further, irrespective of the quality of products and services provided by the company, it is essential for the company to hire experienced marketing professionals to acquire business from potential customers and expand customer base. Similarly, in the absence of qualified accountants, it may become difficult for the company to keep a track of its sales and profitability levels.
Further, compliance with various statutory rules and regulations may also become impossible in the absence of proper accounting and compliance staff. Therefore, it is extremely important for the company to establish strong human resource policies in order to attract and retain qualified, talented and experienced resources.
Irrespective of the size and structure of the organization, it is practically impossible to carry out day to day business operations in the absence of proper working capital. Funds are required to procure raw material, hire labor, pay salaries to employees, meet electricity and telephone costs and so on. Further, growth and expansion plans require heavy investments.
A company can use appropriate mix of debt and equity to meet its financial requirements. For Instance, many companies prefer to obtain loans from banks or other financial institutions to meet their working capital requirements. Similarly, some companies prefer to use their retained earnings to finance expansion plans. However, it is important to understand the risks associated with each source of financing.
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