Course for directors
Economics is the science about business.
Business is when we do or produce something, somebody buys it and we gain earnings from such activities. Earnings are the main reason why we pursue some business and the earnings are achieved when the revenues from some business are higher than its costs, over a certain period of time.
When there aren’t any earnings or if there is a loss, i.e. when the expenses are higher than revenues, then it is not a business, but a disaster – because it is better not to do anything, than to do the business with a loss.
Unfortunately, this cannot be known when we start a business – because there is no guarantee for a good business. A business depends on a market, whether we sell something that the customers want to purchase from us, but it also depends on the competition which pursues the same or similar business and it also depends on how we organize and conduct our business.
A complete philosophy of a business is comprised by a definition „that it is necessary to reduce the expenses and increase the revenues”.
Reduction of expenses can be accomplished in the following ways:
- By the analysis of each individual expense, i.e. whether purchases from the new suppliers can be accomplished under more favourable conditions,
- By the negotiations with current suppliers,
- By compensation,
- By including all the employees in purchase of the goods.
Increasing of the revenues can be accomplished in the following ways:
- By increasing the sale of existing products (larger quantities, higher prices, new clients and new channels of sale),
- By sale of the existing products in the new ways,
- By sale of the new products,
- By permanent analysis of the competition and the market,
- By engagement of all the employees as the sellers
Marketing, being the brain of sales activities, should discover the ways how to make the effects of marketing activities to the sale itself, higher than the marketing costs.
A large problem in managing a business, which is the main criterion for assessment of the quality of a director’s work, represents a necessity of simultaneous monitoring of the market events and the developments within the company.
Competition represents the biggest challenge in any business and therefore it is not possible that we stagnate in development of our products and the offer to the clients, while the competition makes an impressive progress in development of their products and offer, because the company which first appears on the market with better offer – obtains an advantage, while all the other companies run into problems.
A director has to control whether all events in a company unfold according to the plan and whether the assignments he issued to particular employees are executed in time and in an appropriate manner. At the same time, the director must have an insight into the company’s activities on the market, into the competition activities and whether the plans for the new business activities unfold properly, along with monitoring of numerous on-going problems and obligations, which, all together, represent a daily business routine of each director.
In order to be sure that he performs all these assignments in the best way and that he does not forget anything, the director has to prepare a list of his obligations and he has to control – himself in the first place, on a daily basis, whether these assignments are performed as it was planned. This is the director’s main task and if he does not do it, he does not fulfil his main duty, which means that due to his incapability, the company is in a big problem.
Unfortunately, many directors in Serbia think that the companies exist to provide their prosperity, but not that the directors exist to provide prosperity to the companies.
Management
The director performs his tasks with the assistance of the employees, first of all with the assistance of the company’s management and the director’s task is to establish such system of business activities in which the management performs their assignments in unison and a professional manner and sees their benefit in successful business operations of the company. The problem is how to motivate the employees and the management to act like this and the knowledge how to perform this is called MANAGEMENT.
The director either has to know himself what precisely the company has to do in order to improve its business operations or he has to discover the employees who know this and then the director implements it.
The problem is that only a few employees think about this at all, while the rest of the employees, particularly among the members of company’s management, want to obstruct it, first of all because they do not want that somebody’s capability shows their incapability.
Delegation of the jobs and assignments represents a key skill of the director, because if he performs all the tasks himself or if he does not control what the employees do – the company is in deep trouble.
Creation of the business ambient in which only the argumentative and professional discussions have credibility and in which implementation of all the business proposals and projects is continuously being analysed, is the only way which provides that the personnel with the highest qualities manages the company.
A good director has to be a good, honest and cheerful person, because it is the only way that the employees will work their best for the company’s interest, over a long period of time.
Changes
Changes constantly occur in business – when the company has excellent results of the business operations, the necessity for changes is not so noticeable, however, when the company has poor results of the business operations, the changes are necessary and then a genuine quality of the director shows. The problem about the changes is that the employees, and particularly the management, do not want the changes for several reasons and the director has to know WHAT has to be changed, as well as HOW and WITH WHOM these changes should be implemented. If the director does not know this, then he only wishes to be a director, but he does not know to act as the director.
Concretely, it is necessary to establish the system in which all the employees propose the specific methods for improvement of the company’s business activities, on the basis of which the plans are prepared and if these plans will be implemented, the specific employees will be rewarded, in a predefined manner.
When the company starts to function in this manner, very soon stand out the employees who accomplish the results above the average, because they understand the business and think about its improvement. The problem is that, to be a good director, the director has to do all these things.
The employees, and particularly the management, use any lack of knowledge and inconsistency of the director for not doing their job, which the director, not the employees, should be blamed for – the same as that the parents are responsible for behaviour of their children and not vice versa. Ignorance and incompetence of a director to implement the necessary changes in business operations force him to deal with irrelevant operational issues in order to create an illusion that he is doing something, which surely leads a company into troubles. The only guarantee for survival of a company on the market is permanent consideration of the clients, as well as permanent improvement of the quality of products and services we offer to the clients, because if we do not do it, our competition will.
Now if there is a domestic service, then there isn’t any reason not to use the assistance in business. It is an indisputable desire of almost all employees to be directors and it is highly commendable, but, having in mind that the director’s job is a specific job, the specific knowledge is necessary for its high-quality performing. Regardless of whether you are already a director or you will only become a director, it is highly important that you know what you should do and how, in order to be a successful director. It will be our pleasure to help you in such endeavour.
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The author of this site has been managing and improving business in various private companies for 30 years, and everything that is written on this site is a practical experience that defined this text. That is why I am not someone who theoretically deals with economic topics and I don’t know that, but I know what and how to improve the business of a company, because I have been doing that for 30 years. I worked in banking, in the media, trade, IT sector, startup businesses and the largest corporations, in small and large private companies, where I and my friends improved the business of those companies and I like to do that.
