Business administration is often thought of as the domain of large corporations with multiple levels of management, but even small companies have systems and personnel dedicated to administration. Whether your business employs teams of employees and managers or is owned and operated by a single individual, learning the fundamentals of business administration will help you to navigate difficulties, leverage opportunities and keep your company on track.
Because businesses run on money, financial resources management is a critical part of business administration. It includes:
- Financial accounting. Even if you or your top-level managers don't personally manage the accounting and bookkeeping aspects of your business, they should be able to read, understand and interpret basic financial statements.
- Management accounting. In additional to key financial statements such as balance sheets, profit and loss statements and cash flow statements, business administration involves working with custom reports that provide insight on your company's unique operations.
- Finance. Even if your business is consistently profitable, you will almost certainly need to borrow money at some point to cover expansion or cash flow. Business administration is responsible for overseeing decisions about how to finance your need for capital.
Your staff keeps your business running and represents your company to customers and vendors. Business administration is involved in personnel decisions to different extents in different businesses. Your managers may be involved in nuts-and-bolts decisions about hiring and firing, or they may leave these responsibilities to others while making broad personnel policy decisions. Either way, their work includes supervision, direction and attention to company culture.
In a bigger business, there is likely to be a dedicated department devoted to human resources, attending to details such as employee benefits and onboarding. Upper management and administration is nonetheless responsible for setting the tone for your human resources policies, such as whether you invest in your employees with the intention of keeping them for the long term or whether your company is geared toward extracting as much work as possible at the lowest-possible expense.
Administration and management handle your company's big picture, including charting a path from where you are at the moment to where you want to be in the short-term or long-term future. Strategic planning is the process of setting and synching these goals, and leadership is the process of articulating and reinforcing them so your entire staff is on board.
The leadership component to business administration includes both practical and inspirational elements. Your staff needs to know what your business is trying to achieve and how it is trying to achieve it. You will also increase your chances of success if your employees are genuinely engaged in the process and ready to bring their best to their endeavors. This is the human element of business administration, which requires interpersonal skills and a willingness to both communicate and listen.
In many ways, business administration and business management include the same job functions and responsibilities. However, some business schools treat the two as different disciplines. Business management covers all of the aspects of overseeing a business, with a special focus on logistics, finance and strategic planning. Business administration may cover essentially the same topics, while allowing students to choose an area of focus such as marketing or information systems.
The distinction between the two fields is relevant to the academic specialization a business student may choose, but it is less relevant to the actual work of running a business. Both business administration and business management concern themselves with the big picture, and a broad understanding of business fundamentals is necessary for both regardless of the specific job title.