Running a business is a big deal and business administration (also called business management) is a big part of that. But what is business administration? Well, it’s everything really. It’s every aspect of overseeing a business, supervising workers, accounting, quality assurance, sales, auditing, data analysis, market research, project management, design, development… basically if you’re not directly facing a customer or directly building a product you’re working in some area of business administration.

Fundamentally, business administration is what goes on “behind the scenes” to keep everything running both smoothly and profitably, and keep things on track to achieve company goals. Running a business without effective business management is like sailing with no navigator at the wheel and a rudderless ship - it doesn’t matter how many men are working to make the ship move, or how charismatic the captain is, if you don’t have those critical components the ship will never reach its destination.

Fancy metaphors aside, you need strong business administration for your business to function. Workers are critical components of a business, but for a business to be effective someone needs to be doing the admin, and the more effective that admin the more effective that business - even if and sometimes especially if there are fewer workers. However, the reverse can also be true. Ineffective business administration, the kind that drives away workers, eats into profits and makes every stem rough or hard sailing, is the unsung bane of businesses everywhere.

Business administrators are, by the very nature of their business, able to escape or divert a lot of blame away from themselves. When a business has ineffective or even hostile administrators, good workers leave, good administrators leave, and eventually no amount of diversion or good work will save the company. Inevitably the company will fail, and it is for that reason that you need to know and understand what business administration is, does, and is there to achieve.

What is Business Administration?

As we covered above, business administration involves every aspect of overseeing the business and supervising workers. It’s the management of the internal rather than external sides of the business - although it can reach the external as well. Elon Musk is a founder and CEO of many businesses, many of which rise or fall based on his personal reputation. In fact, studying Elon Musk is an excellent way to see everything that is wrong with ineffective business administration.

In 2014, Elon Musk said in an interview the six things he thought lead to a successful business - not caring about money, pursuing passions, thinking big, taking risks, ignoring critics, and enjoying yourself. This is great advice for living life to the full, but it’s terrible advice for business administration, which he quickly discovered in his ongoing Twitter debacle. Most of those things he mentioned are the opposite of good administration - it’s the job of a good administrator to pay attention to the critics and reign those things to ensure the functioning of the company.

What Does Good Business Administration Do?

Aside from paying attention to critics, money, keeping on track and just generally doing the exact opposite of what Elon Musk recommends, good business administration is supposed to offer three things. Systems of accountability, guarantees of security and achieving efficiency in a business. You can think of this in terms of money if you want. It’s one job to keep track of the money, one job to ensure the money is secure at all times, and another to decide where to spend money - presumably by either improving the business or directly benefiting workers and shareholders.

Now sometimes, if a business is small enough this might all be one person’s job, but typically this job will need to be handled by many people at many levels of your business, including your workers who control intake, receipts, and are responsible for reporting incidents up the chain - and when you think about it all of those are acts of effective administration. Seriously, try running a retail business without using receipts or a secure and reliable transaction history and you’ll learn just how valuable those things are. So, what is it that administrators do? They create and maintain these systems, and potentially invent new systems for the better working of the company.

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What Does Efficiency and a Better Working Company Look Like to You?

The answer to that question will change based on your company, but it will shape everything about how and where you will apply the skills of business administration. Perhaps your focus is on the money, and all about gathering the greatest profit possible. Sounds great, but is that a long-term goal or a short-term goal? Is it better to go wide with many products, or to hyperfocus on one item and push that as far as it will go? Once you have the profits, should they stay within the company to make it as large as possible, or should it be divided to the benefit of workers or shareholders, or spent in order to achieve other goals? If it’s to be spent, should it be spent on the infrastructure of your business, or should it be spent on the services you provide? Or perhaps, if the goal is to profit an individual as much as possible, should the company liquidate everything once it has achieved its goal?

The answer to each one of these questions will have monumental impacts on what efficiency looks like for your company and could have a carry on effect in other areas of the company as well. So, understanding your goal and knowing what a better working company looks like to you is critical to all elements of business information. Otherwise, you’re back to the same rudderless ship.

Now, to get to grips with these points, you’d need to take a business administration course. These basics should get you to grips with why business administration is so important, and give you a better idea of what you need for your company, but articles like this can’t ever tell you how it is best to run your company because every company is different. But the more you know, the better you can be the rudder or navigator of your ship - and even if you outsource those duties to others, the more you know the better your ability to evaluate what is going on and ensure your goals are being met at every level.

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