Managing and Running a Small Business

This document provides insights into managing and running a small business, including discussions on resource allocation, planning, customer relationship management, and transnational operations. It covers topics such as the main considerations when allocating and planning resources, tools and techniques for resource allocation, the importance of planning and allocation of resources, CRM processes for small businesses, and the potential to create transnational operations.

MANAGING AND
RUNNING A SMALL
BUSINESS

Contents
INTRODUCTION...........................................................................................................................1
Activity 1.........................................................................................................................................1
Main considerations when allocating and planning resources in order toattain business goals
................................................................................................................................................1
Tools aswell as techniques in an analytical manner about how to plan and allocate resources
................................................................................................................................................3
Importance of planning along with allocation of resources for attaining business objectives3
Various processes of CRM for a small business entities........................................................4
Discussion about how small businesses develop transnationally and its pros and cons........4
Essentialfactors of Customer relationship management process............................................5
Potential to create transnational operations............................................................................6
Activity 2.........................................................................................................................................6
An annual itemised monthly cash flow forecast showing fixed & variable costs in contrast to
income of companies..............................................................................................................6
Break-even analysis in context to organisational situations...................................................8
Explanation about the key financial statements involve in a successful business management
................................................................................................................................................9
Quantitative as well as analytical techniques.......................................................................14
Break even analysis alongwith cash flow statement............................................................15
Essential legislation aswell as regulations which have high implications...........................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
In the current competitiveenvironment, small & social business entityis highly affected
on the overall growth as well as development of the economic system of the country. It has also
been said that according to business people and entrepreneurs it is consider as the opportunity
which leads towards the attainment of more profit and money. Along with this it is also very
essential for the business organisations to identify the needs requirements of customers so that
they can gain success at the marketplace and develop the living standards of people. In this
report, a business organisation named as JS Supermarket Ltd is selected. The present report is
divided into part where activity 1 includes discussions about the significance of planning and
allocation of resources. In addition to this it also consist of factors which needs to be considered
while doing resources allocation. Whereas in the second part of this report, discussion about
break-even analysis, cash flow forecast, are going to be included. Along with this, discussion
related to how financial statements assistin order to gain success at the competitive marketplace.
At the end, different sort of legislation and rules are also going to be discussed which have their
influence on the small business entities.
Activity 1
JS supermarket Ltd company is a small scale retailer mainly operates its business
functions at the marketplace of UK. It is a retail sector supermarket founded in year 2014 by
Ranachandran Jalatheepan. It has been said that the organisation commonly deals in food,
grocery and beverage items which are high in quality. Currently the organisation is facing issues
related to decline in its customer base. This will negatively affect the business operations and
performance of the company at the competitive marketplace. For reducing the negative impact
they are now deciding to develop new strategies and policies to gain higher profitability at
competitive market.
Main considerations when allocating and planning resources in order toattain business goals
At the present marketplace in UK, there are ample number of opportunities given to the small
and medium enterprise to have the capability to earn more profitability at the marketplace where
competition is high. One of the major reason for this is Brexit as it provides benefits to business
organisations to setup their business from small scale within the marketplace of UK. There are
various functions and activities conducted by the organisation on a day to day basis which
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consist of recruitment, budgeting, selection, planning, allocation of resources, interpretation of
financial data & many more. For gaining growth and success at the competitive marketplace
managers of JS supermarket Ltd. in order to develop strategies and policies which is needed to
allocate resources. Some of the key elements needed for planning and resource allocation are as
follows:
Financial resources: It is the element which plays very crucial role in the formulation of
resources allocation. With the assistance of availability of required funds, an organization can
smoothly run their business functions in an effective manner. In the present context of JS
supermarket Ltd the company is a small scale organisation as well as does not include any kind
of investors which makes it difficult for them to perform their business functions in a smooth
manner. The owner gather funds from family, friends and Bank loan. Apart from this,
organisation decides to strengthen their customers base for which huge amount of funds are
required.
Human resource: Another essential factor is human resource on which the whole
organisation growth and development is dependent. With the help of there skills and knowledge
they can produce high quality products and services which leads towards developing loyal
customer base which influence the overall performance in a direct manner. In reference to the
present context of JS supermarket Ltd, HR manager of the company need to develop various
effective strategies in order to hire best and skilled candidates. Along with this, it becomes
essential for the manager to develop strong relationship with their customers so that they can
accomplish their goals and objectives in an effective manner. It will assist the management team
of JS supermarket in order to improve their performance and accomplish their targets within
given time period.
Goals, mission, vision & targets: For grabbing a leading position at competitive
marketplace, it becomes necessary for raising the customer base and retain them for a longer
period of time by maintain them loyal towards their brand. It has been said that the main vision
of the company is to maintain their sustainability and position at the marketplace in retailing
sector. Apart from this, the main aim of JS supermarket Ltd is to create positive and strong
image of the company at the marketplace by satisfying their requirements and demands. For this,
they hire highly qualified and skilled candidates for their business activities and leads towards
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the attainment of growth and development. It has been identified that company mainly targets
people who belongs to the age group of between 20 to 45 years.
Tools aswell as techniques in an analytical manner about how to plan and allocate resources
In order to plan resources in a well defined and systematic manner, there are different types
of tools and techniques which needs to be used by the higher authorities are going to be
discussed as follows:
Gantt chart: This is a graphical representation shows whole schedule of the project which
includes starting as well as ending dates. It is a sort of graphical representation, which shows the
time taken to complete the whole project from initial phase to ending phase. With the help of
this tool, managers of JS supermarket Ltd gain information related to the task conducted to
accomplish the predefine targets and objectives.
Critical path analysis: Another most essential tool is critical path analysis which is used
by the management team of organisations so that they can remain in their budget while
completing the whole project in an effective manner. In the present context of JS supermarket,
adopting critical path analysis technique assist the management team in order to attain their task
and goals in an effective and appropriate manner. This as a result assist the higher authorities of
the organization to complete the project in timely manner to maintain their sustainability at the
marketplace.
Importance of planning along with allocation of resources for attaining business objectives
It has been examined that by proper allocating as well as planning the resources assist a
business entity in order to enhance their performance and effectiveness in an appropriate way
which leads towards the attainment of predefined targets in an effective manner. Apart from this,
proper and appropriate planning help a business entity in order to fulfil their targets within
stipulated time frame. In the present context of JS supermarket Ltd, it has been said that
managers of the company optimum utilise the resources so that they can produce high quality
products and services which increases the customer base. This directly affects the profit margin
and sales of the company in a positive manner. Therefore, as a result company will be able to
gain competitive advantage at the market which is one of the most essential objective of the
business entity.
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Various processes of CRM for a small business entities
It has been analysed that in the current time period, it has been said that the process of
customer relationship management plays very crucial role in order to perform activities related to
customers in an efficient and effective manner. There are different sort of approaches adopted by
business entity while providing services to their customers at the competitive market place. It
assists business entity in order to maintain positive relationship with their customers and
maintain growth at the marketplace. In the present context of JS supermarket Ltd, the main focus
is to increase the level of customer base and for which it becomes essential to identify the
preference, taste, opinions, thoughts. In order to this, effective CRM process are going to be
discussed as follows:
Determination as well as Identification of customer needs: It refers to the starting phase
of CRM process where the management team of JS supermarket Ltd. Examine their targeted
customers with the assistance of segmentation strategy. In this reference, the business entity
categorized their customers into small sections as per their demands, taste, choice and
preferences.
Customer portfolio analysis: This is the phase which helps the management team of JS
supermarket Ltd in order to measure the standards as well as behaviour of the customer. With the
help of this analysis, organisation can easily attain knowledge about the status, purchasing
power, lifestyle of the customers. It assist higher authorities in order to make judgement related
to the needs of alteration needed by the business organization for enhancing customer base as
well target customers.
Customers’ intimacy: It has been said that maintaining as well as developing positive
customer relationship assist a business organisation in order to strengthen their customers base
which leads towards the growth at the competitive marketplace. It is very essential for the
management team of JS supermarket Ltd that they must ensure the needs of customers so that
they can satisfy their demands and retain them for a longer period of time. Apart from this, by
using effective communication tool they can easily transfer required information to their
customers in an efficient manner.
Discussion about how small businesses develop transnationally and its pros and cons
Transnational operations define as one of the essential tactic which is incorporated by the
business entity in order to perform their operations at their head offices. One of the biggest
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benefits of adopting this technique is that it helps in examining the current market situation as
well as profitability of the company in an appropriate way. In the present context of JS
supermarket Ltd, it is the approach adopted by the management team in order to attain the
opportunity available at the international market area. Apart from this, it will help in targeting
right customers at the right time and offer them high quality products and services effectively.
This is the approach which includes various advantages and disadvantages which are going to be
discussed as follows in detail:
Benefits:
 With the help of transnational approach, it has been analysed that management team of JS
supermarket easily make modifications which as a result they can attract large number of
people towards them across the boundaries. Apart from this, they adopt innovative
approaches so that they can promote their products and services at international level in
an effective way.
 Another advantage of this approach is those business organisations merchandise their
products across the whole wide worlds which as a result assist them in enhancing their
sales at the competitive marketplace.
Disadvantages:
 It has been identified that in order to expand business function globally it requires lot of
funds, efforts, need strategies and plans which as a result need huge investment.
Essentialfactors of Customer relationship management process
CRM is linked with different procedures of a business entity needed to accomplish the
goals and objective of the company at the competitive marketplace. Strong relationships with
customers help in retaining them for a longer period of time. It has also been identified that there
are various process of CRM which are adopted by the management team of the company in order
to examine their taste, requirements, preferences and opinions. It assists business entity in order
to provide high quality products and service to their customers who as a result satisfy their needs
and wants effectively. This as a result assists in retaining the potential customers for a longer
period of time. Main elements related to effective customer relationship management are going
to be discussed as follows:
 Business reporting
 Work flow automation
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 Marketing management
 After sales services
Potential to create transnational operations
It is said that transnational operations plays very essential and crucial role in the growth
and development of organizational functions as well as to enhance the performance of business
entity by targeting right customers in an effective and appropriate manner. Apart from this, it
also helps in raising the market share of business entity by doing business expansion at
international market place. In the present context of JS supermarket Ltd. Managers of the
company mainly emphasize on increasing their market share by expanding their business
functions at the competitive marketplace.
Activity 2
An annual itemised monthly cash flow forecast showing fixed & variable costs in contrast to
income of companies
Cash flows forecast is commonly used to develop an effective plan that has major
influence over the business so that higher income can be generated by them effectively. This
kind of forecast directly supports business manager in controlling their expenses so that they can
be controlled in timely manner. There is the huge requirement of several sources in order to
forecast cash flow effectively. The main among them are specified as below:
Equity Finance: In this, funds are raised by selling shares at marketplace form. This
method is not effective for small companies as their market value is low. JS Supermarket raises
funds by taking funds from friends, family members and relatives..
Bank Loan: It is mainly adopted by JS Supermarket for generating funds. Bank usually
provides loan to small entities at nominal interest rate.
Planning, budgeting & forecasting: JS supermarket makes use of these three pillars for
determining tendency in the near future. It also supports entities in formulating midterm budgets
and making decision associated with long term schemes. Wit reference to JS Supermarket, the
respective company could make use of Measure moving average and Time series data and
information methods for planning, budgeting and forecasting.
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Balance Sheet, P& L account and cash flow statement of JS Supermarket Ltd is given
below:
Balance Sheet
Year 2017 (value in £) 2018 (value in £)
Fixed assets 150 200
Stock 25 30
Debtors 60 45
Bank 15 25
Total 250 300
Creditors 150 200
Bank overdraft 100 100
Total 250 300
Profit and Loss Account
2017 2018
Sales 15 25
Cost of sales 20 15
Gross profit 35 40
Overheads 5 5
Net. Profit 30 35
Cash flow Statement
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Variable cost: It is commonly seen as the cost of the product during its development
stage that might fluctuate or change as per the quantity. Variable cost can be easily identified by
simply deducting fixed cost from the total cost.
Break-even analysis in context to organisational situations
Break even analysis is supportive in determining relationship between several elements
such as costs, profits, expenses at various levels of output. With the usage of breakeven analysis
individual can easily determine that at which level their revenue is equal to the production cost.
Breakeven analysis is also named as profit contribution analysis. This can be easily identified
with the usage of the numerical formulas. With reference to J S supermarket Ltd. the respective
manager of this company makes use of the algebraic method for determining break even
analysis. The calculation of this is specified as below:
TFC = Total fixed cost
P = Price
AVC = Variable cost per unit of outcome
Qb= TFC/ (P-AVC)
It is analysed by an example, where variable cost is 40,000 and variable cost is 9 per unit
with 18 as selling cost. The break-even point is calculated as:
=40000/(18-9)= 4444.45
From this, it has been identified that there is the breakeven point which means total cost
is equal to total revenue. This also seen as the no profit no loss situation. Graph of this is
specified as below:
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Sales 34*30 1020
Variable Cost 34*15 510
Contribution 34*15 510
Fixed Cost 34*15 510
Profit/loss - NIL
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Explanation about the key financial statements involve in a successful business management
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Interpretation
It has clearly been concluded with the help of above stated balance sheet which says that
the business organisation conduct all their business functions in an effective and appropriate
manner which leads towards the growth in profit margin of the company at the competitive
marketplace. It has been identified that the profit margin is about 16.06% whereas the overall
operating margin is about 17.89% as per the above stated figures. Apart from this, return on the
assets is around 2.88% which says that company is in a strong position which gives better result
to them at the competitive marketplace. It is examined that the higher authorities are more
concern about their profit margin and wants to do business expansion at international market
place in order to capture huge market share.
.
Income Statement
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Interpretations: It has been identified with the help of above mentioned cash flow table that the
total amount generated by the management team is about 961500 which assist them to perform
all their task in an effective and appropriate manner.
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Interpretation:
With the assistance of above stated table it has been concluded that the overall operating
cost is around 961500 but on the other hand investing cost goes in negative which is around
(646300). This simply shows that the buying of fixed asset is minimum or less then as compared
to sale of fixed asset.
Quantitative as well as analytical techniques
It has been identified by examining various aspects related to a business organisation
which says that each and every business organization adopt quantitative along with analytical
methods so that they can grab information and data related to break even analysis. It has also
been said that it becomes essential for the management team to consider each and every activity
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which assist in accomplishing organizational goals and objectives of the company in an effective
manner. In the present context of JS supermarket Ltd, it is said that top management team along
with financial department adopt such sort of approaches which assist them to improve their
financial performance as well as for attaining their predefined targets.
Break even analysis alongwith cash flow statement
It has clearly been examined that cash flow along with break-even analysis both plays very
crucial role in order to manage the financial position of the company in an appropriate way. This
will help in performing all the business functions in more effective and efficient manner and
leads towards the enhancement of more profit margin. If talking about Break-even analysis, itis
said that this is the condition where a company arise at no profit no loss situation. This situation
help in examining the current market situation of the business entity. On the other hand in
context of Cash-flows statements, this is the financial structure which includes both inflow as
well as outflow of the cash statement.
Essential legislation aswell as regulations which have high implications
It has been analysed that small business entities perform their business functions in an
effective manner which leads towards the development and growth of the society along with the
economy of country in a positive manner. In the present context of JS supermarket, it has been
said that business organisation facing some issues related to legislation which as a result reduces
the overall efficiency and performance of the company in a negative manner. Some of the most
essential laws and legislation are going to be discussed as follows:
Employment Law Act 1996: This is a law formulated by the government in order to
protect the rights of employees at workplace which includes discrimination and many more. In
reference to the JS supermarket Ltd it is said that managers of the company ensure that each and
every staff members working within the organization treat equally and provide equal opportunity
to reduce issues and conflicts from the workplace.
Consumer Law, 2015: It is a sort of law which consist of different rules and regulations
which have the main motive to protect the rights of consumer from any sort of unfair practices.
By adopting all the rules and regulations in an effective manner company will be able to grab
and retain their customers for a longer period of time. Adopt all these policies and strategies help
the management team of JS Supermarket in order to maintain positive relationship with their
customers.
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CONCLUSION
With the assistance of above stated report, it has been concluded that small and medium
scale enterprises plays very important role in the growth and development of the economic
system of a country. Apart from this, it is also very essential for the business organisations to
consider various factors like human resource, finance, mission, vision and objectives of the
company in order to allocate resources in an effective manner. In addition to this, there must be
adoption of each and every law so that they can easily perform their functions and smooth
running of the business operations.
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