This document provides insights on managing and running a small business. It covers topics such as resource allocation, customer relationship management, international expansion, and cash flow forecasting. The document also includes a break-even analysis and discusses the benefits and drawbacks of expanding a small business globally.
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Managing and running a small business
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Table of Contents INTRODUCTION................................................................................................................................3 MAIN BODY.......................................................................................................................................3 P1.....................................................................................................................................................3 P2.....................................................................................................................................................4 P3.....................................................................................................................................................5 P4.....................................................................................................................................................7 P5.....................................................................................................................................................8 P6.....................................................................................................................................................9 P7..................................................................................................................................................11 CONCLUSION..................................................................................................................................12 REFERENCES...................................................................................................................................12
INTRODUCTION A small business can be defined as any company which has less than 500 employees and the revenue of the business is less than $25 million. For example a small garage that employs around 10 people is an example of small business. For managing a business any small company has to have a business plan as without a business plan the company would not be able to manage there finance, time, technology, human resources etc., The small business must make sure that for successful running of there business they should focus on their customer needs and demands as for them Customer is the king so they should focus on the customer relationship management. Also, small business have to arrange the finance to run there business as they will find a lot of problems in raising finance, there source of finance is limited to bank and financial institution only. Small business must have good communication system available for the effective working of the organization. They must timely identify the customer needs and demands by asking there customer what they want. Small business must also have to change with the changing technology in there industry so that they can maintain there customer share in the market and also to compete within such dynamic environment. MAIN BODY P1 Discuss the main considerations a small business or social enterprise needs to address when planning and allocating resources to achieve business objectives. Small business always try and allocate their resources in a way that the resources are utilized optimally, as small business have limited resources and if they are not allocated properly then they will face problems like non completion of the projects being allocated to them which will disrupt the work of the whole organisation. So the SME must allocate there resources according to the importance of the work. For the proper allocation of resources SME like Captify they should use the following techniques discussed below. Determine the resource available Firstly Captify should evaluate what resources they have in their organisation and on the basis of these resources they should identify the basis of the scope of the project they are going to undertake. This will help Captify in analysing that the project undertaken is feasible or not, so the company can make their decision whether they can proceed with the project or not. Identify the resource needed(Storey, 2016) The next thing Captify should keep in mind is that they should identify what resources they are going to need in the project and if they can get there hands on these resources. This will include any specific tools, machinery, expert required to perform the task etc. once the company has
identified this they can proceed to procure these resources. Evaluate the human resource For any operation, one of the main point to keep in mind is that every project require a particular type of human resource. Since SME do not have much workforce therefore they must carefully allocate their human resource and maximize the benefit they can get from them. This is very important for Captify in order to be successful in the current and future environment. Draft a resource plan This is the point of action as Captify will draft a plan to allocate the resource identified and allocated in the previous steps. This will help the organisation to form a layout so that the company could achieve their goals. This is an important step as the whole organisation will follow what this step says. Be ready for emergencies Captify should always be ready for any emergencies that they might face during the course of action in the organisation. The manager working their must have a backup plan to deal with any emergencies. For example if an important person of the project fall sick or for any other reason is not able to come to work then the manager must step in the company and should lead the team toward the achievement of the organisational goals. Control over the organisation Captify should keep an eye over the operations of the company and if any employee or manager is facing any problem then they should be guided in order for the smooth working of the organisation. P2 Explain and evaluate different processes of customer relationship management for a small business or social enterprise. Customer relationship management is a process by which the Captify can manage their interaction with the current and the potential customers. Customer relationship can be maintained by using the customer data from a variety of channel including telephone, email, social media etc., CRM helps the company to know about the feedback of the customer and improve their product and services in order to provide the best customer experience. Benefits of customer relationship management Identification of target market Initially Captify should establish CRM process to identify the market that they want to target. The small business must identify this because they have limited resources so they must
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customize their product according to their customer needs and demand. The identification is based upon the demographics, geographic, trend etc., the customer should be listed on the basis of their value proposition. This value proposition can be done by CRM process which will make the operation of the customer more effective and efficient. Define CRM strategies In this step Captify will form the overall strategies that they are going to implement to target their identified market. These strategies will depend upon the customer that Captify is handling and the budget availability of the company to satisfy the demand of their customers. While devising the strategies Captify should keep the pros and cons of the particular strategy and should evaluate the feasibility of the strategies. These CRM strategies will help Captify in knowing the demand of their targeted market and this will help in achieving the long term goals of the organisation. Define method to handle the company's customer This step involves how Captify will handle each of their customers. The feedback received through the channel of the company shows the company different requirements of the customers so they must identify how they will solve the grievances of each and every customers. For an instance high paying customer should be offered high price items whereas low affordable customer should be handled differently. Captify will then be able to identify there target customer and satisfy the need of the customers in order to be more effective and efficient in the market. Better customer services The company will help improve the services as with the help of customer relationship management the company can know exactly what product they need to develop so that it fits the customer requirement. Improved responsiveness and understanding among the employee of the organisation will result in better customer service. Better customer service will help Captify to build their brand image in the eyes of the customer and this will help in the long term success of the organisation. This will also give Captify competitive advantages over their competitors in the market. If they are able to differentiate their product then they can also charge premium for them increasing there revenue and sales.(Villamizar, 2016) P3 Explain how a small business can develop trans-nationally and determine the benefits and drawbacks. Generally the domestic market is huge enough for any small business to gain satisfactory level of profits but some business entrepreneur wants to diversify their business internationally to increase
their market share. These will help companies like Captify to grab global opportunities and by entering into international market the company can increase there long term profitability. This is generally very huge step for any SME therefore Captify should initially lay out their plan, then they should conduct some market research in order to find out the feasibility of the option to expand globally, then they should perform analysis like cost benefit analysis, PESTLE analysis, SWOT analysis to identify the marco environmental factors, then the company should start looking that how the company would be financed for expanding globally and at last they should look for suppliers who can provide them with the goods needed in the international market. Advantages New market availability One of the major advantage of expanding our business in the international market is that the company have a whole new customer target available for them. The company will need to use a variety of promotional techniques in order to reach their customers like social media, online marketing, online websites etc., these all are cheap way of promoting the product and reaching more and more customer all over the world. They have an excellent opportunity to make their brand image all over the world when they start to expand internationally. Diversification of business activities Another advantage of expanding the business is the diversification of the business. The company can take advantage of the different economic fluctuations in different countries. It may be helpful in offsetting the losses occurred due to economical imbalances in the domestic country. Establishment of business overseas can sustain domestic business for long term. Disadvantages Challenges of different culture As trans national strategy will help to get and attract new customers, the drawback is that cultural differences in different countries. This is one of the major challenge the SME faces as they have to change their operations according to the different countries in which they are expanding. They need to follow their rules and regulations in order to work in the foreign country. There are different challenges like language differences that spoils the marketing efforts of Captify. This may disrupt the operation of Captify and if the company cannot tackle these challenges then they will have to face serious consequences. Financial risk Another major drawback is that the company takes a lot of financial risk in expanding their business internationally as they have to take long term loans from banks and other financial institutions in order to fund the expansion. If the expansion fails then the company can go into liquidation as the banks have to be paid irrespective of profit or loss being made.
P4 Cash flow forecast for fixed and variable cost against set income\ There has been the analysis of the above forecasted cash flow of Captify given below Projected Cash Flow Statement Partic ularsJanFeb Marc hAprilMayJuneJuly Augus t Septe mber Octob er Nove mber Dece mber Openi ng Bal.180002100024000270003000030000275003100034500385004050045000 Cash In Sales250002500025000250002200022000280002800028000270003000030000 Total250002500025000250002200022000280002800028000270003000030000 Cash Out Varia ble costs Mater ial600060006000600060007000700070007000800080008000 Wages500050005000500050005500550055006000600060006000 Mark eting300030003000300030004000400040003000300035003500 Fixed Rent800080008000800080008000800080008000800080008000 Total220002200022000220002200024500245002450024000250002550025500 Cash Flow30003000300030000-2500350035004000200045004500 Closin g bal210002400027000300003000027500310003450038500405004500049500
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Breakeven point analysis: It is a financial tool which helps you to determine at what stage your company, or a new service or a product, will be profitable.It will assist Captify in knowing about how much sales must be made by them. This tool can assist firm in having knowledge about point where company will be able to cover its loss and profitability. (Spence, 2016) This tool assist company in making decisions. It helps them in knowing about the profitability which has been made by them. It enables Captify in knowing about whether the investment needs to be done or not. In order to grow firm needs to have an idea about where sales revenue will meet out its obligations. It assists firm in making clear the relationship between revenue and cost analysis.Break even analysis means determining the relationship between the revenue profits and the cost of an organization at different level of output. The break even point is the point at which the revenue and cost are the same and at this point there is no profit no loss in the organisation. Break even analysis is used by the company to know the feasibility of the product or service they are going to offer to the customer in the near future. Captify can use break even analysis so that they will be able to know how many units are needed to be produced in order to start making profit for the company. This analysis will help Captify in the process of pricing and promotions so to control the cost being incurred. Break even analysis include all types of cost which are fixed costs, variable costs and semi variable costs. All these cost are subtracted from the revenue of the company to find out the break Theoperatingexpenseincludingadministrativeexpenseandoperatingexpensehave significantly increased from previous year this is because since the company is planning global expansion they will require to promote their product which will increase their administrative expenses. The distribution cost is also increased because they will have to set up new stores to provide there product and services. Therefore, there is an increase in the operating expense. Also, the finance cost have increased due to the additional fund which has raised for funding the expansion. These are expected to cover from the additional sales of the company. The company overall performance has been increased significantly and this will be keep increasing in the coming years as in 2020 there has been a major investment and since the company has an excellent brand image the product will have an excellent sale in the future years. But in the short term the company have to deal with low profits. Captify should also address this in there annual report so that there shareholders and other investor like debenture holders and creditors will come to know the reason of the low profits in the coming year.(Lombardi, J.M., Makhni, M.C. and Lombardi, 2019)
Key financial Statements contributing in the successful management of the organisation Financial statement of any organization provides an idea about the financial performance of organization. It provides an information about the inflow and outflow of cash. It also provides description about how effectively company is managing their task by available resources. If the cash inflow is more investor will be interested in investing in Captify. It assists investors in knowing about the current financial efficiency of organization. There are three main financial statement of company that includes income statement, balance sheet and Cash flow statement. Income statement: It is also known as profit and loss statement. It provides details about expenses and assets of Captify. It helps firm in managing assets effectively and efefcinetly. Mian aspect of income statement is that it assists company in knowing about how much profit remains with after investing in various expenses. Balance Sheet: It provides information related to assests and liabilities. It ais being used to calculate the valuation of company. Investors will only invest in company when there liabilities will be less and they have an appropriate cash balance. It will also present the investment which is being made by organization in different ventures. Cash flow statement: It provides about cash inflow and outflow. Most important task for company is to analyse its cash flow projections as this will help them in having an idea about clear picture of their financial position. Fixed costs means that the cost is going to remain the same irrespective of how many units are being produced. These fixed cost for Captify includes the rent paid by the company for their retail stores, insurance of the company etc., all these cost are incurred by the company irrespective of the work done by the company. These cost will incur even if the company does not work at all. Therefore, the company must try to reduce these as much as possible. Variable Costs are those cost which is linked to the number of unit been sold. So as the business increases there sales these cost are increases proportionally.These cost include the salary paid by the company to their employees, if the company stop working then these cost will not incur because the company can kick out there employees and they do not cost them anything. These cost increase with the increase in the company's operations. Semi variable costs are the cost which are fixed in nature but it certainly increases when the output reaches a particular level. This cost can be said as a combination of both the fixed and the variable cost. These costs increases with the increase in the level of operations, so after crossing a particular level of operations these costs will increase and then remain constant for up to another particular level of operations. By analysing all these cost Captify will get there break even point and they can make further
decision on this basis. Captify can use break even analysis very often because they introduce new products every now and then so the feasibility must always be checked or other wise the company might have to deal with different problem in the future. . Gross profit ratio The gross profit ratio has increased from the previous year by 1 percent, this may be due to the increased sales in the 2019. The reasons for this increase may be the company controlling their cost of sales, the markup policy may have worked good for the company or there may be undervaluation of the opening stock. Net profit ratio This ratio has been slightly increased in the year 2019, this is because though the company able to increase their sales the admin and distribution expense are increased proportionately. This may be due to increase in the expense like advertisement to promote their product. These will help the company in the long term. Current ratio This has been diminished as in 2018 it was 1.18 and in 2019 it is 1.11, this might be because the company is not able to pay there short term liability quickly and therefore the current liabilities have been increased.(Slawsky, and Zafar, 2017) This will have a negative impact on the company because the investor will not be happy to see this, also they are far away from achieving the ideal ratio of 2:1. Liquid ratio The liquid ratio has also worsened from the previous year. The company will shortly start facing issue with their liquidity if this continues as they will not be able to pay their liabilities and this may damage their brand image. Although they have achieved there ideal ratio of 1:1. Interest cover ratio The company's interest cover ratio has increased in 2019 as compared to 2018, this might be because the company is been able to pay its interest payment. This is because the profits of the company is gradually increasing and the interest payments are decreasing. From this ratio it can be concluded that the company is paying their interest obligation timely.(Nohria, 2017) Debt to equity ratio The company debt to equity ratio have also worsened in the current year, this is because the company has taken long term loans for the funds they will be requiring to operate their company
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Discuss key legislation and regulations that have implications on small businesses or social enterprises. There are many laws and regulation which are being laid down by the government that may impact the business of Captify directly or indirectly. If Captify does not follow these laws and regulations then they might have to face additional cost. The company should pay their taxes on time, follow laws related to waste disposal and laws for employment management. All the government business legislation has to be followed by all organisations because these gives a legal existence to the business. There are some laws and regulation discussed below: Equality act, 2010 In this Captify must make sure that no discrimination exists in workplace on basis of colour, religion, belief and thoughts. Also they need to be engaged in making p0olicies related to promoting equality and diversity in organization. This will assist them in engaging employees towards firm and it will also help them in making employee relation better. Health and Safety act, 1974-In this company needs to engaged in providing safe and secure environment to their employees. They must make sure that workers do not work in hazardous working conditions. Labour laws The labour laws can affect the working of Captify as if the labourers are not paid the right amount that they need to be paid for the job then they will be required to pay penalties if anyone takes any legal action against them. There are many employment laws laid down by the legislation body that small business has to follow. These laws include the wages and hour which says that the employees must be paid according to the hour that they have worked and they must pay extra for any overtime worked, health and safety at workplace which says that Captify should provide an environment which is safe for their employee to work in, law for equal opportunities which says that each and every employee must have equal chance when it comes to promotion or recruitment of any new members.(Senderovitz, Klyver and Steffens, 2016) .(Njenga and Jordaan, 2016) CONCLUSION From this report we have come to a conclusion about a variety of things about the management of the small business organization. There have been a brief discussion about the resource allocation in the first task and this has been detailed in various sub tasks in which the report explains about the customer relationships management of small business management and what are the pros and cons of operating business at trans-national level. Then there is an analysis about the forecasted cash
flow of the company Captify and there in an interpretation of the analysis being produced. In the report, there is also a brief discussion about the break even analysis for Captify and how can the business use this to their own advantages. In this section we can say that in the short term the company is performing moderately but in the long term there are chances that there performance will improve. At last there is a discussion about the laws and regulations which the small business must follow for the smooth functioning of the organisation. These are strict laws and regulation imposed by international organisation so breaking any of these will have serious consequences upon the small businesses. Comprehensively, the report shows the management of the small business organization. REFERENCES Brulin, G. and Svensson, L., 2016. Managing sustainable development programmes: A learning approch to change. Routledge. Burns, P., 2016. Entrepreneurship and small business. Palgrave Macmillan Limited. Hatten, T.S., 2015. Small business management: Entrepreneurship and beyond. Nelson Education. Hytti, U., and et.al., 2017. Navigating the family business: A gendered analysis of identity construction of daughters. International Small Business Journal. 35(6). pp.665-686. Lombardi, J.M., Makhni, M.C. and Lombardi, J.S., 2019. Building and Managing a Successful Private Practice. In Orthopedic Practice Management (pp. 73-83). Springer, Cham. Njenga, K. and Jordaan, P., 2016. We want to do it our way: The neutralisation approach to managing information systems security by small businesses. The African Journal of Information Systems. 8(1). p.3. Nohria, N., 2017. Fast forward: The best ideas on managing business change. Business Review. 9. p.10. Senderovitz, M., Klyver, K. and Steffens, P., 2016. Four years on: Are the gazelles still running? A longitudinal study of firm performance after a period of rapid growth. International Small Business Journal. 34(4). pp.391-411. Slawsky, J. and Zafar, S., 2017. Developing and managing a successful payment cards business. Routledge. Spence, L.J., 2016. Small business social responsibility: Expanding core CSR theory. Business & Society. 55(1). pp.23-55.
Storey, D.J., 2016. Understanding the small business sector. Routledge. Tidd, J. and Bessant, J.R., 2018. Managing innovation: integrating technological, market and organizational change. John Wiley & Sons. Villamizar, M., and et.al., 2016, May. Infrastructure cost comparison of running web applications in the cloud using AWS lambda and monolithic and microservice architectures. In 2016 16th IEEE/ACM International Symposium on Cluster, Cloud and Grid Computing (CCGrid) (pp. 179-182). IEEE. Villamizar, M., Garces, O., Ochoa, L., Castro, H., Salamanca, L., Verano, M., Casallas, R., Gil, S., Valencia, C., Zambrano, A. and Lang, M., 2016, May. Infrastructure cost comparison of running web applications in the cloud using AWS lambda and monolithic and microservice architectures. In 2016 16th IEEE/ACM International Symposium on Cluster, Cloud and Grid Computing (CCGrid) (pp. 179-182). IEEE.
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