Managing and running a small business

This report discusses the key considerations and activities involved in managing and running a small business. It covers topics such as resource allocation, customer relationship management, financial statements interpretation, and legal implications. The report focuses on the case of Airdri, a manufacturer of hand dryers, and provides insights and recommendations for small business owners and entrepreneurs.

Managing and running
a small business

Contents
INTRODUCTION...........................................................................................................................3
Activity 1.........................................................................................................................................3
Covered in Brochure...............................................................................................................3
Activity 2.........................................................................................................................................3
P4) Produce an annual itemised monthly cash flow forecast showing fixed and variable costs
set against income for a specific organisation........................................................................3
P5) Explain how break-even analysis could be applied to an organisational situation..........5
P6) Interpretation of the key financial statements..................................................................6
P7) Key legislation and regulations that have implications on small business......................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Small business are privately owned corporations that operates with limited investment and it
contributes to the overall development of the economy as it offers various opportunities to the
people such as easily availability of products and services as well as employment opportunity
and many more (Stanciu, 2015). For an entrepreneur it is important to understand various aspects
that are related with running a small business and a social enterprise by managing various
activities related to the business such as efficient allocation of resources, recruitment of staff,
forecasting and management of operations and other functions in relation to the operations. In
this report the organisation to whom the consultancy services are provided is Airdri, that
manufacturers hand dryers. It was founded in the year 1974 and its headquarters are in
Oxfordshire. In this report main considerations of a small business are taken into discussed that
facilitates resource allocation along with the processes of customer relationship management.
Apart from this the interpretation of the financial statement and various legal implications are
discussed that has impact on the small business and social enterprises.
Activity 1
Covered in Brochure
Activity 2
P4) Produce an annual itemised monthly cash flow forecast showing fixed and variable costs set
against income for a specific organisation
Cash flow statement is a financial statement with the help of which a company can identify
and analyse the flow of cash for a specific period of time. With the help of annual itemized
monthly cash flow forecast the Airdri can efficiently plan for their requirement of the resources
as well as investment options for them (Durst and Lee, 2015). It is crucial for the Airdri to
classify their fixed and variable cost against the income so that they can determine the profit
margins for the organisation. On the basis of the analysis of cash flow forecast the small
organisations plan their strategic growth by expanding their operations to other countries. With
the help of cash flow statement investors of the organisation determine the position of the
company which facilitate the company to attract more investors. With the help of operating,

financing and investing activities the company can determine their fixed and variable cash inflow
and outflow.

P5) Explain how break-even analysis could be applied to an organisational situation
Break even analysis is used by the organisation for determining the profitability by
comparing the level of sales volume with the cost. The BEP analysis facilitates the company to
determine the sales volume that has to organisation to cover their total cost as well as to generate
profit. The small businesses such as Airdri set the target with the help of BEP analysis either in
terms of revenue or in terms of units to be sold. The businesses upon reaching the level of BEP
are at no profit no loss situation due to which they continues to operate up to the level of
breakeven (El-Rafei and et. 2017). As soon as the company goes below breakeven they stop their
production as this level they are not able to recover their cost. With the help of this the manager
of Airdri can determine the number of unit that they have to sold by maintaining a significant
amount of profit.

P6) Interpretation of the key financial statements
Income statement

Interpretation: On the basis of the above financial statement it can be analysed the company has
a focus on activities to be included in CFS such as operating, financing and investing. On the
basis of this it is identified that the cash flow from operating activity is positive which implies
that the cash inflow is more while from financing and investing it is analyse that outflow of cash
is more. On the basis of these financial statements, the managers of Airdri can plan their
investment and growth strategies.
P7) Key legislation and regulations that have implications on small business
It is important for the small business to take into consideration various legislations and
regulations that has been implied on them so that they can avoid legal proceedings. Some of the
legislations facilitate the small organisations such as Airdri efficiently managing their operations
while some of the regulations adversely affect their operations. The impact of various
legislations and the regulations are given below:
Labour Law: The labour law of UK has provided various implications on the organisation to
protect the right of the employees. Under this law minimum wage rate is defined age of the
worker, the working time is defined to protect the misuse of the employees. Along with this it
includes provisions for holidays, break from work, pension etc. Under Labour Law various act
are imposed such as employment act, pension act, trade Union and labour relation act, etc. This
has direct influence on the operations of small business as they have to take into consideration of
all the compliances which increases complexities for them.

General Data Protection Regulations: The data protection legislation also has impact on small
businesses such as Airdri. The change in the act included general data protection regulation
under which the business is has to a long record of the deals that they have entered into. The
implication of this regulation is tough as it includes taking new consent from the clients whose
data is on mailing list. Such changes in legislations and regulations have impact on the small
businesses as it is difficult for them to track record of these changes (Javaid and Iqbal, 2017).
Competition law 1998: This law implies that all organisations that are operating same product
must offer the products with similar prices. It is to protect the interest of the customer as well as
to increase the competition among the businesses for lower profit margin. Due to this the pricing
strategies of the small business gets affected and also it leads to decrease in profitability of the
organisation.
CONCLUSION
It is concluded from the above report that a small has to take into consideration various
factors so that they can ensure their survival and growth. Planning and allocation of resources
must be done efficiently so that the organisational objectives can be achieved and for this they
need to take into consideration the impact of various factors. Apart from this, the customer
relationship management process has to be along with the stages of internationalisation so that
expansion of the business can be planned as per the capabilities of the organisation. The
understanding of financial management is must and to support this various financial statements
are included and interpretation so that the impact of financial activities and organisation can be
identified. In addition to all this the impact of various legislations and regulations that are
imposed on the business are also determined that has impact on the small businesses.

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