Managing and Running a Small Business

This document discusses the main considerations for planning and allocating resources in a small business to achieve business objectives. It also explores the processes of customer relationship management and the advantages and limitations of developing transnationally. Additionally, it includes an annual cash flow forecast and break-even analysis for small businesses.

MANAGING AND
RUNNING A SMALL
BUSINESS

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Discussion of main considerations a small business require to undertaken while planning
and allocating resource to attain business objectives.............................................................1
TASK 2............................................................................................................................................3
P2 Different processes of Customer relationship management for small business organisation
................................................................................................................................................3
P3 Explanation of how small entities can develop transnationally along with its Advantages
and limitations........................................................................................................................4
TASK 3............................................................................................................................................6
P4 An annual itemised monthly cash flow forecast showing fixed & variable costs in contrast
to income of companies..........................................................................................................6
P5 Break-even analysis in context to organisational situations..............................................9
P6 Explanation on key financial statements of a company for involvement in successful
management..........................................................................................................................10
TASK 4..........................................................................................................................................15
P7 Key legislation & regulations that have high implications on small business entities. .15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
In the present time, small as well as social enterprises directly affect on the growth &
development of the economy. Entrepreneurs and business people undertaken it as an opportunity
that help in attaining profits beyond their expectations (Arteaga and Uman, 2020). In order to
retain in market for longer time period, one of the factor that plays an important role is offering
innovative and unique idea. It is significant for an organisation to analyse market trends and
customer requirements that assist in gaining success & contribute towards growth of societies.
The present report will cover factors that is significant to consider at the time of planning and
allocating resources to achieve business objectives. In addition to this, various process of
customer relationship management for small business is described. Moreover, there is discussion
about how small entities can develop transnationally along with its advantages & drawbacks.
Furthermore, an annual itemised cash flow and break even analysis is develop for organisation.
In the last, various legislations as well as regulations which have implications on social
enterprise and small business is going to elaborate in a proper manner.
TASK 1
P1 Discussion of main considerations a small business require to undertaken while planning and
allocating resource to attain business objectives
In the present scenario, business sector if United Kingdom gives various business growth
opportunities to individuals who has the capability to perform task & earn higher profits. It is
determine that one such reason of development of high opportunities is Brexit as because of this,
people gain benefit to start and set up their own business within the UK and at small level
initially. It mainly take place when the person has an innovative as well as effective idea that
fulfil needs of customer and meet with the market trends. There are various activities which is
required to be done by small businesses on continuous basis such as managing & allocating
resources, forecasting & budget, recruitment & selection, analysis of financial statements and
many more.
For attaining growth, it is significant for company like JS supermarket which is a small
business to undertake right plan & develop effective strategy to allocate the resources in an
effective manner. The main factors which is required to consider at the time of planning &
allocating resources by small business are as follows:
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Financial resources: It is consider as one of the important factor which plays vital role in
effective planning as well as allocation of resources as well. It is stated that availability of
adequate funds assist small business entity to systematically and smoothly carry out the
activities. For instance, JS supermarket Ltd, a small business entity that does not include number
of investors therefore it is not easy for owners to accumulate funds in order to implement
business activities (Crane, Glozer and Spence, 2019). The senior management of JS supermarket
Ltd has less number of possibilities to gain funds such as family, friend and bank loan as well. It
is significant for business entity to focus on adopting saving approach which assist in reducing
expenses in an appropriate manner.
Human resource: Another factor that is required to be consider while planning and
allocating is human resource. They play an important role in enhancing the performance and
productivity level of an organisation. It help company to provide quality and on time service to
customer that develop positive mind set of customer and raise customer base level of a company.
For example, JS supermarket Ltd have build policies & acquire appropriate approaches in order
to hire talented and best candidate for the company so that their performance is enhanced at
marketplace. In addition to this, it also provide training to staff members so that they can
implement activities as per the expectations that is important in order to gain success and growth
within the market.
Business plan: It is important for the top level authorities to overlook on their business
plan prior to planning & allocation of resources. By undertaking all the tactics & strategies
involved within business plan assist in effective as well as proper resource allocation which
directly leads to achievement of growth & success.
Performance management: It is significant for a business entity to analyse the
performance, skills and knowledge level of employees prevailing in the company. This help an
entity to allocate resources and assign activities as per the interest area of staff employees that
will leads to increase in performance and productivity level in a positive manner.
Health and safety issues: Another important element is health &safety of staff members
that is essential for proper execution and functioning of activities (Depken and Zeman, 2018).
Along with this, it help company to effectively plan and allocate resource that leads to
achievement of organisational objectives within stipulated time period.
2

Apart from this, there are also other factors that us needed to be consider that is Premises
and equipment, equality and diversity, employee legislations. All this will assist small business
entity to properly plan and allocate resources which leads to increase in productivity and
profitability of company.
TASK 2
P2 Different processes of Customer relationship management for small business organisation
Customer relationship management is defined as process of maintain an effective and
string relationship with customer with an aim to retain the for longer time and enhance the
performance of a company. There are various techniques that is acquire by small business
entities in order to provide quality and on time service to its customers which assist in gaining
the trust of customers towards brand. For instance, JS supermarket Ltd is focusing on increasing
customer base level and for this, it is significant for organisation to first identify customer needs,
taste and preferences, views, opinions and many more. There define customer relationship
management process below:
Identification of customer’s base: It is undertaken as an initial phase and herein JS
supermarket Ltd determine target group of customer with the assistance of STP strategy. This
help in categorising customer and market in small groups which is advantageous for analysing
customer demand, taste, choice in an appropriate manner.
Customers intimacy: It is analysed that managing & maintaining customer relationship
assist an entity to raise number of loyal customer & also retain them for longer period (Hickman
and Silva, 2018). It is significant for an organisation to focus on fulfilling needs of customers
which assist in developing strong bond and effective relationship with customer and strengthen is
market presence as well.
Developing effective channels for customer communications: One of the vest way to
maintain an effective and long relationship with customer is to remain in touch with them and
resolve their issues by communicating with them in an effective and appropriate manner. For
this, small business entities can develop page on social media applications such as Facebook,
Instagram and so on. This help company to give proper information about product and service to
large number of customer and also allow in remaining in touch with them. Moreover, Small
company such as JS supermarket can hire person that carry online chats with customer and give
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them rapid response of their queries. All this will assist company to develop a positive mind-set
of customer towards brand and retain them for longer time period.
Value proposition development: This step mainly focuses on the data gathered at the
time of customer intimacy. It is analysed that when company once analysed it’s target customer
then it move towards to develop value proposition for his customers. It is important for an
organisation to create value for customer that must develop value for business entity as well.
Customer lifecycle management: it is defined as customer journey that is start from
potential customer to the delivering of products as well as services. It is determined that
managing cycle requires attention and structure to process. It is important for company to
determine how it will approach customer in order to retain them for longer time period.
P3 Explanation of how small entities can develop transnationally along with its Advantages and
limitations
Transnational operations refers to an approach by businesses go to perform various
activities and functions globally by setting up their offices locally and internationally. It is
necessary for them to make sure that communication and operation between these offices are
carries out successfully. It helps organisation to increase their overall sales performance and
generate greater profits. There are a number of small companies developing transnationally to
enhance their profitability and productivity. Below mentioned are two ways in which companies
are developing transnationally:
By developing channels for customer communication: Small businesses can
successfully work on transnational approach in order to expand their business for which they can
effectively develop channels of customer communication. There are a number of social media
platforms such as Instagram, Twitter, and Facebook etc. that businesses can use to draw their
communication channels. Online chat options are also available with businesses that enable thm
to provide responses to their consumers timely.
BY developing customer care programmes: Customer care programmes id another
option that can be used by businesses while adopting transnational approach. Real time solutions
and online testimonials are used by organisations to get quick responses from consumers. It will
help in maintain relationships with consumers and also increasing efficiency as well as
profitability for organisation.
4

JS Supermarket is successfully using this approach in order to achieve their targets and
achieving all their aims and objectives. However there are a number of advantages and
disadvantages which business will need to deal with while using this approach which is
mentioned below:
Benefits:
It is important for small businesses as well as start-ups to expand their business and get
internationalised there are various advantages related to it that are mentioned below: Increase in customer base level: Companies who are expanding beyond their domestic
level will successfully earn huge customer base and also generate customer loyalty for
them internationally. Enhancement in productivity level: Productivity level of JS supermarkets will also
increase as they start operating internationally.
 Employment generation: Organisations will also help economies by generating
employment opportunities in different countries.
 With the help of transnational approach small business like JS supermarket can attract
more customers beyond their domestic boundaries which will help in increasing their
brand value.
 With the help of this approach company can earn profits through communicating their
products throughout the world (Kgoroeadira, Burke and van Stel, 2019).
Disadvantages: High operating cost: Companies have to incur high costs in order to expand their
business internationally. There is a lot of operational cost required by business to expand
in international market. The revenue cost is also high which will require small
organisation to look into operating expenses carefully.
 Labour exploitation: The human resource required to expand business might involve
high cost for small businesses. They need to expand taking this factor in mind.
 High amount of investment as well as strategies that managers need to develop for
expanding in international market which may be difficult for small business organisation.
5

 Companies can effectively use social and ethical policies in order to expand their
business. This process requires time, cost and efforts in order to meet requirements of
business.
TASK 3
P4 An annual itemised monthly cash flow forecast showing fixed & variable costs in contrast to
income of companies
Cash flow forecast is defined as an effective form of plan that directly has impact on
respective organisation for earning more income. Along with this, such forecasting assist an
organisation to control expenses in an appropriate manner. There are various sources adopt to
forecast cash flow, which are as follows:
Equity Finance: This form of financing is used by small companies for increasing funds
by selling shares in market. The business is performing at small scale and has low market value
due to which does not sell shares.
Bank Loan: It is consider as an effective approach, which is adopt by small businesses in
order to acquire funds and implement activities as well. The banks provide loan by checking
documents and charge a percent of interest on the principal amount.
Planning, budgeting and forecasting: It is consider as three important pillars which is
used by small entities like JS supermarket Ltd for recognising tendency related to near future. In
addition to this, it help organisations to develop budget and long term schemes in an effective
manner.
Measure moving average: With the help of this technique, an organisation can easily get
information which assist in setting objectives. Along with this, it is utilised when it comes to
identify current position of a business entity.
Time series data and information: It help company to develop various applications for
setting production schedules in a proper manner. In addition to this, it also help in execution of
plan as per the set time as well as budget.
Balance Sheet, P& L account and cash flow statement of JS Supermarket Ltd is given
below:
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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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Activities
Jan
uar
y
Febr
uary
Ma
rch
Ap
ril
M
ay
Ju
ne
Ju
ly
Au
gus
t
Septe
mber
Oct
ober
Nove
mber
Dece
mber
Tot
al
Receipts:
Total
amount of
loan
200
0 2000 18
00
15
50
17
50
18
50
20
00
145
0 500 200
0 1400 2200
20
50
0
Available
cash
100
0 800 10
00
10
50
12
00
70
0
89
0 760 950 600 550 1000
10
50
0
Total
receipts
300
0 2800 28
00
26
00
29
50
25
50
28
90
221
0 1450 260
0 1950 3200
31
00
0
Payments
Fixed
cost:
Interest
expenses 60 60 60 60 60 60 60 60 60 60 60 60 72
0
Rent 500 500 50
0
50
0
50
0
50
0
50
0 500 500 500 500 500 60
00
Salary 300 300 30
0
30
0
30
0
30
0
30
0 300 300 300 300 300 36
00
Variable
cost:
Direct
material 600 500 54
0
54
0
40
0
45
0
41
0 350 360 380 444 260 52
34
Direct
labor 60 80 75 55 50 40 65 95 45 78 85 96 82
4
Selling
expenses 110 90 80 78 65 55 50 60 90 75 85 87 92
5
Total
payments
163
0 1530 15
55
15
33
13
75
14
05
13
85
136
5 1355 139
3 1474 1303
17
30
3
Net cash
flow 137
0 1270
12
45
10
67
15
75
11
45
15
05 845 95
120
7 476 1897
13
69
7
Variable cost : It is the cost which arise at the time of developing products and canes the
level of quantity. It is basically deducting fixed cost out of the total cost. In addition to this, it is
8

consider as normal cost which involve from development to finished products involving fixed
cost within it.
P5 Break-even analysis in context to organisational situations
Breakeven analysis is a plan adopted by businesses in order to understand the relationship
between its incomes, expenses and profits at various levels of outputs produced by organisation.
It is also called as profit contribution analysis. There are two criteria used in order to
calculate it which are non-liner cost as well as revenue relationships. Companies can also use
graphical methods in order to determine this financial analysis. The leaders and managers in JS
Supermarket are effectively using algebraic method to calculate their break even analysis which
is mentioned below:
TFC = Total fixed cost
P = Price
AVC = Variable cost per unit of outcome
Qb= TFC/ (P-AVC)
It is analysed from above 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
Breakeven point refers to a situation for an organisation where the total expenses of
businesses are equal to their income. This concludes that business is at a point of no loss and no
profits.
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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
P6 Explanation on key financial statements of a company for involvement in successful
management
10

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Interpretation
The above Balance sheet helps in interpreting the amount of assets that are required by
organisation to carry on their activities and earn profits. The profit margin for business is 16%.
They are also earning 2.88% from return to assets. With the help of balance sheet it can be
analysed that company needs to work upon their profits and expand to increase it.
.
Income Statement
12

Interpretations: With the help of above cash flow it can be interpreted that company requires
961500 to manage their operating costs. However company is using these inflows to manage
their financing and investing outflows.
13

Interpretation:
There are three major activities which are focused upon to evaluate inflow and outflow of cash
which are operating, investing and financing. In the above table all these cash flows are
mentioned for organisation. Here, the operating cost is positive and both of the other costs are
negative.
Quantitative and analytical techniques
There are a number of analytical and quantitative methods that are used by organisations
in order to reach to break even analysis. It is required by managers in an organisation to manage
various activities that will help organisations to increase their efficiency. When taking JS
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Supermarkets into consideration the company uses all these financial analysis to enhance their
performance financially in the competitive market.
Break even analysis & cash flow statement
It is analysed that cash flow statement as well as break even analysis are important for
assessing financial statement.
 Break even analysis states a position for company when they are neither at profit nor at
losses.
 Cash flow statements help organisation to assess the inflow and outflow of cash in
business.
TASK 4
P7 Key legislation & regulations that have high implications on small business entities
It is analysed that small companies are facing legislative issues because of which the
performance is decline. Some of the laws, which have high implications on small business is
mentioned below:
 Consumer Law, 2015: This include rules and laws which main objective is to protect
customer from any form unfair business practices. It is stated that following all the rules
associated with consumer law assist an organisation to attain long term advantages and
also retain them for longer time. Employment Law 1996: The main motive to developed such law is to protect workers
from issues such as workplace discrimination, unfair job practices and many more
(Kremer, Rizzuto and Case, 2019). It is important for a business entity to ensure that all
employees were treated equally and fairly within the premises as it assist in reducing
number of conflicts in an effective manner.
 Data protection act: This law was developed by Parliament of UK in order to protect
information or data which is private and stored on desktops. Following of all such laws
help an organisation to secure and protect information of being copied and theft by
others. Moreover, it declines the level of security issues and Help Company to secure
customer’s personal information in an appropriate manner.
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 Health and safety: it is significant for an organisation whether it is small, medium and
large to ensure that it’s employees are safe at workplace. This make employees feel
valued at workplace and they work without any mental pressure that has positive
influence on the productivity as well as performance of business entity.

CONCLUSION
From the above discussion, it has been concluded that small business plays an important role
towards the growth and development of an economy. Along with this, it is significant for
business entity to undertake various factors at the time of planning and allocating resources such
as human resources, business plan, premises and equipment’s, financial resource, vision and
many more. Moreover, it is concluded that it is important for an organisation to follow laws such
as employment law, consumer law, data protection and so on. This will assist company to
implement activities in a systematic and proper manner, which has positive impact on
performance and productivity of a company.
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REFERENCES
Books and Journals
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history. Baltic Journal of Management.\
Crane, A., Matten, D., Glozer, S. and Spence, L., 2019. Business ethics: Managing corporate
citizenship and sustainability in the age of globalization. Oxford University Press, USA.
Depken, D. and Zeman, C., 2018. Small business challenges and the triple bottom line, TBL:
Needs assessment in a Midwest State, USA. Technological Forecasting and Social
Change, 135, pp.44-50.
Hickman, C.R. and Silva, M.A., 2018. Creating excellence: Managing corporate culture,
strategy, and change in the new age. Routledge.
Jackson, K.L. and Goessling, S., 2018. Architecting Cloud Computing Solutions: Build cloud
strategies that align technology and economics while effectively managing risk. Packt
Publishing Ltd.
Kgoroeadira, R., Burke, A. and van Stel, A., 2019. Small business online loan crowdfunding:
who gets funded and what determines the rate of interest?. Small Business
Economics, 52(1), pp.67-87.
Kremer, C., Rizzuto, R. and Case, J., 2019. Managing by the Numbers: A Commonsense Guide
to Understanding and Using Your Company's Financials. Hachette UK.
Kulothungan, G.D., Oham, C. and Jirel, P., 2019. Managing Uncertainty in Small and Micro
Social Enterprises: A Cynefin-Bricolage Framework. In Handbook of Research on
Value Creation for Small and Micro Social Enterprises (pp. 327-348). IGI Global.
Pakroo, P., 2018. The small business start-up kit: A step-by-step legal guide. Nolo.
Park, K., 2018. The Korean American dream: Immigrants and small business in New York city.
Cornell University Press.
Rowe, S.F., 2020. Project management for small projects. Berrett-Koehler Publishers.
Sharafizad, J., 2018. Informal learning of women small business owners. Education+ Training.
Wei, L.H., Thurasamy, R. and Popa, S., 2018. Managing virtual teams for open innovation in
Global Business Services industry. Management Decision.
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