Main Considerations for Small Business Planning

This document discusses the main considerations for small business planning, including the importance of planning and resource allocation. It also explores different processes of customer relationship management in small businesses and the development of small businesses to transnational businesses. The document provides insights into the implementation of customer relationship management for achieving business objectives.

Managing and
Running a Small
Business

Table of Contents
MAIN BODY...................................................................................................................................4
TASK 1............................................................................................................................................4
P1 Main considerations of small business that requires to address when planning in business. 4
M1 Apply relevant tools and techniques for plan and allocate resources...................................6
M2 Importance of allocating resources and planning.................................................................6
D1 Critically evaluation of application resources for achievement of business goals................6
TASK 2............................................................................................................................................6
P2 Different Processes of Customer relationship management in small businesses..................6
P3 Development of small business to a transnational Business.................................................8
M3 Implementation of customer relationship management towards the achieving business
objectives.....................................................................................................................................9
M4 Model of Internationalisation for small businesses..............................................................9
D2 Overcoming the challenges of Transnational Businesses..................................................10
TASK 3..........................................................................................................................................10
P4 Produce an accurate cash flow forecast and break-even analysis supported by a critical
evaluation of how key financial statements contribute to the successful management of the
business.....................................................................................................................................10
P5 Produce an annual itemised monthly cash flow forecast showing fixed and variable costs
set against income for a specific organisation...........................................................................12
P6 Interpretation of key financial statement.............................................................................14
D3 Forecasting of Break even Analysis...................................................................................16
TASK 4..........................................................................................................................................17
P7. key legislation and regulations that have implications on small businesses or social
enterprises. ...............................................................................................................................17
M6. Evaluate the implications of key legislation and regulations in an organisational context.
...................................................................................................................................................17
D4 key legislation and regulations that affect small businesses or social enterprise
organisations, taking future developments and changes into account. ....................................18
REFERENCES..............................................................................................................................19

Books and Journal:....................................................................................................................19

MAIN BODY
TASK 1
P1 Main considerations of small business that requires to address when planning in business.
In the present scenario of economy, it is analysed by the economist that small business
gives a huge contribution in the economy. It play a significant part in GDP because it is
identified that SME sector gives 47% contribution in GDP of UK. Small enterprises have a
important role that it boost the productivity and growth of the economy. But still they didn't get
the right directions that actually needed in the small scale sector. They need to expand more
business so that they get to work properly and give maximum contribution to the economy.
Small scale business are the private owned corporations that have no inclusion of government of
UK (Alapati, 2016). They are the corporations that have private owners and having limited or
unlimited liability. It only depends on the nature of business adopted by the owners.
Small business helps to shape the UK economy that improves the growth and
productivity. There are many problems that faced by the small business due to the dynamic
nature of business. So it is necessary for the organisations to take measures and per corrective
actions for achieving their targets and goals. It can be done through taking main considerations
that should be include while starting and running the small business. The main considerations
helps to protect and prevent from the upcoming challenge of the company. Main considerations
are mentioned below:
Planning:
Planning is one of the important and primary functions of management of the
organisations. It refers to make the blue print of future activities in a written document that will
be performed. It is the most essential element that should be taken while running a small
business (Anderson, 2020). It applies in all types of business, because it has a pervasive nature.
Successful business needs to be proper planning that helps to achieve the objectives and targets
of the organisation. Proper planning helps to achieve the organisation's targets and goals. It is
mentioned below that how planning help to achieve the targets and goals of the business:
 Effective planning gives the right and accurate information of pre determined activities
that help to management and employees that to know the roles and responsibilities in the
organisation.

 If the company make flexible plan then they are able to handle all the upcoming and
unknown challenges in the business environment.
 Planning gives the pre determined goals that give right directions to the employees so that
they increase their productivity towards organisational goals.
 Increase in productivity helps to achieve the organisational goals and objectives
effectively and efficiently (Belussi and Sedita).
Resource allocation:
The small business can function only when, there resources requirements getting fulfil.
Resources can be raw material, machines and equipments, human resource, land and building,
money, etc. These resources are very important for meeting the organisational goals and
objectives. Without resources no small business can attain their business objectives, because they
are the things that helps to perform the functions. For example, without money small business
can not but their premises and lands, machinery and equipments, etc. Without human resources
even a single unit can not be manufactured by the company. So it is very obvious that small
business should take care for allocation of resources. The proper allocation of resources how it
helps to meet the organisational objectives and targets gives under the following point:
 Allocation of resources determine success and growth of the business. Because
availability of raw materials and other resources can not stop the working in the small
business so they continuously work on their goals.
 When the company wants to run their business smoothly, then it is very necessary for the
small business to allocate resources timely.
 Availability of raw materials helps to manufacture more and more products with less
times that increase productivity (Brennan, 2020).
 Increase of productivity helps top achieve the organisational goals and objectives,
because it can not stop the business functions.
Other important considerations:
Above two things are very crucial for the success and survival of the business in the
dynamic environment. There are many more other things that are necessary for the achievement
of the organisational goals and objectives. They are nature and size of the business,
implementation of legal rules, corporate social responsibilities, etc.

From the above discussion, it is analysed that planning and resource allocation is very
necessary for the accomplishment of goals and targets. But there are certain more factors that
should be consider in the planning and resource allocation that helps to attain their goals and
targets of the business (Charlwood and Hoque, 2017). In planning, it should be flexible,
strategically so that small business can handle the upcoming unknown happenings. Whereas in
resources allocation, it should be available within time and try to focus on cost so that they can
obtain their targets easily. So these factors are very important for accomplishment of goals and
targets of small business organisation. When the small business run then they should be focus on
the things that are very necessary for the achievement of goals and targets.
M1 Apply relevant tools and techniques for plan and allocate resources
For good planning and allocate resources, it is suggested that the small business should
adopt work breakdown structure (WBS) so that they can achieve the organisations' goals and
targets easily. It is also suggested that planning should be strategically planning so that they
consider all the relevant future activities.
M2 Importance of allocating resources and planning
Planning and resources allocation is very important for the survival and sustainable
growth of business. Because it helps to achieve the desired organisational goals and objectives in
effective and efficient way. This is why because it increase the productivity of the small
business.
D1 Critically evaluation of application resources for achievement of business goals.
Resources are the main important things that should be properly allocate for the success
of business goals and targets. If the resource allocation is not taken properly then it directly
effect the organisational goals (de Beer and et. al., 2017). With proper allocation of resources it
is identified that it helps to achieve the targets and goals very effectively.
TASK 2
P2 Different Processes of Customer relationship management in small businesses.
Customer relations depicts the interlinked bond between the buyer and seller due to their
strong and efficient marketing skills. The customers are also attracted towards the proficient after
sales services of small businesses. Generally, small businesses wants to capture the market share
in industry and for that they have to main effective customer relations to sustain competitive

advantage over its competitors. Customer relationship management is the responsibility of the
operational manager which will retain the customer for longer duration. There are different
processes adopted by the small businesses to manage their customer relationships in this
competitive industry which can be explained as follows:
 Understanding Customer Needs: The foremost task is to understand the needs of the
customer and their expectation from their brand. Customer will approach the brand for an
efficient product and it is the duty of the operational manager to fulfil their needs
effectively. This will also persuade the potential customers to make an immediate
purchase. It requires the manager to put himself in the customer shoes for better
understanding their needs and requirements.
 Service Management: The manager must ask several questions to customer to relate
their needs with their business offerings. Good service management will manage and
enhance their relationship with customers (Fondahl and et. al., 2019). Manager must
analyse and predict the customer requirements to achieve success in the management.
 Improve Communication with Customers: Small businesses must enhance their
communication level with the potential customers to manage the customer relations. The
manager must inform the customers: potential and current about their new and current
offerings to generate revenue and enhance the productivity of the company. The manager
must adopt different channel to reach their customers. Social media is an effective way to
make a direct connection with the customers. It also an innovative trendy method adopted
by many companies across the globe. This will leave a good impression of the small
business in front of the customers that will create loyal customers for the company.
 Regular Feedback: Feedback is an tool adopted for the purpose of analysing the
improvements needed in the company's offerings. The offerings must be according to
customers preference and meet their perspective. Customers prefers those brand that
have time to acknowledge the customers feedback regarding their products improvements
(Heine, Atwal and He 2019). Feedback ensure the improvement in current product and
introduction of better products according to the customer requirements. It is also
important to address the feedback of the customers efficiently to appreciate their time
involvement. The company must keep in touch with their customers on occasions and
festivals and inform them about their current offers and products.

 Drive Innovation to Attract the Customers: Innovation is a key tool to attract the
customer and persuade them to shift to their brand. The company will achieve the target
audience with good word of mouth advertisement from their existing customers. For this
focus is the key factor for an manager over driving the innovation factor in their product
offering to attract the customers.
Hence, these are the following methods to maintain effective customer relations with customer
and manage them precisely to sustain growth and productivity.
P3 Development of small business to a transnational Business.
Small Businesses has the aim to target the international market to ensure growth and
productivity for their organisation. Transnational business means taking a small business at
international level to expand their business operations. Many companies apply it in their
businesses which will help in maintaining efficiency and effectiveness in their working. This will
help in connecting with other nations across the globe and also ensure investment in foreign
assets. Small businesses can develop transnational business in the following ways:
 Exporting: It involves direct selling of goods and services to serve the clients of
international market. This is the simplest method which is used by many businesses
across the globe (Joshi and Singh, 2018). This strategy require reliable exporter who
will supply the goods on the companies side into the international market.
Advantages:
1. It will provide higher profits and growth prospects for small business.
2. Also, it is a medium of expansion and a way to enter the international market.
Disadvantages:
1. It is difficult to understand the diversified culture of international market.
2. It requires more time, money and energy which a small business cant afford. Foreign Direct Investment: It involves the investment of small business funds in an
business of international market. It is the form of ownership control which one company
have on the other business organisation located in other country. Also, it invlves
acquisition of foreign business assets which will help in the sales and revenue
enhancement.
Advantages:
1. Stimulation of economic capital of the company.

2. Increased profits and growth prospects for small businesses.
Disadvantages:
1. There is an risk of funds for the small business due to investment.
2. There is an uncertainty of legal situation prevailing the FDI country. Joint Venture: Small businesses enter into joint venture with the large organisation
which will create a tie up agreement between them. This will ensure the sharing of profits
and losses by the companies (Tinggi, Jakpar and Hui, 2019). This will create growth
opportunities for small businesses. Also, the risk and return will be shared by both
companies and they will work together in complex international environment.
Advantages:
1. It will provide access top international market with flexible distribution networks.
2. It will enhance the capacity of the company with potential resources.
Disadvantages:
1. The venture has an unclear objective which will harness the growth prospects of
the companies entered into this joint cooperation.
2. Both the companies have different working styles which will create conflicts in
their early stage (Ma and et.al., 2019).
Hence, these are the different ways of developing a transnational business which have
some advantages which will enhance the growth opportunities. Also there is involvement of
some challenges that will create obstacles in their level of productivity.
M3 Implementation of customer relationship management towards the achieving business
objectives.
Customer relationship management is important to achieve the goals of the company
effectively. It will help in keeping the customer track and connecting them for enhancing the
sales target. In this customers are grouped in different aspects which will be easier for the
company to understand their needs accordingly. Efficient dealing wit customers will enhance
their level of satisfaction.
M4 Model of Internationalisation for small businesses.
The model of internationalisation in context with small businesses explains the
establishment, maintenance and development of relations with foreign network participants. This
will enhance the strength and opportunities for small businesses across the globe. Also, this will

build a single global network of different organisations with diverse backgrounds. This will also
helps in utilisation of resources which will deal with the elements in international firm's
activities.
D2 Overcoming the challenges of Transnational Businesses.
Transnational businesses involves challenges such as cultural difference, different
political situations and many more. These challenges can be overcome by deep understanding the
customers requirements and taking advantage of opportunities to expand the business worldwide.
Building effective relationships with local partner in international market will overcome the risk
of local competition. Efficient management of supply chain can be ensured by adoptive effective
plans and strategy to sustain growth in international working environment (Mohan and Chitale,
2016).
TASK 3
P4 Produce an accurate cash flow forecast and break-even analysis supported by a critical
evaluation of how key financial statements contribute to the successful management of the
business.

P5 Produce an annual itemised monthly cash flow forecast showing fixed and variable costs set
against income for a specific organisation.

Interpretation:
Profitability ratios:
 The net profit margin calculated above is 44.98 millions.
 The net profit of market is calculated approx 3.92%.
 The operating profit calculated by EBIT is approx 1.61%.
Liquidity ratios:
 Quick ratio is same as the current ratio accept inventory.
 Current ratio calculated by dividing current assets to current liabilities.

P6 Interpretation of key financial statement.

Interpretations: It has overview from above cash flow statement 961500 is generated by
sales, and against investment and finance negative results shows figure of -329300 and 646300.
D3 Forecasting of Break even Analysis.
TFC = Total fixed cost
P= Price
AVC = Average variable cost
Qb = TFC\ (P- AVC)
Furthermore, for a detailed understanding, it can be understood with an example which
has following values:
AVC= 9
TFC= 40000
P= 18
Hence, Break even point in this case,
= 40000\ (18-9)
= 4444.45

TASK 4
P7. key legislation and regulations that have implications on small businesses or social
enterprises.
A small or medium business enterprise must go through under some legislative
surveillance because of their size and investment in the economy. These legislations bound them
to work within the set rules and regulation. UK government has imposed these boundaries, law
that has huge implication on small firms (Pagh, 2020). These are described below:
Consumer law, 2015: This law provides equal and fair rights to customer not to get
exploited by and business firms. Which protect their money and power to buy anything. This law
states the consequence of providing any irrelevant product or services by any firm. So that a
small firm must considers these aspects of providing relative and expected product which they a
consumer came for. It also let a business to provide alternative solution for disputes among
retailer and consumer before being into court.
Competition law, 1998: This law states that consumer should not get exploited or dis
balanced their preference in order to choose firms as per their pricing. There should not be any
practice of selling more products in cheaper rates compare to their competitive firms. Every
business in the same market must follow the set industry prices, they cannot make any changes
according to them.
Employment law, 1996: This law protect the right of every employee working in the
same organisation, so that they must get treated equally and appropriately in terms of their safety
and security and get free form discriminating behaviour or inequality. Every employee in entitled
to get benefits and compensation as per the government guidelines (Paul and Chowdhury, 2020).
This make them feel motivated towards organisations goals and objectives.
M6. Evaluate the implications of key legislation and regulations in an organisational context.
An organisation is abounded by government acts and boundaries which interns make
legislations for economic welfare for protecting right for individual living in same economies,
that evaluate rights for consumer act, competition law, and employment law. It automatically
generates the policies in order to eliminate consumer exploitation and being not treated equally.

D4 key legislation and regulations that affect small businesses or social enterprise organisations,
taking future developments and changes into account.
Consumer law, 2015 sates relevancy in rendering services as per costumer expectation,
this enhance customer satisfaction and less disputes, which is beneficial for business market
growth (Saarenko, 2017). On the other hand Competition law, 1998 Employment law, 1996
evaluates a firm to manage customer and employees for longer period of time by regulating
equal and fair treatment among them without being greedy to take more advantage.
CONCLUSION
From the above report, it is well concluded that operation of small business are beneficial
for the economic growth by managing and setting plans in adequate manner. These small firms
would be the future of economy by initiating development and analysing market potential with
its benefits and drawbacks. Also, above sated legislation sets some boundaries for these firms in
order to make any business practices. Any act of disobedience these legislation, the firm must get
permanently closed or could be sue for further government formalities. So that, in order to make
long term retention of small firms, for both the society and consumers tends to ease in cash flow
in the economy with customer satisfaction and retention.

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