Managing and Running a Small Business

This document discusses the importance of planning and allocating resources for small businesses to achieve their goals. It covers factors to consider, tools and techniques for resource planning, and the significance of planning and allocation in business success.

MANAGING AND
RUNNING A SMALL
BUSINESS

Contents
INTRODUCTION...........................................................................................................................1
Activity 1.........................................................................................................................................1
Main considerations while planning & allocating resources to attain business goals............1
Tools and techniques in an analytical manner on how to plan as well as allocate resources in
an organizational context........................................................................................................3
Significance of planning & allocating resources in order to achieve business aims.............3
Different processes of CRM for small business organisation................................................4
Explanation of how small entities can develop transnationally along with its Advantages and
limitations...............................................................................................................................4
Elements of the CRM process................................................................................................5
Potential to develop 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 on key financial statements of a company for involvement in successful
management..........................................................................................................................10
Quantitative and analytical techniques.................................................................................14
Break even analysis & cash flow statement.........................................................................15
Key legislation & regulations that have high implications on small business entities........15
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................17

INTRODUCTION
In today’s scenario, small and social enterprises is highly impacted on the growth and
development of an economy. Business people and Entrepreneurs consider it as an opportunity
which assist them to earn money beyond their expectations. One of the major and factual point is
offering unique idea and performing it properly in market help enterprises to remain in market
for longer time period (Crane, 2019). It is important for companies to determine the customer
requirements and market trends in order to gain success and contribute towards development of
societies. The activity 1 of report will discuss about importance of planning as well as allocation
resources for attaining business objectives. Along with this, it covers factors that is considered at
the time for planning & allocating resources. Moreover customer relationship management
process is going to discuss along with its application of tools & techniques, which help in
planning and allocating resources in a proper way. The activity 2 of present report will discuss
cash flow forecast, break-even analysis and a discussion about how financial statements
underwrite towards successful management of companies. Later, legislations as well as
regulations, which impact small business is described in report properly.
Activity 1
Main considerations while planning & allocating resources to attain business goals
In the current time, UK business sector provide a number of business and growth
opportunities for person who has the ability to perform and earn profits as well. One of them
main reason of development of such opportunities is Brexit as it give an advantage to individuals
to setup their business at small level in United Kingdom. It influence persons to focus on
populated areas & opening outlet that offer services to potential customers and generate revenue
in an effective manner. It take place when an appropriate and innovative idea is developed by
considering customer requirements and market trends as well (Galyer, 2019). Some of the
activities that is done by an entity on regular basis are planning and allocating resources,
recruitment and selection, forecasting and budgeting, interpretation of financial statements and
so on. In addition to this, it is important for entrepreneurs to make use of all the resources
optimally and properly in order to gain better results in an effective manner.
In order to gain growth, it is essential for owners of companies such as JS supermarket
Ltd to consider the right plan and it take by developing of effective strategy and consider the
1

factors that is required for allocating of resources. The elements that is required to undertaken
while planning as well as allocating of resources is described below:
Financial resources: One of the major factor that plays an essential role in development
of right plan and allocation of resources. Availability of funds help an entity to implement task in
a smooth and proper manner. For example, JS supermarket Ltd is a small company and did not
involve number of investors so it is not easy to accumulate appropriate funds for well developed
plan. The owner of JS supermarket Ltd. has less number of options from which it can acquire
funds that is Bank loan, family and friends. JS supermarket deals at small level and it is
important for company to adopt saving approach as it help in declining expenses in an effective
manner. In addition to this, the company is plan to enhance its customer base level and for this
funds are required for activities such as promotions and so on.
Human resource: It is consider as one of the factor that help company to reach on higher
growth and success level. Their skills and abilities help an entity to offer quality to users and
develop them as loyal customers that has positive influence on performance as well as
profitability of an organisation. For instance, JS supermarket Ltd have develop policies and make
use of effective approaches that help in hiring best and talented candidate for company (Hickman
and Silva, 2018). It is important for manager of JS supermarket to maintain effective relationship
with their employees as if it does not occur, it may lead to decline in efficiency level of company
and enables it to attain objectives on time period. It is suggested to company to develop better
policies, provide compensation, training to employees as it motivate them and enhance their
level of skills and capabilities to perform task. It will help small companies to make
improvements on its performance level and attain objectives within stipulated time frame.
Goals, vision and targets: In order to gain leading position at marketplace, it is important
to increase number of customer and turn them as loyal towards company. The vision of company
is to gain leading position within retail sector. In addition to this, the goal of JS supermarket, a
small company is to develop a positive brand image by offering quality service in market that
satisfy customers. It is determine that the target audience of company is people belong from age
group 20 to 45 years. All this take place by JS supermarket by considering all factors of planning
and allocate the resources in optimal manner, which will also help in attaining objectives in a
timely and proper manner.
2

Premises and equipment: Another important factor which is required to be consider
while planning and allocating resources are premises in which all the activities is performed and
the equipments that assist in proper implementation of activities. Availability of proper
equipments along with a proper space is essential in order to execute operations and allocating
resources in an effective manner.
Business plan: it is significant for higher authorities to determine their business plan
before planning as well as allocation of resources. Considering all the strategies and tactics
involved in business plan help in proper and effective allocation of resources that directly leads
to attainment of growth and succeeds as well.
Performance management: It is consider as a tool which is adopted by companies in
order to gain an insight about the performance and skills of staff members working in an
organisation. In addition to this, it is analysed that analysing performance and allocating
resources accolading to it plays vital role in attaining business objectives in a timely and
effective manner.
Health and safety issues: One of the main factor that is needed to be undertaken is
health and safety of employees which is important for proper functioning and implementation of
activities. In addition to this, considering health and safety of employees assist in proper
planning & allocating of resources and also help in achieving desired goals in an effective
manner.
Tools and techniques in an analytical manner on how to plan as well as allocate resources in an
organizational context
The various techniques as well as tools help an entity to easily plan resources in a
structured way is given below in context to chosen organisation/;
Gantt chart: This chart represents the overall schedule of particular project and consist of
initial and completion days a well. In addition to this, Gantt chart us considered as a particular
chart which represents accurate time is going to consume for completion of project. By the
assistance of this tool, small companies can gain knowledge about task to be achieved and at
what time as well.
Critical path analysis: By the assistance of this tool, companies that is large or small in
nature needed to stay right on order along with the budget specified for particular project
(Hodges and Link, 2019). Critical path analysis tool help managers to achieve task with time
3

period or duration. It will aid small entities to effectively and timely complete projects and meet
with targets in an appropriate way.
Significance of planning & allocating resources in order to achieve business aims
It is analysed that proper allocation & planning of resources help company to maximising
its efficiency level in an effective manner by using all the resources optimally and properly. In
addition to this, proper planning lead an entity to meet with its targets and attain business
objectives within given time frame. For instance, In case of JS supermarket Ltd, it help manager
to maximise the use of resources in order to increase its customer base level that has positive
impact on its sales and profit margins. Moreover, it also help company to attain competitive
advantage at marketplace that is consider as an objective of most of the small companies.
Different processes of CRM for small business organisation
In the present time, it is determine that customer relationship management process of every
entity plays vital role in implementation of activities effectively in the market. There are various
approaches used by companies at time of providing delivery service to customers. It help
company to maintain good relationship with customers and attain growth and success at
marketplace. For example, JS supermarket Ltd, it focuses on enhancing customer base level and
due to which it is important for company to identify and analyse customer requirements, taste,
preferences, opinions, views and so on. There define CRM process is given below:
Determination or Identification of customer’s base: It is consider as initial phase in
which JS supermarket Ltd analyse targeted groups of customers by using strategy like
segmentation (Huntington, 2018). The entity classified customers as well as markets into small
groups that will be beneficial for identifying customer taste, demands, choices in more effective
manner.
Customer portfolio analysis: It is undertaken as an effective tool that aid JS supermarket
Ltd, a small company in measuring behaviour and standards of customer. By the assistance of
customer portfolio analysis, the company can easily gain understanding and knowledge about
lifestyle, purchasing power, status of people in which market they offer products as well as
services. It aid managers in making judgement about any requirement of modification require by
company in order to enhance customer base level and target potential customers. It help
company to attract large number of people and gain leading position at marketplace in an
effective manner.
4

Customers intimacy: It is determine that maintaining and managing customer
relationship help company to increase number of loyal customers and retain in market for longer
time frame. It is important for small companies to ensure that requirements of customers is
satisfied as it help in developing effective relationship with customers and remain its presence in
market. In addition to this, its manager focuses on using proper communication tool so that it can
provide information to customers and communicate with them in an appropriate manner.
Explanation of how small entities can develop transnationally along with its Advantages and
limitations
Transnational operation is termed as a tactic and herein organisation incorporates global business
functions and activities by cooperation among head office & international operations. It is
identified that present position is evaluated that would help in making appropriate activities rely
on presentation level. The advantage of using such technique can deal the actual position of
company and its sales performance as well. It is determine that this approach also help in
enhancement of productivity and profitability level in an effective manner (Pakroo, 2018). There
are also other ways by which small companies can develop transnationally is given below:
By developing channels for customer communication: It is determine that small
businesses can develop transnationally and performing cooperate at international level. One of
the effective customer communication channel is social media applications such as Facebook,
Instagram and so on. Developing a page on such applications help company to reach on large
number of people and communicate with them in an effective manner. Nowadays, small
companies are also using online chat options in order to give response to customer in a rapid and
effective manner at to reach them a any place and at any time as well.
BY developing customer care programmes: Another option that assist small entities to
develop transnationally is customer care programmes. It can include real time solutions and
online testimonials that will help in giving quick response to customer and also assist in
maintaining good relationship with customers in an appropriate manner. Moreover, it help in
improving performance and profitability level of small entities.
For example, JS supermarket Ltd can adopt this approach for undertaking opportunities
and coordination associated to international marketplace. In addition to this, company can easily
target right people by their products as well as services in given time frame. Moreover, it is
determine that transnational approach help in analysing demand of customers belong from
5

different culture, areas in an effective manner. The approach consist of benefits and drawbacks
that is given below:
Benefits:
It is important for small entities and start-ups to expand their business and get
internationalised as it has various advantages: Increase in customer base level: It is analysed that if a small company expand its
operations at global level, there is increase in the customer base level of company which
directly leads to increase in market presence and market share of small company in an
effective manner. Enhancement in productivity level: By increasing operations at an international level, it
is determine that the overall productivity and performance level of small companies is
increased that has positive influence on the profits and revenue earned by company.
 Employment generation: One of the benefit of increase in number of small companies at
international level is employment generation. It is determine that in UK, small companies
offer more job opportunities to local person due to which the unemployment rate of UK
is decline and leads to growth and development of economy of UK.
 By the assistance of transnational approach, it is analyse that JS supermarket can easily
make alterations in its operations and activities due to which it attract more number of
people that are sitting beyond the boundaries. In addition to this, it is determine that such
approach can develop opportunities for manager to promote its goods and services at
global level.
 Another benefit of transnational approach is that company can easily merchandise its
goods all over the world that has positive influence on sales and profit margins of small
companies.
Disadvantages: High operating cost: By going internationalised, it is determine that it occur high cost to
company which sometimes is not in the hands of small businesses. In addition to this,
enhancing business operations require high cost to be spent due to which revenue level of
small entities is declined and sometimes also leads to winding up of business.
6

 Labour exploitation: In some countries, the labour cost is so high and to hire them might
decline the revenue level of small companies. It is important for small companies to
consider this factor before expanding their business at international level.
 It is determine that expanding business at international market require manager to
develop a proper strategy, plan, preparation of resources, utilization of resources and so
on. More important factor is, it requires high amount of investment that may not easy for
small entities to afford and manage as well.
 In this approach, small companies are required to follow all the societal and ethical
policies as well as procedures that is following by particular country in which it is going
for expanding. It is a time consuming process and develop problems related with finance
and decline of productivity of present business.
Elements of the CRM process
Customer relationship management is associated with various process of an organisation,
which are required in order to attain objectives and meet with the targets. An effective relation
plays an important role in enhancing loyal number of customers and retain the for longer time as
well (Putra and Cho, 2019). In addition to this, it consist of several processes that is used to
identify or analyse customer taste, choice, preferences, opinions, expectation and many more. It
help company to provide better service to customers and satisfy them in an effective manner. It
help in retention of customer and development of brand image at marketplace. Some of the
components of customer relationship management is given below:
 Work flow automation
 Business reporting
 Marketing management
 After sales services
Potential to develop transnational operations
Transnational operations plays vital role in development of business operations and to
maximise performance by targeting right people in an effective manner. In addition to this, it aid
in enhancing size as well as growth of business by expansion globally and develop relationship
with customer appropriately. For example, JS supermarket Ltd focuses on increase its customer
base level that can take place by expanding operations at global level and by development of
effective strategies.
7

Activity 2
An annual itemised monthly cash flow forecast showing fixed & variable costs in contrast to
income of companies
Cash flow forecast is consider as an effective form of plan which directly has influence
upon respective company in order to earn more income. In addition to this, such forecasting help
company to control its expenses in a proper manner. There are different sources used to forecast
cash flow that is described below:
Equity Finance: This form of financing is adopted by companies raise funds by selling
of its shares. The company is performing business at small scale and does not sell shares due to
low market value.
Bank Loan: It is consider as an approach that is used by small companies in order to
raise funds in an effective manner (Williamson, 2018). The bank provide loans to small
companies and in turn charge interest that is fixed along with the principal amount.
Planning, budgeting & forecasting: It is undertaken as three significant pillars that can
be utilised by small company such as JS supermarket ltd in order to recognising tendency
associated to near future. it help company in developing mid-term budgets and deciding of long-
term schemes. The methods that cab be used for planning, budgeting as well as forecasting is
given below:
Measure moving average: By the assistance of this technique, company can easily get
data that help in setting objectives. In addition to this, it is utilised when it comes to identify
present position of company.
Time series data and information: It aid company to create different applications for
business entities in order to set production schedules in an effective manner. It also aid in
implementation of plan at an estimated time and budget as well.
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
8

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
9

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 : This cost is incurred at the time of developing products in an organisation
and it alters with the changes take place in quantity. This is basically deducting fixed cost from
10

the total cost. It is consider as a normal cost that consist from development to finished products
including fixed cost in it.
Break-even analysis in context to organisational situations
Break even analysis is termed as a blueprint that is adopted by companies to identify relationship
among costs, profits, expenses at various levels of output (Pakroo, 2018)
. It is determine that with the help of break even analysis an entrepreneur is easily identify
that at which stage the cost of production and revenue is equal.
It is also known as profit contribution analysis. It is executed in two criteria one is
revenue relationship and linear cost and second is revenue relationship and non-linear cost as
well. It is analysed that companies can make use of such process and execute it in graphical
method, contribution analysis, algebraic method & profit capacity ratios. The manager of JS
supermarket ltd have used algebraic method that is suitable for taking effective decisions in
complex scenario. The break even analysis is calculated as:
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
It is determine that break-even point is when total revenue is equal to the total cost that is
no profit and no loss situation. The graph is described below:
11

Sales 34*30 1020
Variable Cost 34*15 510
Contribution 34*15 510
Fixed Cost 34*15 510
Profit/loss - NIL
Explanation on key financial statements of a company for involvement in successful
management
12

13

Interpretation
It is interpreted from the above balance sheet that businesses carry its operations at a
decent profitability level. The profit margin that is determined is 16.06% and 17.89% is
operating margin. In addition to thus, return on asset of entity us 2.88% that is enough in order to
analyse to gain better results. It is analysed by the assistance of balance sheet that business is
concern with profits and is able to do further expansion (Surangi, 2018)
.
Income Statement
14

Interpretations: The above cash flow represents that 961500 is generate by respective company
in order to fulfil business activities. In some factors that is finance & investment, company has
negative show, which is close -329300 and 646300 respectively.
15

Interpretation:
An organisation is mainly emphasis on three activities that is associated with operating, investing
and operating cost as well. The above table shows 961500 is operating cost, investing cost is
negative (646300), it shows that purchase of fixed asset is less in comparison to sale of fixed
asset. The financing cost is also negative that show there is high purchase of financial services.
Quantitative and analytical techniques
It is determine that every business entity make use of quantitative as well as analytical
methods in order to gain information about break even analysis (Polonsky and Waller, 2018). In
addition to this, it is important for manager to consider activities, which is beneficial in order to
16

achieve objectives. In relation to small company such JS supermarket Ltd, it can make use of
such approaches to improve financial performance and to achieve set targets.
Break even analysis & cash flow statement
It is analysed that cash flow statement and break-even analysis plays important role in
managing financial statements and activities that has positive influence on profitability and
productivity of company.
Break-even analysis: It states the situation when a business is at no loss & no profit
situation that help in identifying present conditions of the organisation.
Cash-flows statements: It consist of cash outflow & cash inflow statements of an
enterprises.
Key legislation & regulations that have high implications on small business entities
It is determine that small enterprises has performing well and contribute towards
development of society and economy as well. The companies are facing legislative issues due to
which performance is declined. The laws that have high implications on small enterprises is
given below:
Employment Law 1996: This law is developed for protecting employees from any kind
of issues at workplace such as discrimination. It is significant for small companies to ensure that
all the staff members is treated fairly and equally at workplace as it help in declining conflicts
and develop positive mind set of employees (Sharafizad, 2018).
Consumer Law, 2015: This law consist of rules that aim is to protect a user from any
kind of unfair business practices. Following of all the rules of consumer law help company to
gain long-term benefits and retain its customers. The various right of consumer that is a sales of
goods & service that state customer should be provided with quality products and services as
well.
Health and safety: Another law is healthy and safety of employees, this law states that
safety of employees is important at workplace and it is essential for companies to make use of
safety measures. In UK, most of the small companies take responsibility and liable if any of the
issue is arise towards health and safety of staff members due to companies or within the premises
of organisation.
Data protection act: It is a UK act of parliament which is developed in order to protect
personal data that is stored on desktops or in other systems. Following of such law assist
17

company to secure their information of being theft or copied by others. In addition to this, it also
assist in security of customer personal information in a proper manner.
CONCLUSION
From the above study, it is analysed that concluded that small-scale business plays vital part
in the development of economy. In addition to this, it is important for company to consider
factors such as finance, human resource, vision, mission and so on in order to properly allocate
resources. For implementing activities in a smooth and appropriate manner, it is essential for a
small entity to follow all the legislation such as employment law, competition law, consumer law
and so on.
18

REFERENCES
Books and Journals
Crane, A., and et. al., 2019. Business ethics: Managing corporate citizenship and sustainability
in the age of globalization. Oxford University Press, USA.
Galyer, J., 2019. Managing business like a boss 2019. Professional Beauty, (Jan/Feb 2019), p.34.
Harrison, C., Burnard, K. and Paul, S., 2018. Entrepreneurial leadership in a developing
economy: a skill-based analysis. Journal of Small Business and Enterprise
Development.
Hickman, C.R. and Silva, M.A., 2018. Creating excellence: Managing corporate culture,
strategy, and change in the new age. Routledge.
Hodges, N.J. and Link, A.N., 2019. Innovation by design. Small Business Economics, 52(2),
pp.395-403.
Huntington, J., 2018. Managing the Practice: Whose Business?. CRC Press.
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.
Pakroo, P., 2018. The small business start-up kit: A step-by-step legal guide. Nolo.
Polonsky, M.J. and Waller, D.S., 2018. Designing and managing a research project: A business
student's guide. Sage publications.
Putra, E.D. and Cho, S., 2019. Characteristics of small business leadership from employees’
perspective: A qualitative study. International Journal of Hospitality Management, 78,
pp.36-46.
Russell, H.C., Westby, M. and Watt, M.C., 2020. A Vignette-Based Approach to Predicting
Behavioral Intentions When Managing Running Injuries. SAGE Publications Ltd.
Sharafizad, J., 2018. Informal learning of women small business owners. Education+ Training.
Surangi, H.A.K.N.S., 2018. What influences the networking behaviours of female
entrepreneurs?. International Journal of Gender and Entrepreneurship.
Wei, L.H., Thurasamy, R. and Popa, S., 2018. Managing virtual teams for open innovation in
Global Business Services industry. Management Decision.
Williamson, K., 2018. The International Business Archives Handbook: understanding and
managing the historical records of business. Harris, T., 2018. Start-up: a practical guide
to starting and running a new business. Springer.
19