Small Business Management and Strategic Analysis

The provided document is an assignment on small business management and strategic analysis. It requires students to analyze the characteristics and challenges of small businesses in Africa, explore crisis management in UK small-and medium-sized enterprises, and understand the impact of level of education and experience on profitability. The assignment also involves identifying and explaining financial management challenges in small and medium-sized enterprises using a strategic management approach. Furthermore, it discusses the importance of customer relationship management, transactional business strategy, and financial analysis methods in enhancing profitability ratio, market shares, and customers base. Students are expected to demonstrate their knowledge of entrepreneurship and small business management concepts.

Managing and
Running a Small
Business

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1. Major considerations a small business needs to address when planning and allocating
resources to achieve business objectives................................................................................3
TASK 2............................................................................................................................................4
2. Explain and evaluate different processes of customer relationship management..............4
3. Explain how a small business can develop transnationally and determine the benefits and
drawbacks...............................................................................................................................6
TASK 3............................................................................................................................................8
4.An annual itemised monthly cash flow forecast showing fixed and variable costs set against
income....................................................................................................................................8
5. Explain how break- even analysis could be applied to an organisational situation...........9
6: Interpretation of financial statements of Rowlinson Knitwear:.......................................10
TASK 4..........................................................................................................................................15
7. Key legislation and regulations that have implications on small businesses...................15
CONCLUSION..............................................................................................................................16
REFRENCES.................................................................................................................................17

INTRODUCTION
Small business or enterprise refers to a company which have approx 300 employees. It is
very difficult for a owner to run business in effective manner because they have to consider
various things. Such as resources, strategies, plans, funds and many others things which is
required to managing and running a small business in effective and efficient manner.
Organisation taken for this assignment is Rowlinson Knitwear which is incorporated in 1972 and
it is a private limited company. They are manufacturer of knitwear and school wear for school
going students (Adisa, Abdulraheem and Mordi, 2014). They basically operate there business
functions in market of United Kingdom. Topics covered in this assignment are how small
business allocate resources and plan things and effectiveness of customers relation. Along with
this it explain how small enterprise develop transactionally and cash flow, budget and break-
even analysis. It also include some major legislation and regulation which a small business has to
follow.
TASK 1
1. Major considerations a small business needs to address when planning and allocating
resources to achieve business objectives
Overview of company
Rowlinson Knitwear is a manufacturing cloth manufacture company which is establish
in 1972 and they conduct there business operations and function in market of United Kingdom.
They generally dealing in apparel and textile production industry in which they manufacture
quality school wear and corporate wear (Rowlinson, 2019). There are various planning strategies
and allocation of resources which is consider by respective company in order to achieve goal and
objectives in effective manner, some major of them are describe below:-
Research: When a company wants to conduct or start there business or enterprise
company must conduct research to identify appropriate plans and resources which they will
required to full fill objectives and goal in effective manner (Bridge and O'Neill, 2012). So when
Rowlinson Knitwear start there operation in manufacturing cloth for kids and corporate peoples.
They will conduct research so that they know what is resent trends and requirement of market.
By this they able to understand approaches need and demand of customers and according to that
they can plan and allocate their resources for achieving goal and objectives.

Determine the purpose of plan: Before starting a business or enterprise it is essential for
owner to identify and determine purpose why they want to establish and run business. When a
person clear with there purpose they able to plan strategies in effective and appropriate manner.
That directly and indirectly help them in managing and running there business in effective
manner. When a person is having clear purpose they able to make strategies in appropriate
manner according to need and demand of customers.
Identify the resources: When Rowlinson Knitwear is clear with there purpose they able
to decide resources and plans in appropriate manner which help them in conducting there
operations and functions in appropriate ways (Burns, 2016). So management of respective
company identify resources which they are required to manufacture kids school wear and
corporate wear. When a company identify there resource requirement they conduct their
operations and function is effective and appropriate ways.
Evaluate the human resources: In this management of Rowlinson Knitwear analysis
and determine human resources which they required achieve their target and goal in appropriate
and effective manner. Such as according to requirement respective company hire and train
employees so that they conduct work in effective and quality manner. When employees get train
they can do there work or task in quality manner and in effective time.
Promotional activities: When a company decide to start a business they have to do
promotional and advertisement so that target market know about product and services. So
management of Rowlinson Knitwear promote there products and services so that customers
know about them and purchase there products in high quantity.
By conducting all these Rowlinson Knitwear able to operate and function there plans and
resources in effective manner and by this they also able to achieve goal and objectives in
appropriate and effective manner.
TASK 2
2. Explain and evaluate different processes of customer relationship management
Customers relationship management is refers to practices, technology and strategies
which organization conduct and operate in order to maintain and establish relationship with
customers or clients (Chiliya and Roberts-Lombard, 2012). By this company can maintain and
retain customers in appropriate and effective manner. For this Rowlinson Knitwear develop and

adopt various process or techniques for keeping effective customers relationship which help in
maximising profit in appropriate manner. When respective company maintain and establish
effective reslation there customers get loyal and purchase there products for fulfilling there needs
and demand. For evaluation of this Rowlinson Knitwear adopt techniques which is mentioned
below:-
Customer portfolio analysis- By this respective company can able to analysis
appropriate group of customers for there business by which they gain maximum profit. Along
with this according to this company can decide there target customers (Crane and Matten, 2016).
It is important for Rowlinson Knitwear to develop customers portfolio so that they can evaluate
and identify customers need and demand. Moreover by it respective company able to design
products according to need and current trends.
Customer intimacy- It is knows as process of Customers relationship management by
which Rowlinson Knitwear get familiar with their individual customer on which organisation is
targeting. In this it is based on how effective company know and understand there customers,
habits and other related things like birthday etc. For this respective company take feedback and
suggestion with there customers and when they again develop strategies and plans they consider
those feedbacks and suggestions to make effective products which attract customers in high rate
or ratio.
Value proposition development- In this process company collect information or data
related to there target customers. Which help company in creating value proposition for
customers. When a company create value for customer it is necessary to also create value for
company by which they able to get benefits for business. Such as Rowlinson Knitwear develop
proposition values according to there target customers which help them in attaining success and
growth in effective and appropriate manner.
Customer life cycle management- It refers to process of continuous journey of
customers which include all steps starting from identifying potential customers and end at
providing products and services to them in appropriate manner (Fayol, 2016). For conducting
this process in effective and appropriate manner human resource manager of Rowlinson
Knitwear give there full efforts and attentions. They also develop effective strategies and plans
by which it can be done in appropriate and proper manner. Along with this by it company able to

handle their customers in appropriate manner and also develop products accordingly. In
respective company they develop appropriate strategies by using CRM system and strategy.
3. Explain how a small business can develop transnationally and determine the benefits and
drawbacks
Transnational business refers to activities or business operation which help an other
company in carry out there business in international market. By which a company can enhance
there sales, profit and customers base which help them in obtaining goal and objectives in
effective manner (Hatten, 2015). Through this Rowlinson Knitwear company able to carry out
there business operations and function in global and international market. In this management of
company invest there assets or funds in international countries and then conduct operations in
international marketplace. In this company try to make effective tied with other countries so that
they can operate there business in effective manner and make proper profit. A small business or
enterprise can adopt traditionally but during this they may face various benefits and drawbacks.
Some major of them which is face by respective company is explain below:-
Benefits:
Expansion of business: One of the major advantage of transactional business strategy is
that it help in expanding business operations and functions of a company in international market.
In other word company able to sell their products and services in world wide market by which
they can enhance there profitability ratio and customers bases. By this company can also able to
understand different or diverse country culture which help them in design products and services
according to there need and demand. In context of respective company by adopting transactional
strategy they able to enhance there business in international market in effective and efficient
manner.
Adopting innovation: When a company expand their business in international market
they able to expand their business by adopting innovative and creative techniques (Herbane,
2013). In this company can adopt innovation and new techniques according to need and demand
of customers or public. When Rowlinson Knitwear adopt transactional business strategy they
able to adopt new and innovative strategy according to need and demand of customers and
population. By adopting new innovation company also able to conduct there operations and
function in effective manner.

Deep understanding of culture: When a company expand there business in international
market they they able to understand and analysis other country culture in effective and
appropriate manner. Which help them in designing products and services according to need,
demand and culture that leads to enhancement in profit and customers base. So when respective
company adopt traditional business strategies they understand culture of different countries and
then they design product and services accordingly. By which they able to design product
accordingly which leads to increase in sells and profitability ratio.
Drawbacks:
Complex to implement: When a company decide to implement transactional business
strategy they may face various difficulties and problems. This is so because it is complex and
difficult to implement in business or company (Karadag, 2015). Due to which manager and
leader has to make creative and innovative ideas in order to overcome this.
Implementation is Costly: When a company want to expand there business they have to
arrange funds from various resources like bank loan, investments, financial institutes and many
more. This is so because for implementation or expanding business in international market
required huge funds. So when respective company want to expand in world wide market first
they analysis there financial status and if required then they arrange according to requirement. So
that they conduct business operations and function in effective and appropriate manner.
When Rowlinson Knitwear decide to adopt transactional business strategy or expand
there business they must conduct analysis and evaluation of respective things so that they must
develop strategies and plans accordingly. This will help them in operating business operations
and functions in effective and efficient form.
Ways in which a small business can develop transnationally:
Franchise: It refers to a strategies which is adopted by an organisation in order to expand
there business in different location or areas. It is a basically a partnership among companies
which is known as franchisor and an individual that known as franchisee. Aim behind giving
franchise is to sale products and services at different location within a country or out side
country. In respect of Rowlinson Knitwear they can give franchise to different peoples or
companies so that they can distribute products on world wide level.
Joint Venture: It refers to formal and written agreement between two or more parties or
companies to run business in more effective manner by a large group. By this company

accomplish there task in effective manner by using resources in appropriate way. Company can
do joint venture for short or long time duration. Respective company can do joint ventures to
other companies in order to expand there market.
TASK 3
4.An annual itemised monthly cash flow forecast showing fixed and variable costs set against
income
Cash flow refer to net amount of cash equivalents and cash which is transfer inside or
outside of business operations. It is prepare by a company in order to identify there financial
position in market place (R.A and Ullah, 2014). Every organisation estimate and try to enhance
there profit as compare to there part year profit. Cash flow statement of Rowlinson Knitwear is
given below:-
` (Amount in £)
Particulars January February March April May June
Sales 3500 4600 4700 5200 6200 6500
Other income 1500 2500 2600 2650 2000 2200
Total inflows 5000 7100 7300 7850 8200 8700
Cash Outflows
Variable cost:
Materials 450 500 530 650 740 830
labour 490 540 580 750 820 940
Other variable cost 200 250 260 340 420 520
Fixed cost:
Rent 1000 1000 1000 1000 1000 1000
Salaries 800 800 800 800 800 800
Other fixed cost 200 250 250 360 320 320
Net cash flow 1860 3760 3880 3950 4100 4290
Particulars July August September October November December Total
Sales 8900 14000 18500 20000 21500 24500 138100
Other income 2250 2050 1300 2600 2750 2850 27250

Total inflows 11150 16050 19800 22600 24250 27350 165350
Cash Outflows
Variable cost:
Materials 960 1010 1090 1150 1200 1260 10370
labour 1000 1030 2030 2150 2300 2450 15080
Other variable cost 550 600 650 700 760 840 6090
Fixed cost:
Rent 1000 1000 1000 1000 1000 1000 12000
Salaries 800 800 800 800 800 800 9600
Other fixed cost 320 350 350 350 350 350 3770
Net cash flow 6520 11260 13880 16450 17840 20650 108440
Interpretation- Above given cash flow is from January to December which shows
continuous enhancement in profit due to increase in sales. For getting total net cash flow
respective company deduct total outflow amount from total inflow amount. By analysing cash
flow respective company able to know there financial status and then accordingly they able to
develop strategies and plans. This will help them in deciding appropriate resources and process
for production.
5. Explain how break- even analysis could be applied to an organisational situation
( Source: BEP Analysis, 2019)
Break even analysis is refers to techniques which is use by production, accountant and
management sections. In it total cost of variables and fixed cost are compare with whole revenue
of sales through which company can determine volume of sales or production at which point
business it where there is no profit and no loss situation arise (Sampaio, Thomas and Font,

2012). By this respective company can identify and analyse quality or number of products and
services which a company they have to sell for achieving break even point. Break even analysis
which is done by Rowlinson Knitwear are mentioned below:-
Note: Break even point (In units) = Fixed Cost / Contribution per unit
For example: Let variable cost is 9 per unit, fixed cost is 40,000 and selling cost is 18, then
Break-even point is measured as:
=40000/(18-9)= 4444.45
(Amount in £)
Particulars At 10000 units
Revenues in values (A) 200000
Less: Variable Cost (B) 100000
Contribution margin(A-B) 100000
Contribution per unit 10
Fixed Cost 30000
Break-even point (in units) 3000
Interpretation- it can be evaluate from above break even analysis that respective
company's break even analysis is 10000 units, whether they have no profit and no loss. If they
want to gain profit they have to sale more products then 10000 units because if they sell less than
respective amount they face situation of loss. So it is recommendations to company that for
gaining profit they must 4reduce there variable cost or sell more units of products.
6: Interpretation of financial statements of Rowlinson Knitwear:
Financial Account:
It refers to balance of an organisation's debt, profit, investments, cash flow,
balance sheet and many more. Which is mainly use by bank, investors and financial institutes for
identifying financial stability and performance of a company (Schaper and et. al., 2014). For
interpretation financial account there are various method which a company can use such as cash

flow, trading account, profit and loss account and many others. Below financial statement of
Rowlinson Knitwear company is given:-

Income Statement of Rowlinson Knitwear for the year ended 25th March, 2018
Particulars 25th March, 2018 (In £)
Revenue 200000
Cost of sales -165500
Gross Profit 34500
Administrative Expense -3200
Other expenses -4500
Net profits before tax 26800
Income tax expense @ 20% -5360
Profit for the year 21440
Interpretation- From above mentioned income statement of respective company it can
be analysis that its total revenue is £ 200000. From which their expenses are sales cost that is
165500, administrative expense which is £ 3200 and other expenses that is of £ 4500. Along
with this they also have to pay income tax which is of £ 5360. After deducting all expenses it can
be identify that Rowlinson Knitwear is earning £ 21440 as a profit in a financial year.

Balance Sheet of Rowlinson Knitwear as at 25th March, 2018
Particulars 25th March, 2018 (In £)
ASSETS:
Non Current Assets:
Intangible assets 10500
Property, plant and equipment 43700
Investments 10600
Current assets:
Inventories 8500
Trade and other receivables 18900
Cash and cash equivalents 12800
Total 105000
LIABILITIES & EQUITY:
Current liabilities:
Trade and other payables 12440
Income tax payable 5360
Non Current liabilities:
Borrowings 12350
Equity:
Share Capital 62000
Retained earning 12850
Total 105000

Interpretation- Balance sheet is a financial tool in which both assets and liabilities are
equal. During preparing balance sheet of respective company it can be identify that total assets of
company including non current assets and current assets is £ 105000. Along with this total
liabilities and equity of Rowlinson Knitwear by including current liabilities, non current
liabilities and equity is also 105000.
Cash Flow of Rowlinson Knitwear for the year ended 25th March, 2018
Particulars 25th March, 2018 (In £)
Net cash flow from operating activities 4522
Net cash flow used in investing activities -6720
Net cash flow from financing activities 6098
Net increase in cash and cash equivalents 3900
Cash and cash equivalents at the beginning of the year 8900

Cash and cash equivalents at the end of the year 12800
Interpretation- Above given table is defining cash flow of respective company by which
they able to know its financial status at a marketplace. According to data net cash flow of
operating activities of respective company is £ 4522. along with this cash and cash equivalents
at the beginning of year is £ 8900 and for year end is £ 12800.
Interpretation of financial accounts by using ratio analysis:
(1) Current Ratio: Current Assets / Current Liabilities
2017-18
40200 / 17800
2.26
Interpretation: Relationship among current assets and liabilities is known as current ratio
and it is also known as working capital ratio. Ideal ratio of Rowlinson Knitwear is 2:1, it means
current ratio is more than ideal ratio. This shows that liquidity position of respective company is
better.
(2) Quick Ratio: Quick Assets / Current Liabilities
2017-18
31700 / 17800
1.78
Interpretation: Quick ratio is consider as more rigorous as compare to current ratio. Ideal
quick ratio of respective company is 1:1 whereas quick ratio of Rowlinson Knitwear is 1.78:1.
this shows that respective company has better quick ratio to compete and survive in market or
industry.
(3) Gross Profit Ratio: Gross Profit / Sales * 100
2017-18
34500 /200000 *100
17.25%
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Interpretation: Gross profit ratio refers to percentage of gross profit in regards of sales of
units or products. Every company must enhance or maintain there gross profit as compare to
there last year profit. Rowlinson Knitwear company is having gross profit ratio of 17.25% which
is consider as quit better ratio.
(4) Net Profit Ratio: Net Profit / Sales * 100
2017-18
26800 / 200000 *100
13.40%
Interpretation: Net profit ratio is refers to percentage of net profit which is represent in
term of sales. Current net profit ratio of respective company in year 2017- 2018 is 13.40% which
is viewed as good performance of Rowlinson Knitwear this is so because it is positive. Due to
this company earn good net profit ratio.
TASK 4
7. Key legislation and regulations that have implications on small businesses
Legislation is the main process that mainly focuses on the business environment which
includes consumer protection act, various environmental laws and some healthy and safety rules
and regulations. The main purpose of legislation and regulation in Rowlinson knitwear to meet
all obligations that help to provide some certainty and priorities to conduct various activities in
business that meet fair and pellucid needs.
Minimum wage Act, 1998- It is the act that provide the minimum wages to both skilled
and unskilled labours. In Rowlinson knitwear, it provides the fair payments to all the labourers
that include proper self-respect and maintain a good healthy environment within the
organisation. This make government to fix the wages to all the labourers and meet basic needs
like food, shelter and clothing (Steingold, 2017). It provides the benefits to their families like
proper education to children and travelling allowances. This act is the important part of
Rowlinson knitwear in which they meet all the needs of the labourers by providing the fair wage
payment on time.
Equality Act, 2010- This is a law that provide the characteristics based on age, race, sex,
disability etc. Rowlinson knitwear made different regulations that provide equal values to all the
labourers in the organisation such as education,employment, maintaining good public relations
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and transportation facilities (Yeoman, 2012). It provides medical facilities in organisation. If
labour is ill then it make all the payments to their illness programs.
Safety and security Act, 1974- It is a process that provides safety and security policies
that helps to implement various plans and procedures. In Rowlinson knitwear, it ensure that all
labourers should follow the guidelines in order to meet the requirements and follow all the rules
and safety programmes. If the labour is ill then it provide the safety guideline to him/ her.
Handling the taxes- This is the very important part in which different taxes are made to
implement various programmes and policies. In Rowlinson Knitwear, all labourers have to give
the taxes on proper time so that they handle all the policies in the organisation. It is important to
every employee to pay the taxes on time so that they receive the payments. If they will not give
the tax on time then labourer have to gave more tax. The labourers have to gave the taxes on
proper time.
Bonus Act, 2013-In this act if the labour is working beyond the working hours then it
will receive an increment in salary I.e. bonus. According to the act that within 8 months the
bonus has to be paid in the form of cash (Yeoman, 2012). It is a necessary act that employees
should be inherited and plans various outcomes in the given organisation. They receive the
bonuses on the festive occasions and employee should maximise the profit every year.
CONCLUSION
From above discussed point it can be conclude and evaluate that for running and
managing a business operations and function owner has to develop various strategies and plans.
Management and owner of small business enterprise conduct evaluation and decide strategies
accordingly and allocate resources which is required for complete task in appropriate manner.
For this company also develop and maintain customers relationship which help them in attaining
goal and objective. This also help them in identifying customers need and demand and for this
company conduct analysis by using methods like Customer portfolio analysis, Customer
intimacy and many more. Along with this company also adopt transactional business strategy
which help them in expanding business operations and functions in international market. By this
they also able to enhance there profitability ratio, market shares and customers base. For this
company do analysis of funds by using various methods like cash flow, break even analysis and
many other. When a company expand their business in different countries they have to follow
17