Break Even Analysis and Entrepreneurship Strategies

This assignment provides a detailed analysis of break even analysis in business, including its significance, calculation methods, and application in different industries. It also explores entrepreneurship strategies for small businesses, such as collective entrepreneurship, and the importance of social media value. Additionally, it discusses managing information systems security, including neutralization approaches and employee involvement in strategic management.

Managing and Running Small
Business

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Main considerations a small business or social enterprise needs to address when planning
and allocating resources to achieve business objectives.............................................................1
TASK 2............................................................................................................................................2
P2 Explain and evaluate different processes of customer relationship management for a small
business or social enterprise........................................................................................................2
P3 Small business develop transnationally and determine the benefits and drawbacks.............4
TASK 3............................................................................................................................................5
P4 Produce an annual itemised monthly cash flow forecast showing fixed and variable costs
set against income for a specific organisation.............................................................................5
P5 Explain how break- even analysis could be applied to an organisational situation...............8
P6 Interpret key financial statements for an organisation in relation to how they contribute to
successful management of organisation......................................................................................9
TASK 4..........................................................................................................................................10
P7 Discuss key legislation and regulations that have implications on small businesses or social
enterprises.................................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Small business are firms which consists integral part in country, as they contribute in
enhancing economic growth and development. These are enterprise which are incorporated and
run by individual to generate money and take risks. Entrepreneur responsibility is to manage
business and utilise resources properly for sustaining market position and brand value in market.
Present report is based on Wiser which is a recruitment firm that provide young people
opportunity and chance to make career (Herbane, 2013). This assignment specifies main
consideration that small business require to make while resource planning and allocating.
Different processes of customer relationship management and transnational operation are
examined. Besides this, cash flow forecast, break- even analysis and financial statement
interpretation is stated. Further, implication of regulation on small business is mentioned in
report.
TASK 1
P1 Main considerations a small business or social enterprise needs to address when planning and
allocating resources to achieve business objectives
Small business and social enterprise are firms which are started by individual to make
income. They require to have skills to manage resources efficiently for conduction of business
activities effectively. These scale of organisation have funds, material and manpower in limited
amount. Entrepreneur require to make plan and allocate resources in different operations for
attaining targets. Wiser is small scale firm which require to enhance their market share and
goodwill. It is necessary that people, material and equipments are used properly. For this,
entrepreneur had formulated plan and strategies for directing and making employees to complete
tasks within specified time (Hove and Tarisai, 2013). Thus below mention are considerations
which small business consider for accomplishing goals and objectives:
Establishing an appropriate organisational culture: Business people require to have
sufficient workforce for execution of activities effectively. Recruitment, staffing, performance
assessment, team building and motivation are various practices which are performed for having
skilled and competent people. It is essential that employees get proper culture in organisation for
retaining them for longer time.
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Drafting a business plan: Business plan is document which is frame by an executive to
direct functioning of stakeholders. Company's background, vision, mission, objectives, goals,
strategies, SWOT, marketing plan, competitor analysis and financial planning are various
constituents of this. This helps entrepreneur of Wiser to provide information to investors,
employees, suppliers, clients and other people which have direct or indirect connection with
firm. Thus, they are able to establish and maintain relations by giving them knowledge about
system.
Identifying customer's need: Business person require to have information about market
conditions for designing system and making changes in technologies. Market research and
survey are techniques which are used to ascertain demands of people and competitor's offering.
This helps entrepreneur of Wiser to formulate objectives and goals from information about
opportunities which are present in market (Kumar, Petersen and Leone, 2013). Company find out
needs of public for providing them services for satisfying them.
Outline the finance required: Small firms are generally established by individuals which
have less capital and resources. Therefore, due to shortage of funds they require to find sources
from where additional money can be acquired for enhancing business. Business person of Wiser
formulate budget through which funds are allocated in different activities. This helps them to
have information about funds required for conducting operations and providing services to
people. In this, expert financial manager are involved to raise funds and enhance profitability.
TASK 2
P2 Explain and evaluate different processes of customer relationship management for a small
business or social enterprise
Customer relationship management is tactic through which organisation manage
interaction with present and potential buyers. This is a comprehensive strategy which is used by
business person to acquire and retain customers for longer time. Small and social firms require to
sustain their market position and share. Entrepreneur of Wiser organise and conduct business
activities, through which products and services are delivered in according to demands of people.
Along this, advertisement and promotion are executed to aware public about offerings to attract
them to purchase for fulfilment of their needs. This helps executive of Wiser to build relations
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with buyers for making them loyal towards company. Along this, they are even able to position
firm higher than rival firms.
(Source: Customer Relationship Management, 2018)
Processes of customer relationship management: These are steps which are carried out
by entrepreneur of Wiser to maintain relations with clients are mentioned below: Customer portfolio analysis: This is first phase in which business person assess
information about group and type of buyers that will be profitable for firm. This help
them to provide products and services in according to target customers. Wiser is
recruitment consultancy firm whose target people are young people (Njenga and Jordaan,
2016). Company provide them support to get job in according to their capabilities for
growing in career. Customer intimacy: It is next step in which management build relations with people.
Entrepreneur of Wiser interact with target buyers for getting familiar with them and
acknowledging their demands. Buying habit to their personal information that is birthday
are find by them for maintaining connection. These details are recorded in customer
database for future use. Thus, business person is also able to find out opportunities to
enhance intimacy of buyers and target market.
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Illustration 1: Customer Relationship
Management

 Network development: This is phase in which business person create and maintain
relation with people that are essential for success of firm in serving buyers. Investors,
suppliers, employees are various stakeholders which directly or indirectly support
entrepreneur. It is necessary that their connection with firm sustain, so that quality
services are delivered to customers. Value proposition development: It is essential step by which executive frame tailored
value proposition for buyers. For this, data gathered at time of customer intimacy are
used for having knowledge about target customers (Njenga and Jordaan, 2016). Thus,
entrepreneur of Wiser create value for firm and buyers for maintaining functionality and
profitability.
 Customer life cycle management: This is last step of CRM which refers to ideal journey
of buyers that is potential buyers to item or services advocate. Business person require to
maintain relation with clients for longer time. For this, they require to manage system and
business activities for providing quality products and services to people. Customer
acquisition and retention are two approaches which are followed by entrepreneur of
Wiser. Along this, performance measurement benefits entrepreneur to enhance operations
and manage relations with customers.
P3 Small business develop transnationally and determine the benefits and drawbacks
Transnational sales refer as a technique by which employers of small organisations can
trade their products in foreign market place. It would help them enhancing sales performance and
expand business market at global level. Small business has large number of opportunities in
respect to enhancement of their profit and market. Transnational is process which small scale
firms expand and operate in more than one nation (Wellin, 2016). It is necessary that
entrepreneur increase market reach and customer base to enhance sales volume and profitability.
Wiser is recruitment consultancy firm whose business person require to increase number of
outlets. For this, transnational sales is tactic which help them to conduct business globally.
Entrepreneur of Wiser provide recruitment services through online. This help them to have large
market reach and customer base.
Benefits: These are advantage that transnational activity have on organisation are defined
below:
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 Increase market and customer base: Small and social firms that uses transnational
concept which helps business person to enhance their market reach and buyers. This aid
Wiser to protect its business from competition of domestic firms. Along this, firm’s sales
and profitability also enhances.
 Saving of Funds: Transnational tactic also benefits small firms to expand business in
places where they can get resources at effective rates (Polonsky and Waller, 2014). This
help them entrepreneur of Wiser to reduce expenditure that is employees, raw material
and many other by conducting business in nation which have these available in large
amount.
Drawbacks: These are disadvantage that transnational process have on functioning of
firm are stated beneath: Lack of understanding: Business person require to have capability to manage business
globally. So, transnational tactic become demerit if firms didn't have full knowledge
about market in which business is expanded. People demand and needs varies, so
company's sales and profitability are affected.
 Political, legal and operational risk: This is another demerit of transnational concept on
company's performance. Every country's government had formulated different legislation
and laws which require to be considered by entrepreneur of Wiser (Ratten, 2014). It is a
small firm which doesn't have sufficient resources that is funds, material and manpower.
Thus, executive is not able to handle risk which result into losses.
TASK 3
P4 Produce an annual itemised monthly cash flow forecast showing fixed and variable costs set
against income for a specific organisation
Cash flow forecast is process which is conducted by business person to have knowledge
about funds. It is necessary that they have information about expenses which are incurred at time
of production process. Profit and loss account and balance sheet are statement which are
formulated by business person of Wiser to have information about performance of firm. These
tactic helps them to have knowledge about total assets and liabilities. Besides this, cash flow
statement is maintained through which inflow and outflow of money are ascertained by
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entrepreneur. Thus, surplus or deficit of cash are analysed for getting additional funds from
sources which are present in market (Zafar, Butt and Afzal, 2014).
Profit & Loss, Balance Sheet and cash flow statement of Wiser Company:
Profit & Loss Account at the ended year
2017 2018
Sales 20 30
Cost of sales 10 15
Gross profit 30 45
Overheads 6 7
Net. profit 24 38
Balance Sheet
Year 2017 ( in £) 2018 ( in £)
Fixed assets 130 210
Stock 20 35
Debtors 70 55
Bank 20 30
Total 240 330
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Creditors 120 180
Bank overdraft 90 70
Total 210 300
Working capital 30 80
Cash flow statement
Particulars Jan Feb Mar Apr May June July
Cash inflows
Investment 8000
Credit sales 1200 2000 7500 3000 5000 6500 1200
Total inflows 9200 2000 7500 3000 5000 6500 1200
Cash outflows
Fixed :
Equipment’s 2500 1200 1500 2500 1100 1500 1200
Variable : Direct
material 350 300 250 150 100 500 500
Total outflows 2850 1500 1750 2650 1200 2000 1700
Net cash flow 6350 500 5750 350 3800 4500 -500
Opening balance 0 6350 5850 11600 11950 15750 20250
Closing balance 6350 5850 11600 11950 15750 20250 19750
August Sept Oct Nov Dec
3200 1500 8200 1250 3210
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3200 1500 8200 1250 3210
600 500 500 1200 700
250 450 250 1300 500
850 950 750 2500 1200
2350 550 7450 -1250 2010
19750 22100 22650 30100 28850
22100 22650 30100 28850 30860
P5 Explain how break- even analysis could be applied to an organisational situation
Break-even analysis is technique which is used by business person to have information
about point at which investment gives positive return. This method helps them to define point at
which no profit or loss situation occur. Wiser is a small firm, so entrepreneur require to conduct
break even analysis. This aid them to have knowledge about point at which expenditure are
realised. Thus, rates of services are fixed such that people avail them and benefit firm in
generating revenue through which costs are fulfilled (Definition of Break Even Analysis, 2018).
Illustration 2: Break even analysis
(Sources: Break even analysis, 2014)
As per above diagram, which depict that fixed and variable are two kind of cost which are
incurred in every firm. Fixed and variable costs are two types of expenditure which are
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conducted in firm are computed. Depreciation and rent are expenses which occur even when
there is no production. Besides this, transportation, electricity, salary and other are cost which
have direct relation with operations (Roomi, 2013). Thus these are tactics which occur in Wiser
and require to be maintain by entrepreneur for proper utilisation of money.
Break-even analysis is computed as average of per unit variable cost to per unit revenue
of business. The organisational situation which is created for example to illustrate the situation of
BEP includes Wiser organisation is required to provide services through which organisation
earns monthly profit of 150000. As this is necessary to attain the situation of BEP in future to
recover their variable and fixed cost to attain the situation of no profit and loss. This technique
helps firm to measure unit contribution margin which is amount of additional revenues and
calculated by formula which is as stated:
Unit Contribution Margin = Sales Price-Variable Costs
Calculation of break-even points in units-
Break-even units= Fixed Cost/Contribution margin per unit
In terms of sales value-
Contribution margin= (Sales Price- Variable Cost)/ Sales Price per unit
P6 Interpret key financial statements for an organisation in relation to how they contribute to
successful management of organisation
Cash flow, balance sheet, profit & loss are financial statement which are formulated by
business person to have knowledge about functionality of organisation. These are statement
which helps management to ascertain information about flow of funds and revenue. Entrepreneur
of Wiser require to utilise funds properly and make business successful. With aid of above tools,
they have appropriate knowledge about expenses and net profit. This help them to make changes
in system and use advanced technologies through which quality services are delivered to buyers.
Thus, these are financial statements which are descried below:
Balance sheet: It is a financial statement which shows financial position of company
through assets, liabilities, equity and debt of business at a specifies period. It is prepared on
quarterly and yearly basis to analyse financial viability of company. Balance sheet has two sides:
Assets and Liabilities. Assets are resources owned by companies (Schaupp and Bélanger, 2013).
It further divided into current or non-current assets and long term assets. Current assets are easily
convertible to cash and non-current assets are not easily convertible to cash. Liabilities are
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obligations of company and it is divided into current and long term liabilities. From balance
sheet of Wiser, it had been interpreted that total assets and liabilities value in 2017 was 400k
Pound which increases to 460k Pound in 2018.
Profit and loss account: It is also known as Income statement which shows revenue and
expenses of company of a particular period. This statement is formulated by management to
represent profitability of business. Net profit is determined from this account by deducting all
indirect or operating expenses and indirect revenues of company. All indirect expenses are
recorded on debit side and all indirect revenues on credit side of this account. If credit side is
more than debit side than it shows Net profit and if debit side exceeds credit side than it will
result in Net loss. From P&L account of Wiser, it has been analysed that sales volume of
business had raised from 25k to 30k. This helps entrepreneur to generate good amount of
revenue that is gross and net profit enhance to 5k Pound in current year. Thus, this reflects that
company is growing which aid business person to sustain position and image in market.
Cash flow statement: It is a financial statement that provides information about inflow
and outflow of money. It records cash generation and spending which are made by business
person during a particular period of time (Schleifer, Sullivan and Murdough, 2014). Operating
activities includes revenue generation tasks, while investing activities are related to sale or
purchase of investment or fixed assets. Besides this, financing activities are sources that is debt
or equity which are used by entrepreneur. From cash flow statement of Wiser, it has been
interpreted that in beginning there was no funds. This is recruitment consultancy firm which help
business person to have £30, 806 as closing balance.
TASK 4
P7 Discuss key legislation and regulations that have implications on small businesses or social
enterprises
Government formulate rule and law for regulating and directing functioning of
organisation. It is essential that business person consider them while formulating policies and
strategies to make system function legally. Executive of small and social firm that is Wiser faces
problem for taking care that legislation are followed. Their goal is to utilise resources efficiently
for sustaining firm's position and image in market. They didn't have much time to give in making
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changes in policies. Along this, if business is expanded to another nation which affect operations
and functioning of firm. Thus, these are different legislation which are mentioned below: Health and safety act: This law is formulated by government to ensures health, safety of
employee in work place. This legislation consists general duties which employer have
towards the subordinates. Besides this, regulation cover different issues regarding, illness,
accidental cases, etc. All worker, employer, contractors, volunteers, outworker, trainees
and apprentices are protected in this law (Wellin, 2016). So that the health and the safety
could not be placed at the risk. Entrepreneur of Wiser provide secure and healthy
working environment to staff members which help them to retain them for longer time. Employment act: This law define that business person require to protect employees from
discrimination, unfair labour policies and unsafe working condition. Entrepreneur of
Wiser provide wages and hours to workers in according to government rules. In this
minimum age and the working hours are fixed below which employer or cannot work.
 Anti- discrimination act: This law is formulated by government to prevent and protect
people from getting exploited on grounds of sex, age ,race,gender,etc. The roots of this
law on principle of equality that the individual should not be treated differently due to its
own characteristics (Zafar, Butt and Afzal, 2014). Wiser is recruitment firm, so
entrepreneur provide fair treatment to employees and clients.
CONCLUSION
As per above report, it can be comprehended that entrepreneur manage and run small
business for making profit. It is necessary that drafting business plan, identifying customer's need
and outline finance required are consideration which aid in utilisation of resources properly.
Customer relationship management is process which is used by management to build and
maintain buyers for longer time. Transnational tactic benefits small firms to conduct business
globally for enhancing sales volume and revenue. Balance sheet, profit & loss, cash flow
statement aid business person to have knowledge about flow of money and financial state of
firm. Besides this, break even analysis define point at which expenditure are ascertained.
Employment, anti- discrimination and health & safety are different act which are considered by
entrepreneur for formulating policies and making system function legally.
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REFERENCES
Books and Journals
Herbane, B., 2013. Exploring crisis management in UK small‐and medium‐sized enterprises.
Journal of Contingencies and Crisis Management. 21(2). pp.82-95.
Hove, P. and Tarisai, C., 2013. Internal factors affecting the successful growth and survival of
small and micro agri-business firms in Alice communal area. Journal of Economics.
4(1). pp.57-67.
Kumar, V., Petersen, J. A. and Leone, R. P., 2013. Defining, measuring, and managing business
reference value. Journal of Marketing. 77(1). pp.68-86.
Njenga, K. and Jordaan, P., 2016. We want to do it our way: The neutralisation approach to
managing information systems security by small businesses. The African Journal of
Information Systems. 8(1). p.3.
Njenga, K. and Jordaan, P., 2016. We want to do it our way: The neutralisation approach to
managing information systems security by small businesses. The African Journal of
Information Systems. 8(1). p.3.
Polonsky, M. J. and Waller, D. S., 2014. Designing and managing a research project: A business
student's guide. Sage publications.
Ratten, V., 2014. Future research directions for collective entrepreneurship in developing
countries: a small and medium-sized enterprise perspective. International Journal of
Entrepreneurship and Small Business. 22(2). pp.266-274.
Roomi, M. A., 2013. Entrepreneurial capital, social values and Islamic traditions: Exploring the
growth of women-owned enterprises in Pakistan. International Small Business Journal.
31(2). pp.175-191.
Schaupp, L. C. and Bélanger, F., 2013. The value of social media for small businesses. Journal
of Information Systems. 28(1). pp.187-207.
Schleifer, T. C., Sullivan, K. T. and Murdough, J. M., 2014. Managing the profitable
construction business: the contractor's guide to success and survival strategies. John
Wiley & Sons.
Wellin, M., 2016. Managing the psychological contract: Using the personal deal to increase
business performance. CRC Press.
Zafar, F., Butt, A. and Afzal, B., 2014. Strategic Management: Managing Change by Employee
Involvement. International Journal of Sciences: Basic and Applied Research. 13(1).
pp.205-217.
Online
Definition of Break Even Analysis. 2018. [Online]. Available through:
<https://www.entrepreneur.com/encyclopedia/break-even-analysis>.
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