Effective Management for Small Business Success

This document discusses the crucial role of operational activities in ensuring the success of small businesses. It emphasizes the need for systematic management of these activities to maintain profitability and liquidity. A good relationship with customers is also stressed as essential for sustaining in the market and achieving set goals. The assignment draws from various sources, including books and journals that provide insights into risk management in SMEs, the application of people, process, and technology models, and the importance of innovation in achieving competitiveness.

Managing and Running
A Small Business

Table of Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
Overview of the firm..............................................................................................................3
Considerations a small business to achieve business objectives............................................3
M1 allocate resources in an organisation ..............................................................................5
M2 Importance of planning and allocating resources............................................................6
D1 analysis of application of appropriate resources...............................................................6
LO 2.................................................................................................................................................7
Different processes about customer's relationship management for small business..............7
The way in which small business can develop transnationally..............................................7
M3 Elements of customer relationship management process................................................9
M4 Benefits and challenges of Stage model of internationalisation......................................9
D2 Critical evaluation of customer relationship management process................................10
LO 3...............................................................................................................................................10
Cash flow forecast that shows fixed and variable costs.......................................................10
Application of Break even analysis......................................................................................11
Interpretation of key financial statements and its contribution in successful management of
business ................................................................................................................................12
M5 Application of quantitative and analytical techniques...................................................15
D3 Evaluation of financial statements..................................................................................15
LO 4...............................................................................................................................................15
Key legislations and regulations that impact activities of small business organisation.......15
M6 Implication of key legislations.......................................................................................16
D4 Critical evaluation of key legislations and regulations that affect small business firms 16
CONCLUSION ............................................................................................................................17
REFERENCES..............................................................................................................................18

INTRODUCTION
Management consists all the activities which are used for making plans and strategies in
the firm and taking cooperative work from the employees for achieving the preset goals and
objectives. Small business enterprises which are newly established and wants growth and
sustainability in marketplace within a short time period. As per international reports, there are a
large number of SME in UK which provides a tough competition to the giant players of UK
market. Dwell is the firm which is taken for this assignment. The firm is engaging in retail
business of furniture products in UK. This report will discuss about the tools and techniques
which is helpful in allocating and planning the resources along with their benefits for the firm.
Process of Customer relationship management along with cash flow statement, break even
analysis will also covered in this report. Financial statement of the firm will also prepared in this
assignment.
LO 1
Overview of the firm
Dwell is a firm which deals in furniture and home accessories products along with
headquarters in UK. The firm was founded by the young entrepreneurs Aamir ahmad, Dave
Garrett and Sean Galligan in the year of 2002. In present time the company has 30 stores across
the UK and they are successfully perform their operations with the help of directors, managers
and staff members.
Considerations a small business to achieve business objectives
There are a large number of environmental factors which affects the operational
activities of a firm. These factors are called macro environmental factors which are not
controlled by the organisation. There are also some factors which are present in the workplace of
firm and affects the operations of firm in internal manner. In order to formulate the effective
plans and strategies Management have to consider both kind of factors. With the help of it,
Managers can achieve their goals and objectives in the allotted time period and also allocate their
resources in effective manner (Stark, 2015). Dwell is a UK based retail company which deals in
furniture products in the UK market. They have 30 stores across the UK which provides
products to their targetted customers. The main objective of the firm is to provide quality
products to their customers at affordable prices due to which a large number of customers

attracted towards their offerings and firm get a huge success and sustainability in the
marketplace. Through implementing effective plans and appropriate allocation of resources such
as funds, employees etc. With the help of it firm can build a strong customer base which will
help them in gaining competitive advantage in marketplace. Managers of Dwells have to
consider many factors for achieving their objectives in appropriate manner which are defined as
under:
Requirement of funds – It is an important resource without this, any firm can not
perform their functions in appropriate manner. It is an obligation upon the managers to identify
the requirements of funds in every departments in order to perform their functions. It assists
them in identifying the availability of funds in the firm due to which they will know about the
insufficiency of funds. It will helps them in allocate the resources through which funds can
easily raised and the departments can easily carry out their operational activities. It is difficult
for a firm to perform the functions without funds (Springer, 2015). Therefore, managers of
Dwell have to make their financial statements so that they will able to know about the income,
expenditures along with inflow and outflow of funds. With the help of it, they will easily
formulate policies which helps them in removing unessential expenses from their functions.
Objectives, vision and mission – There is a large impact of vision and mission of firm
on formulation of plans and policies for different goals of firm. Dwell provide furniture products
to their customers. The main aim of firm is to provide quality products to their customers with
implementing new and latest technologies in their goods due to which their sale figures has been
increases in future time.
Human resources- Planning of work force is an essential element which helps the
managers in completing their tasks in the given time period. Inappropriate planning can
increases the cost of product and also reduces the sales figure. For this, HR manager have an
obligation to measure the performance level of their employees and conduct training
programmes for the lower performer of the firm through which the inefficiency will be reduced
and they will better perform on the given tasks.
For managing and functioning of operational activities, managers of Dwells have to allocate
some resources of funds. Some funding resources are given as under:
Personal savings – It is one of the most source of funds because in it, owners have to use
their own money for managing or running the operational activities. In the context of Dwell, they

have enough funds for regulating their functions and operations apart from that, owners have to
allocate some more resources for funds so that their business operations will be managed in an
effective manner.
Crowdfunding – It includes funding of the business through taking small funds from
various individuals. This process is usually done through the internet in which owners can use
their network of friends and take funds from them by telling them goal of the business
M1 allocate resources in an organisation
There are a large number of tools and techniques which can be used by the managers of
Dwell in order to plan and allocate the resources for the functional departments of the firm:
Critical path analysis – It is a technique which is used for identifying the alternatives in
order to allotment of funds in effective manner. It is very profitable for the firm because it helps
the firm in finding a suitable path in which the project can be completed in a stipulated time
period.

Gantt chart – it is a graphical bar chart which is used by various firms for scheduling
their all activities with a specific time period in which they will be completed. In the context of
Dwells, Their managers can use this technique during the allocation of resources to their
different departments. It also helps the managers in making a better business cognition.
M2 Importance of planning and allocating resources
It is very essential for a firm to planning and allocating the resources to the various
departments of firms. With the help of it, departments can perform their assigned tasks in
appropriate manner. In the context of Dwells, proper allotment of funds will increase the
profitability and productivity of firm. It is very important to the firm to allot the resources in
effective manner therefore employees of different departments can successfully perform on their
given tasks and contribute in the development of the firm. When employees will perform well on
the given task then it will automatically leads the firm towards competitive advantage in the
marketplace.
D1 analysis of application of appropriate resources
There is an interrelation between allocation of the resources with achievement of
objectives. Because if the departments have not proper resources it influences the ability and
arises issues in the workplace due to which the firm can not achieved their goals in the given
time period (Segal, 2011). Therefore, all resources such as funds,employees etc. are managed in
proper manner so that the firm can achieve their preset objectives.

LO 2
Different processes about customer's relationship management for small business
Customer relationship management (CRM) – it is a process in which firm have to retain their
customers. For all firms, it is very essential to maintaining better relations with the customers so
that the profitability and revenue can be increases. In the context of Dwells, Managers have to
use this process through which they will maintain good relations with the customers. All process
are given as under:
Analytical process – In this, customer data has used by the firms for various purposes
which involves taste and preferences of customers along with their requirements and demands.
This is used for setting an appropriate format for the marketing team so that a large number of
customers can aware about the offerings of Dwells. Making effective prices of the goods,
development of product and target market are also related with this process.
Operational process – this kind of process helps the firm in managing their customers in
efficient manner. Several type of processes such as sales and marketing of goods and services
are related with this process. It provide guidance to the managers of Dwells to make
modifications in their existing products and services so that, they can attract a large number of
customers towards their offerings. The main objective behind this process is to generating leads
from the marketplace and modify them in business contacts. With the help of it, firm can
generate huge profitability and customer base in the marketplace.
Collaborative process – this process is called as communication process in which
managers have to interact with the users of their products and services. In this procedure, they
have to gather the feedbacks from the customers and make solutions for their issues and
complaints regarding the products. For this, they can use emails, websites, messages etc. This is
basically used for making improvement in the delivery process of the products and services.
All above processes are followed by the managers of Dwells for managing relationship
with the customers because it helps them in retaining existing and attracting more customers
towards their offerings.
The way in which small business can develop transnationally
Transnational development of a firm is defined as a process of operating the business
activities from outside of nation. It is basically connected with providing global trade in which a

firm supply their products across the world in order to increasing profitability and revenue.
Before expanding the business operations, managers of firm have to analyse the market trends
and customer's preferences of the country through which they will formulate proper strategies
and plans for the expansion (Peters, 2012). Dwells can develop their business at global level
through offering their products in different nations. It will help them in increasing their profit
and sales figures as the new customers will aware with the offerings of firm. At the time of
expansion, Managers of dwells have to provide more efforts because it will help them in
grabbing new opportunities in new marketplace. There are some advantages and disadvantages
of developing business globally which are described as under:
Advantages
Foreign trade- when a firm expand their business at global level then it will enhance the
foreign trade for the company. With the help of it, the profitability and funds will be enhanced
which can be used by the managers of dwells in executing their business activities in effective
manner.
Independence – Owner of the firms have right to make all decisions which are related
with expansion of business. In the context of Dwells, the managers are independent as they have
right to take decisions for expansion of business which will increase the profitability of firm.
Disadvantages
Risk in terms of finance – It is a major risk which will be faced by the managers of
Dwells at the time of launching new products in global markets. They have to face financially
risk because it is a small firm who have not appropriate funds for operating business operations
(Monk, 2012). Small and medium firms such as Dwells who is a new player in the market and
have no ability to invest huge amount in promotional activities to spread awareness about the
offerings of firm to customers.
Long term period – In order to establishing a business in new market areas it requires a
long time period. Managers of Dwells have to wait for a long time for expanding their business
operations at global level.
Some ways through which Dwells can become international.
Licensing: It is the top most strategy of entrance in a global market that provides the
authorities to local companies for utilising their goods and services in a particular time. The
assets that can be licensed like copyright, patent, trademark etc. Licensing is the most common

method for manufacturing firms like Dwells through which the firm will able to use their tools
and techniques in return of royalty which is to pay them to the government authorities.
Direct exporting: This strategy is divided in two parts like direct or indirect approaches.
Direct exporting allows the organisation for selling the products in a particular market place as
per their want. Whereas, in indirect exporting managers of organisation have to make proper
commitment towards the new market in which the operations of company are expanded.
Piggybacking is the direct exporting technique in which products of Dwells are given to the new
or fresh customers through using existing production or distribution of other organisation which
is already exists in new nation.
M3 Elements of customer relationship management process
There are a large number of factors which plays an important role in CRM process
because it helps the managers of Dwells in achievement of their targets. All factors are given as
under:
 Understanding market and customers: If a company wants to achieve their objectives
in a specific time period they have to understand the needs and preferences of customers
so that, they can provide appropriate products to their customers with fulfilling their
requirements.
 Gain trust of customers: Managers of Dwells should achieve the trust of its customers
through providing them quality furniture products. It will help them in making huge
customer base which increases the revenue and profitability of firm.
 Retaining customers: Managers of dwells uses proper strategies for retaining their
customers which includes discount and cashback on their purchases.
M4 Benefits and challenges of Stage model of internationalisation
Stage model: It is defined as a theory of globalisation which includes integration,
acquisition, skills and knowledge that is required for launching new products in the foreign
marketplace. This model is used by the managers of Dwells at the time of introducing their
furniture products at international market. It will increase the profitability and funds of the firm.
Some benefits and challenges of this model are defined as under:
Benefits:
 It also helps the firm in increasing the profits and sales figures.
 With the help of this firm can easily introduce their products in global markets.

 This model helps the mangers of firm in showing their talent in new market areas.
 It provides opportunities to the local firm for expanding their market share through
launching their existing products in a new marketplace.
Challenges:
 Managers have to arrange a huge funds for investing in promoting the products in the
new marketplaces where the product will be launched and it is not possible for the small
firms like Dwells to bear huge cost.
 Expansion of the business activities in the new marketplaces requires a long time period.
D2 Critical evaluation of customer relationship management process
It is very important for all the firms to manage the customer's relation at all stages in
effective manner. As effective relationship with the customers increase the sales figures and
profitability of firm (Falkner, 2015). When a firm expand their business at global level they have
to face various type of challenges such as insufficiency of funds and long period of time.
Recommendation: In order to reducing the issues of firm is recommended to make
proper budgets so that efficient funds can be collected by the managers in order to expanding
their business operations at global level. It is also important to allocate proper resources so that
all essential activities can be executed by the managers in an effective manner.
LO 3
Cash flow forecast that shows fixed and variable costs
Cash flow statement: It is a statement which includes information of inflow and outflow
of cash. It is basically made for a limited time period. It provides actual financial position of the
firm to the stakeholders through which they can decide for investing more funds in order to
increasing the sustainability and growth of firm in the marketplace. At the time of expansion, the
managers of Dwells have to prepare a proper cash flow statement which provides a suitable
guidance to their stakeholders for investing more funds in future period. A forecasted cash flow
of Dwell are prepared as under:
Balance sheet, P&L and cash flow statement of Dwells:

Interpretation- It has been analysed from the above statement that firm have received a
surplus of 6392 in the upcoming period, total variable expenditures of the firm are 63753 and
total fixed cost is 24000. total revenue of the company are 94145.
Application of Break even analysis
Break Even analysis: It is a point in which a firm is in the position of not in profit or
loss. At this phase all the expenditures are recovered from the sale of their products (El-
Gohary,2012). The formula of calculating B.E.P is given as under:
BEP = Fixed cost/ selling price per unit – variable cost per unit
Calculation of BEP=
Fixed cost= 12000
Selling price per unit= 10
Variable cost per unit= 4
BEP= 12000/10-4

BEP= 12000/6
= 3000.
The organisation needs to sell 3000 units to recover all its expenses.
As the Dwell firm is operating their business operations across the UK in successful
manner and the firm is a small enterprise so that it is very essential to analyse a point where the
firms gets the position of no profit and no loss. With the help of this analysis, company can
easily recover their expenses which are included in the production process. It also guides to the
managers of firm that manufacture appropriate units.
Application of BEP:
 It is uses for determining a suitable point where the firm can achieve huge profitability.
 It also guide the managers of firm to set affordable prices of the goods which are
manufactured by the firm.
 Managers can identify the units which are essentially required for manufacturing so that
the cost of product will be reduced.
Illustration 1: Break even point
It can be said from the above image that when the profits and expenses of firm are meet
then it is called break even point. The fix cost may remains same of the product but variable cost
are flexible according to the manufactured units.
Interpretation of key financial statements and its contribution in successful management of
business
Financial statements: These are the statements which are prepared by the managers and
financial experts of firm and analysed by the stakeholders and investors for determining the

profitability of firm in the marketplace. The main objective behind formulating these kind of
statements is to analysing the current position of the firm. There are some statements which are
prepared by the accountants of Dwell.
 Income statement: It is used for recording all the income and expenditure of the firm so
that the actual profitability of organisation can be evaluated. In the Dwell income
statements are formulated for determining the income and expenditures of the firm for a
specific time period.
 Balance sheet: It is prepared for analysing the present financial position of firm. It shows
assets, liabilities, equities of the firm which are essential for making strategic decisions
by the stakeholders (Ates, 2011). It also helps the investors and stakeholders by showing
them the financial position of firm so that they can decide for investing amounts in near
future.
 Cash flow statement: All the transactions which are related with cash inflows and
outflows are mentioned in the cash flow statement. It also helps in determining the actual
financial performance of the firm for a limited period of time. There are some financial
statements of the firm along with their interpretations:
Income statement:
Particulars Amount
Sales £15,000
Cost of Goods Sold £11,500
GROSS PROFIT £3,500
Expenses
- Salary £250
- Rent £500
OPERATING PROFIT £2,750
Depreciation £1,200
PROFIT BEFORE TAX £1,550
Taxes - 20% £310
NET PROFIT £1,240
RETAINED
EARNINGS £1,000

DIVIDENDS £240
Balance sheet:
ASSETS Amount
Cash/Banks £3,500
Inventory £1,500
Acc Receivable £3,600
Fixed Assets
- Gross £12,800
- Acc Depreciation £2,000
- Net Value £10,800
TOTAL ASSETS £19,400
LIABILITIES
Bank Loans £8,500
Accounts Payable £1,660
TOTAL LIABILITIES £10,160
EQUITY
Capital £8,000
Retained Earnings £1,240
TOTAL EQUITIES £9,240
TOTAL EQUITY + LIABILITIES £19,400
Cash flow statement:
Particular Amount
INITIAL BALANCE £6,800
CASH IN
From Operations £1,500
From Investment £1,100
CASH OUT

From Operations £3,500
From Investment £2,400
FINAL BALANCE £3,500
Interpretation – It has been analysed from the above statements that the gross profits of
Dwells are 3500, sales is 15000, cost of the sales are 11500. according to the income statement,
the net profit of the company is 1240 which shows the firm is earning profits regularly. From the
balance sheet, it has been evaluated that the assets of the firm are 19400 and liabilities are10160.
From the above cash flow statement, it has been analysed that the firm has total cash of 3500. as
per the analysis it can be said that the actual position of firm is good because it earns profitability
regularly in the marketplace.
M5 Application of quantitative and analytical techniques
Analytical and quantitative tools plays an important role in evaluating the cash flow and
Break even analysis. All these kind of tools and techniques are basically used for improving the
organisational performance (Wagner, 2012). It also provide actual position of the firm in the
marketplace to the stakeholders. Cash flow statement provide the informations of inflows and
outflows of cash and Break even analyse helps the managers in analysing the actual units which
are manufactured by the firm for reducing the expenses.
D3 Evaluation of financial statements
Financial statements such as income and expenditure statement, cash flow and balance
sheets are prepared for analysing overall performance and profit of the firm. It also provides
guidance to stakeholders of firm for investing the funds through which the sustainability and
profitability of firm can be increased in the marketplace. Managers can also review financial
statements which will help them in developing and implementing strategies for betterment of the
firm. Financial statements guides the managers in formulating proper strategies and policies.

LO 4
Key legislations and regulations that impact activities of small business organisation
Key legislations and regulations are of very importance for business entities as they are
enforced by government of the country. The legislations which have to be followed by Dwell
are:
Health and safety act 1974- The act constitutes of following guidelines that
organisations needs to take care if their production activities are harming the health of their
employees (Kelly, 2017). This act has to be followed to run the business operation successfully.
So, Dwell also has to oblige this act.
Data protection act, 2018- According to this act the organisations are required to keep
their confidential data in secured form so it can not lead to misuse of it by others. The executives
of Dwell should protect their confidential information. So, that there is no harm to the
organisation from employees leaving in future.
Record keeping act, 2005- This act requires companies to maintain a proper record of
the organisational and functional activities for the future use. It helps the organisation from legal
authorities by assuring the activities to be legal and organisation is not part of any illegal works.
Dwell should also maintain its records so that it can be accessed by the stakeholders to see the
performance of the company.
Maternity Leaves – This legislation falls under the Employment protection act, 1975. It
states that the company needs to provide maternity leaves to their working women to take two or
four weeks of maternity leaves.
Minimum wages Act, 2018 – It is an important act in which management have to
provide £7.83 per hour to the workers who are having age above 25, £7.38 per hour for their
employees who are within the age of 21-24 and £5.90 per hour to the employees who are aged
between 18 to 20.
Disability Act – This act falls under the equality act, 2010 in which if a employee is
suffering from mental or physical disorders then management have to treat these employees
accordingly without any discrimination based on their mental or physical disorders.
The acts described above should be followed by Dwell for the smooth functioning of its
business activities and to reduce the challenges from legal authorities.

M6 Implication of key legislations
Legal authorities of the countries impose various legislations when there are various
companies operating in business. Organisation whether small or big including Dwell has to
follow these rules to lead the business activities effectively. The main aim of these acts is to
secure the data and to maintaining a proper report of business activities. With the help of
maternity, disability or minimum wages act, management will be able in retaining their
employees in their firm for a long time period which is beneficial for the sustainability and
improved performance.
D4 Critical evaluation of key legislations and regulations that affect small business firms
key regulations includes various measures that affect the small businesses like Dwell in
a positive as well as negative form. These regulations are record keeping, data protection, health
and safety act, etc. Positive form impacts in keeping informations securely and maintaining
records. Legislations like maternity act, equality or minimum wages act will be helpful for the
employees because it will motivate them as they are treated equal and their rights are protected
by the management. Whereas, negative impact is a challenge to follow all these regulations
being a small business entity.
CONCLUSION
On the basis of the above project it can be concluded that small business organisations
should manage their operational activities for the benefit of their business proceedings to run in a
systematic manner to achieve success. If the business managers are incapable of managing these
crucial requirements for the business than they are leading the company towards reduction in
profitability and liquidity. It is very important for small business entities to maintain a good
relations with their customers to sustain in the market and to achieve the set goals. Before
starting a business in a new market it is essential to access the conditions and expenses that can
occur in future and to make a suitable budget accordingly.

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