Managing and Running a Small Business

Managing and
Running a Small
Business

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1. Covered in Booklet...........................................................................................................1
LO2..................................................................................................................................................1
P2. Covered in Booklet..........................................................................................................1
P3. Covered in Booklet...........................................................................................................1
LO3..................................................................................................................................................1
P4. Cash Flow Forecast .........................................................................................................1
P5. Break even analysis..........................................................................................................2
P6. Interpretation of key financial statements........................................................................4
LO4..................................................................................................................................................9
P7. Regulations and Legislations ..........................................................................................9
CONCLUSION .............................................................................................................................10
REFERENCES .............................................................................................................................11

INTRODUCTION
Small business is determined as an enterprise which is independently operated and owned
enterprise and which has a limited size and generate small revenue which is dependent upon the
nature of a industry (Albadri and Aziz, 2019). In order to run a small business in an appropriate
manner, there are various factors which must be considered. This report covers basic
considerations and aspects which must be considered by a small scale business to achieve
business objectives and allocate resources. It also includes various processes of customer
relationship management and its evaluation upon a small enterprise. It also includes the way in
which small business can expand its business transnationally and its merits and demerits.
Further, it includes cash flow forecast that show variable and fixed costs which is set against the
income of a particular enterprise. This report also includes application of break even analysis and
important financial statements upon financial situation. Various important legislation and laws
which can have impact upon a small business is also elaborated in this report.
LO1
P1. Covered in Booklet
LO2
P2. Covered in Booklet
P3. Covered in Booklet
LO3
P4. Cash Flow Forecast
A cash flow forecast is determined as a document which helps a business enterprise in
estimating certain amount of money which will move out and move in your business. It also
consists of certain expenses and incomes (Kunaka and Moos, 2019). Here, an annual itemised
monthly cash flow is is developed for a small scale business which helps in showing variable and
fixed costs which is setted against income for a particular enterprise.
Particulars Jan Feb Mar Apr May June July
Augu
st
Septe
mber
Octo
ber
Nove
mber
Dece
mber
Cash inflows
1

Opening
balance 5000 5500 8770 13312 14179 19324 21248 26905 33197 39427 46398 53012
Cash sales 4000 4080 4162 4245 4330 4416 4505 4595 4687 4780 4876 4973
Credit sales 2000 2040 2081 2122 2165 2208 2252 2297 2343 2390 2438 2487
Total inflows (
a ) 11000 11620 15012 19679 20674 25948 28005 33797 40227 46598 53712 60472
Cash outflows
Fixed: Rent
and electricity 3000 2500 1500 2000 1200 3500 800 200 300 100 600 300
Variable :
Direct material 2500 350 200 3500 150 1200 300 400 500 100 100 400
Total outflows
( b ) 5500 2850 1700 5500 1350 4700 1100 600 800 200 700 700
closing
balance
( Total A- B ) 5500 8770 13312 14179 19324 21248 26905 33197 39427 46398 53012 59772
Interpretation- It has been interpreted from the above cash flow statement that total inflows is
more than the total outflows, which depicts that cash which is coming into an organisation is
more than cash going out of an organisation.
P5. Break even analysis
Break-even analysis is determined as a business tool which is used by organisations for
determining the profitability level. It helps the companies in covering costs in order to make a
profit. It is the point which helps in indicating profit in which a business entity bears no profit
and no losses (Lombardi, Makhni and Lombardi, 2019). It takes place when all the profits of a
business covers all expenses which are occurred in an enterprise. When a manager ascertains
break even point than it helps that manager of a small scale business in identifying the total
number of units which were sold.
Break-Even point is determined by manager of a small scale business in taking various
kind of important decisions and in increasing effectiveness of financial performance of an
2