Small Business InTRODUCTION 3 TASK 13 P1 How small business can develop transnationally

Managing and Running a Small Business INTRODUCTION 3 TASK 13 P1 Considerations needs to address when planning and allocating resources to achieve business objectives 3 TASK 24 P2 Different process of customer relationship management 4 P3 How small business can develop transnationally and determine benefits and drawback 5 TASK 36 P4 Annual itemised monthly cash flow forecast showing fixed and variable costs set against income 6 P5 Break-even analysis could applied to an organisational situation 7 P6 Financial statements in relation to how they

Managing and
Running a Small
Business

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Considerations needs to address when planning and allocating resources to achieve
business objectives......................................................................................................................3
TASK 2............................................................................................................................................4
P2 Different process of customer relationship management.......................................................4
P3 How small business can develop transnationally and determine benefits and drawback .....5
TASK 3............................................................................................................................................6
P4 Annual itemised monthly cash flow forecast showing fixed and variable costs set against
income.........................................................................................................................................6
P5 Break-even analysis could applied to an organisational situation ........................................7
P6 Financial statements in relation to how they contribute to the successful management of
the organisation...........................................................................................................................8
TASK 4 .........................................................................................................................................12
P7 Key legislation and regulation.............................................................................................12
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Small business is privately owned organisation which have few employees as well as
generate less revenue in comparison of other regular size association. At present, small scale
association help in growth of economy by offering employment opportunities to several peoples
(Adisa, Abdulraheem and Mordi, 2014). This report is based on, The little one Coffee shop
located in London and serving products like coffee, muffins, espresso, crepes and so on.
Respective shop don't have much space but they provide seating to their customers.
This assignment will going to discuss requirement of small business while planning and
allocating resources. In addition to this, report will highlight several process related to customer
relationship management along with this how small business can develop transnationally also
discuss with its benefits and drawbacks. Moreover, for managing success of corporation break-
even, financial statements and cash flow will described. In the end, legislations and regulation
will be discuss which have to follow by small business.
TASK 1
P1 Considerations needs to address when planning and allocating resources to achieve business
objectives
Small scale organisations are those which privately owned and there are not more than 50
employees as well as there sales volume is less in comparison of other scale association. Such
companies don't have high budget, thus for them it is important to consider all essential factors
before business operations as well as resources allocation. There are some major consideration
which The Little One Coffee Shop have to undertake at the time of planning as well as allocating
resources for accomplishing objectives of company. Explanation of these are as follows :-
 Ability and skills of employees – It is crucial for organisation to analyse skills and
ability of there employees before allocating the resources. So that, allocation will be done
in effective manner and result in accomplishing objectives (Anderson and Ullah, 2014).
Such practices will result in eliminating resources wastage and result in bringing
effectiveness within firm. In addition to this, it also result in gaining competitive
advantages over competitors within market area. Thus, it result in accomplishing goal of
The Little One Coffee Shop effectively as well as efficiently.

 Physical Resources – These are tangible resources of organisation and all these are
necessary as well as available for conducting business function. Physical resources are
mainly inventories, storage information system, equipments and so on. It is important for
manager of The Little One Coffee Shop to evaluate there available physical resources and
after that allocate them in effective manner. So that, daily basis operations will conduct in
effective manner without wastage and over utilisation of available resources.
TASK 2
P2 Different process of customer relationship management
Customer relationship management is the tool which utilise by an organisation while
interacting with their current as well as potential customers (Bridge and O'Neill , 2012). For long
term sustainability and generating revenue it is important for an business firm to build relation
with customers and convert them into loyal. Main motive of customer relationship management
is to gather important information about customers which help them in making satisfied. There is
proper process of CRM for The Little Coffee Shop explanation are as follows :-
 Set a target – Within CRM first step is to identify goals and after that do planning after
that for accomplishing setted predetermined goals. Main target of he Little One Coffee
Shop is to accomplish high market share and to maintain wide network for distribution
around United Kingdom.
 Prioritize customers -In next step manager of company will prioritize their customer
base for identifying that how profitable they are. For example, for an organisation
returning customers are valuable. Thus, as per traits of customers they are segmented so
that CSR efforts will be implemented for building long relation.
 Communicate with employees – Next step after prioritizing is to implement strategy
which has been designed for improving customer relation. Within this, The Little One
Coffee Shop involve their employees also for designing effective strategy.
 Track customers – Next step is targeting customers as company should have to try for
gathering information related to targeted customers. This can be possible through social
media or by identifying their views related to offerings. It will assist in analysing demand
of customers as well as their expectations towards company's offering.

 Asses information collected – Its time to work on information collected so that changes
will be made according to their need and wants in effective as well as result in making
customers satisfied. Thus, by assessing data The Little One Coffee Shop have to modify
their existing strategy and implement new as per requirement.
 Continual improvement in relationship – Respective organisation should have to ask
their customers about feedback as well as have to take suggestions from them for
continuous improvement.
P3 How small business can develop transnationally and determine benefits and drawback
In an organisation transactional strategy will be use when they want to operate their
business activities at global level. Such companies have their headquarters within parents nation
as well as subsidiaries within another countries (Chiliya and Roberts-Lombard, 2012). In case
of small scale association, they can set subsidiaries in several nations by analysing market as
well as opportunities available within market area. Although, transactional activities provide
assistance to small business in their growth at worldwide level by serving new customers and
generating high revenue.
The Little One Coffee Shop can design their transactional business through setting their
business with other people who want to start coffee shop. There are some benefits and drawback
of the same explanation of these are as follows :-
Benefits :-
 Tax benefits – Business firm who are operating at worldwide level gain major benefits of
low tax rate with other nation in import and export transactions. Because government in
some other nation give tax rebate for attracting investors who perform their business
operation in their country.
 Brand recognition – The Little One Coffee Shop will gain high brand recognition when
they conduct their business operations at international level. Such practices result in
generating high revenue as well as result in growth of business.
Drawbacks :-
 Expensive – Small Scale organisation don't have much funds for them transnational
business is major disadvantage as it is much expensive activity. There are numerous cost
included within this such as obtaining permit, acquiring facilities and many more which
are not in the reach of small scale organisation.

 Risk of Failure – Every region have their different political and legal requirement which
is not possible for small scale business to meet in proper manner. Thus, there is chance of
failure in business operation at global level. Apart from this, every country have different
culture and religion so it cannot be ensure that product offering by The Little Coffee
Shop will be like by people. Thus, there is chance of failure and high loss for company.
TASK 3
P4 Annual itemised monthly cash flow forecast showing fixed and variable costs set against
income
Financial resources are simply available fund which utilise for financing operational
activities of company in form of credit lines, liquid security, capital and so on. It is important to
have adequate amount of funds because it help in performing operational activities within
effectual manner as well as result in gaining competitive advantages. For, The Little One Coffee
Shop there are some major source of generating funds explanation of these are as follows :-
 Bank Loan – This is one of the major source for generating funds for several companies.
Simply bank loan is the amount credited by bank and it is repayable after some fixed
duration on the interest rate which has been fixed by bank (Crane and Matten, 2016).
 Hire purchase and lease – It is also source of generating fund in that company have to
give their property on leader to some other for some fixed time period. Within this,
organisation generate funds that are in the form of rent.
 Equity Finance – It is fund raising source which can be use by business firm through
selling their share. In present scenario, The Little One Coffee Shop is not able to sale
their share because it working at small level. As well market value of their share is low so
equity finance is not suitable source.
Thus, The Little One Coffee Shop use Bank Loan as source for generating funds.
Because it is secure and their will be less chances of any type risk.
Cash flow statement
(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
P5 Break-even analysis could applied to an organisational situation
Break-even analysis is financial tool that assist an organisation in identifying that at what
stage company , product or services will be profitable (Fayol, 2016). It is a situation, in which

business firm making neither money or losing it but cost have been covered. Moreover, break-
even analysis provide assistance to The little one Coffee Shop in determining quantity of sales or
number of products that have to be sold. Within this, business firm shall calculate various break-
even point at several sales volumes along with this allow company to known how much profit is
generated within different sales volumes. Formula of Break-even analysis are as follows :-
Break-even point (in units) = Fixed cost / contribution per unit
Illustration 1: Break-even analysis
( Source: BEP Analysis, 2019)
For this, Company has been assumed that its sale will be 10,000 in present circumstances
and business firm will conduct this analysis by taking present sales unit
(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 90000
Break-even point (in units) 9000
Thus, From above break-even analysis it has been summarised that The Little One Coffee
Shop have its Break-even point at 10,000 Units, at this situation there is no profit and no loss. If
respective Coffee Shop want to generate more revenue then they have to sell some unit more
then 10,000 units which is their current sale. So, for this company it has been recommended they
can improve their profitability by decreasing variable cost or selling more units.

P6 Financial statements in relation to how they contribute to the successful management of the
organisation
Final accounts are those which an organisation prepare at their last stage of accounting
cycle. It reflect both financial position of company with their profitability as well as final account
of Company use by internal and external parties for several purpose. Trading account, balance
sheet and P&L all together are know as final account.
Income Statement of The Little One Coffee Shop for the year ended 25th March, 2019
Particulars 25th March 2019 (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

Balance Sheet of The Little one Coffee Shop as at 25th March 2019
Particulars 25th March, 2019 (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
Cash Flow of The Little one Coffee Shop for the year ended 25th March, 2019
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Particulars 25th March 2019 (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
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Financial accounts interpretation by utilising ratio analyses -
1) Current ratio = Current Assets/ Current Liabilities
2018-19
40200 / 17800
2.26
Thus, Current ratio simply explain relationship within current assets and liabilities as well
as it is also known as working capital ratio. Its Ideal ratio is 2:1, Company's current ratio is
greater than this which simply shows that liquid position of business is better.
2) Quick ratio = Quick Assets / Current Liabilities
2018-19
31700 / 17800
1.78:1
In comparison of Current ratio, quick is more rigorous for testing liquidity. Ideal quick
ratio is 1:1 and The Little One Coffee Shop ratio is 1.78:1 which simply shows that respective
organisation have good quick ratio which help them in competing within industry.
3) Gross Profit ratio = Gross Profit / Sales * 100
2018-19
34500 /200000 *100
17.25%
This ratio gives percentage of gross profit in terms of sales and company should have to
enhance their gross profit ratio in comparison of last year. At present The Little Coffee Shop
Have gross profit of 17.5% which is better.
4) Net Profit ratio = Net Profit / Sales * 100
2018-19
26800 / 200000 *100
13.40%
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Simply net profit ratio reflect its percentage in terms of sales as well at present The Little
One Coffee Shop Have 13.40% within 2018-19. it is consider as business good performance and
respective business firm has earned good net profit.
TASK 4
P7 Key legislation and regulation
Legislations is preparing as well as enacting laws through local, state or national
legislatures. On the other hand regulation are principle or rule which employed in directing,
controlling, organizing or managing activities (Hatten, 2015). There are some key legislation
and regulation which have to be follow by The Little one Coffee shop. Explanation of these are
as follows :-
Healthy and Safety act – This act was introduced in 1974 which lays down several
duties on employers in relation to health and safety of their employees. It is important for an
employer to protect health, safety as well as work for the welfare of their staff members along
with some other people also on premises such as clients, general public, visitors etc.. This act
help in providing safe working environment to employees which create positive environment and
result in increasing productivity. Furthermore, healthy and safe surrounding result in increasing
morale as well as support staff for performing in well manner. As per respective act, training
have should be provided to personnel when they are working with any dangerous or difficult
tool.
Data protection act – This is United Kingdom Act of parliament that was given in 1988.
Data protection act was developed with the motive of controlling how personal or customer
information will be used by government bodies. In simple term, it protect people and given some
rules that how data about customers have to be use by organisation (Karadag, 2015). It is not
only for customers but also for staff members as company is liable for security of their data and
it should not have to share with anyone. Thus, The Little One Coffee shop have to implement
respective act within their working which help in providing data safety to customers and
employees which result in creating positive environment.
Employment Act – This act mainly governs relation within employees and employers by
defining their rights as well as duties within organisation. Along with this, motive behind
creating this law keep staff member safe as well as treat them in fair manner without any type of
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discrimination. There are several rules and regulation consist within employment act all these are
related to fair compensation, working condition as well as employees rights. He Little One
Coffee Shop should have to implement respective law within their working by considering
personnel needs and expectation like working condition, compensation and so on for avoiding
legal compliances.
Labour Compensation – This law state that The Little One Coffee Shop have to provide
fair and equal compensation to their staff members of their work (Sampaio, Thomas and Font,
2012). There should not any type of discrimination between staff members on the basis of
gender, age, cast, religion and so on. Respective company have to implement this law for
avoiding any type of legal compliances which may give negative impact on goodwill of business.
Thus, he Little Coffee Shop have to provide equal remuneration to their personnels without any
type of discrimination.
CONCLUSION
From overall discussion it has been analysed that, Small business are important part of
economy as they help in its development by enhancing per capita income and providing
employment opportunities to people. Along with this, there are several consideration which have
to be consider while planning for small business because it may give direct impact on its
working. Along with this, for small scale association it is important to build relation with their
customers and convert them into loyal. Because it help in generating revenue as well as long
term sustainability of company. Along with this, there are some legislation and regulation given
by government of every nation and have to be followed by small business working within
business environment.
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