Developing Successful Small Businesses

This assignment delves into the critical factors essential for establishing and growing thriving small businesses. It examines the need for a robust financial foundation, dedicated research and development capabilities, strong leadership, innovative thinking, competitor analysis, and effective communication skills. Additionally, it explores strategies for fostering diversity within businesses to achieve sustainable growth.

SMALL AND MEDIUM SIZED
ENTERPRISES

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Contemporary issues in small and medium sized businesses.................................................1
Strategic issues in SME businesses........................................................................................2
Alternative routes of business development in SME.............................................................3
Diverse business development methods in SME....................................................................4
Financial aspects of business expansion in SME...................................................................5
Change and development process in SME.............................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Small and medium sized organisations in the UK operating as private firms are the main
factors to improve and develop business growth in nation effectively. The report will cover
contemporary issues within Azio which is a SME business within UK with 48 employees.
Strategic issues are discussed in this report associated with SME. Different alternative routes of
business development methods will be studied here as well in context of SME. Diverse business
development methods and financial aspects of business expansion will be explained too. Finally,
the report will cover change and development process associated with Azio within UK.
TASK 1
Contemporary issues in small and medium sized businesses
There are many key challenges faced by small and medium sized businesses today in
UK. It can be said that 99.9% businesses in the UK are private and holding a large number of
SME effectively. Azio is one of them which is an electrical keyboard making firm with a small
number of 48 employees. There is a significant impact of contemporary issues within Azio such
as:
 Leadership: There is no academic qualification to be a leader of an SME and as a
suspect if one were offered most entrepreneurs eager to get started wouldn’t do it any
way. Leading people in a running business without any skilled and knowledgeable leader
is a challenging work for organisation. Thus, leadership plays an important role in Azio
in order to manage human resources.
 Strategy: A consequence of a lack of leadership development is a lack of business
planning in most of the SME. Business planning tools are necessary to focus what
matters for the firm in terms of profitability and production (Brunswicker and
Vanhaverbeke, 2015).
 System and process: A lot of smaller businesses seem to think having systems and
processes that make them less competitive. The process and system of delivering quality
goods and services is also necessary to achieve customer satisfaction and requirements.
 Cash flow: The managers in firm should manage the cash flow in order to manage
resources effectively. This will help them to manage different operational costs under the
budget. This will lead towards the financial goals and objectives.
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 Staff Turnover: Staff turnover is the major challenge for firm in order to manage and
control them effectively. This can be described as number or percentage of workers who
leave organization and are replaced by new employees. Measuring employee turnover
can be helpful for employers that want to examine reasons for turnover or estimate the
cost-to-hire for budget purposes.
 Growing Revenue: It should be no surprise that growing revenue tops the list of business
challenges for small businesses. It helps towards business expansion, future growth and
create opportunities effectively. Strategies help businesses and managers to achieve the
desired goals and objectives by managing work from employees and effective
management.
 Raising Capital/Funding: Securing funding to get off the ground and begin expanding
is not a surprising obstacle for small businesses to face. Thus, the firm should take initial
steps to raise its capital effectively. Lack of system and process decrease the effectiveness
of business operations.
Strategic issues in SME businesses
There are number of strategic issues within SME firms such as Azio is suffering from
lack of leadership and strategic planning (Hillary, 2017). Strategies and plans are important for
the firm in order to manage resources, strategic focus, competencies, products and services as
well as cultural modifications. Lack of effective strategy can cause some issues as described
below:
 Products and services: Products and services require an effective strategic plan to
develop and improve. Managers are responsible for making strategies towards quality as
well as effective products and services. Lack of communication also causes strategic
issues. Thus, strategies towards products and services should be managed by firm in
order to increase sales and production.
 Unmeasurable goals: Goals are the main indicators for employees within firm which
help to identify what should be achieved in a specific time effectively. Goals can be
effectively designed and measured by reviewing the previous year’s data and
information.
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 Unclear or inaccessible strategy: Strategies should be placed in the form of documents
within firm. Moreover, your employees have enough problems in a day without having to
discern what role they play in that multi-page document. The strategic plan should be
well defined and clear that each role of different department can be easily understood.
 Resources limitations: SME firms are suffering from resource limitations. Lack of
strategic plans cause a major problem of managing different resources within Azio.
Management of resources is necessary to expand the business operational activities
(Hilmersson, 2014). This will help to achieve the financial goals as well by managing
resources under the cost.
 Fail to achieve innovation: It can be said that strategic plan is important for making the
changes within firm. Changes are necessary to improve and develop organisation as well
as employee’s performance level. Lack of strategic plan will decrease the innovation and
changes effectiveness. This will also reduce the profitability and production; an effective
plan can help to achieve competitive advantage. Lack of strategies prevent managers to
achieve innovation targets. This will also reduce the impact of innovation towards
business profitability and production.
 Motivation: Employee buy-in is very important for small businesses in particular, as
there tend to be fewer of them and apathy has a greater impact. There’s a real need to
understand what employees want effectively. Happy employees always help towards
strategical decision making of managers in order to increase production and profitability.
 Overheads: Overheads is one of the major problem for small businesses. Resolving them
involves paying close attention to what customers actually want and providing products
or services sharply tailored to suit.
Alternative routes of business development in SME
Business development needs are crucial for SME firms in order to expand their business
operational activities. In order to do that, certain things are required such as strong financial
position, research and development facilities, management and leadership skills, creativity,
competitor analysis and communication skills with strategies. This will help SME and Azio firm
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within UK to develop and grow its business effectively. Here are some of them is described
below as an alternative route for business development:
 Collaboration and partnership: The firm is able to make a partnership with other
organisations that have complementary products and services. This will help to create
awareness towards businesses and will increase the production as well as sales. This is an
effective way to develop and grow business (Karadag, 2015). Azio can easily make a
collaboration with any other electrical firm in order to expand business operational
activities and development.
 Finance: One of the major needs of SMEs is finance. Although, there are so many
strategies formulated by government in order to reduce this problem to a minimum level,
still, the problem is same and there are no routes for SMEs to increase their capital.
Funding from friends, family members and relatives will help to develop the performance
and improvement of business.
 Management and leadership skills: Azio is able to appoint a manager or leader with
quality skills and knowledge in order to develop its operational activities. It can be said
that an effective leader through his leadership can easily manage the growth of business.
This will help to achieve the desired goals as well as objectives.
 Creativity: Creativity is crucial for SME that new products and services can be made by
creative minds. Azio requires new innovative ideas to rebrand the existing ones and
develop business growth. For an example, creativity is increasing production and
reducing production cost which will help to access more profitable market. New
innovations and creative ideas help business management to develop and improve
operational activities.
Diverse business development methods in SME
Development is necessary for the firm to increase its profitability and production. There
are different diverse methods which help Azio to develop its market share. Diversity of a
business requires certain strategies and development methods which will help to achieve the
growth (Moro, Fink and Maresch, 2015). Here are some business development methods to bring
diversity within business as described below:
 Identification of needs: The firm should evaluate key potential areas which require
improvement and development. This will be done by compiling data and information
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regarding employees and operational activities of business effectively. Once the data is
collected, firm should identify development needs and areas.
 Address policies or practices: Managers must determine if there are barriers impeding
the employment of individuals from different demographic groups. Policies and practices
should be considered by the firm in order to adjust and eliminate them. This will help to
achieve business development and diversity effectively. Policies and practices will
provide development chances for firm in order to increase sales and profitability.
 Identification of business objectives: The managers are responsible to identify how a
diverse and inclusive workforce can aid in accomplishing organisational objectives and
goals associated with strategies and processes. Some specific goals should be settled by
the firm in order to relate them with diversity and strategic objectives.
 Implementation of initiatives: Examples of diversity and inclusion initiatives are
changed in policies and practices, staff training, targeted recruiting and employer-
sponsored diversity as well as inclusion awareness events for employees (Perera and
Chand, 2015). An action plan is required to enhance the business value that is readily
achievable to build momentum for initiatives effectively. The business should make
regular changes in order to develop business growth which lead towards profitability and
production.
In practical life, the term Business Development Strategy has evolved into several
application and usage. In this age, the tasks of business developer are very varied and interesting.
It has a wide application group starting from IT professional to engineers, from marketing
management to prospective client. Recent research has pointed out the co relation between
emerging business development solution to an innovations management procedure effectively.
The methods are useful that it helps to increase economy level particular country. Policies
and practices should be considered by the firm in order to adjust and eliminate them. Some
specific goals should be settled by the firm in order to relate them with diversity and strategic
objectives. Although, there are so many strategies formulated by government in order to reduce
this problem to a minimum level, still, the problem is same and there are no routes for SMEs to
increase their capital. The firm should ensure that whether decisions are right and according to
the employee’s satisfaction in order to expand the business or not. Thus, market analysis is a
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crucial aspect for business in order to drive business performance which lead towards expansion
as well.
Financial aspects of business expansion in SME
Financial aspects can be described as a business function that uses numbers and
analytical tools to help managers to make better decisions. Financial analysis will help the
business to gain a clear understanding of current financial position of firm effectively. There are
some financial aspects which help to drive business expansion as described below:
 Market analysis: Market analysis is crucial for all small and big firms in order to
determine their position in the market effectively. Market analysis will help to identify
customer’s needs and requirements which will help SME businesses to manage their
products and services accordingly. It will also help to assess whether the firm is able to
launch a new product or service or not.
 Financial statements: Financial statements should be prepared by the managers and
professionals in order to evaluate the performance of business regarding financial
activities. Financial statements are also prepared within a particular time period such as
quarterly, yearly or if necessary. This will help to manage the cost of resources and will
lead towards the business expansion.
 Decision making analysis: Decisions are important for all the firms in order to manage
and control different departmental activities (Tolstoy, 2014). A large decision for which
finance provides guidance could be whether to acquire a competitor in order to grow the
company more quickly and effectively. The firm should ensure that whether decisions are
right and according to the employee’s satisfaction in order to expand the business or not.
 Forecasting and planning: Planning is a process in which management of Azio is able
to evaluate numerical goals for the upcoming time period. This will help to make long
term plans and actions to be taken in a time frame effectively. Planning also helps to
forecast the performance of business and lead towards expansion. Planing and forecasting
will also help to achieve business expansion goals by providing effective management of
resources and other activities within Azio. Thus, market analysis is a crucial aspect for
business in order to drive business performance which lead towards expansion as well.
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Change and development process in SME
Developmental changes are those you make to improve current business procedures. As
long as you keep your staff well informed of changes, and give them the training they need to
implement process improvements, they should experience little stress from development change.
Changes are necessary for SME in order to develop and improve the business performance. This
will also help to assess market through market analysis and evaluation (Volery, Mueller and von
Siemens, 2015). This will provide relevant data and information which will help to manage the
changes within firm effectively. Marketing strategies refocusing and upgrading payroll process
are some effective development methods.
 Management support for changes: Management should support employees that will
help to motivate and encourage them towards work. It is critical that management shows
support for changes and demonstrates that support when communicating and interacting
with staff.
 Involvement of employees: All efforts are made by employees within Azio that
involvement of workers is really important for firm in order to make changes for the
purpose of development. Changes can be made in work in progress, customer satisfaction
techniques, way to reduce cost and implementing the planning process effectively.
 Communication: Communication is an effective process that can change organisation
structure in a systematic manner. Employees can be described as a mercy for
management to inform them about changes (Wang and Yang, 2016). Poor
communication process starts spreading rumours and conflicts which prevent
effectiveness of changes. This will help managers that suggestions and feedbacks will
help to manage development changes effectively. Thus, communication is required to
make effective changes through suggestions.
 Implementation: Finally, when the changes are planned, it’s time to implement them
within firm effectively. A timeline should be made for the implementation and changes
should be made in the order of its impact on the process and the employees who manage
that process. For an example, if Azio is making changes in process of making keyboards,
employee’s training should be provided by management for effective changes in the
process.
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Thus, it can be said that changes and development in SME help to drive performance
which leads towards profitability and production effectively (Zhou, 2016). Changes should be
made in accordance with the employee’s satisfaction.
CONCLUSION
From the above analysis, it can be concluded that businesses in UK are private and
holding a large number of SMEs effectively. There is a significant effect of contemporary issues
within Azio. There are number of strategic issues within SMEs such as Azio is suffering from
lack of leadership and strategic planning. In order to make development, some certain changes
are required such as strong financial position, research and development facilities, management
and leadership skills, creativity, competitor analysis and communication skills which will help to
manage effectiveness. Diversity of a business requires some certain strategies and development
methods which will help to achieve growth. .
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REFERENCES
Books and Journals
Brunswicker, S. and Vanhaverbeke, W., 2015. Open innovation in small and medium‐sized
enterprises (SMEs): External knowledge sourcing strategies and internal organizational
facilitators. Journal of Small Business Management. 53(4). pp.1241-1263.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Hilmersson, M., 2014. Experiential knowledge types and profiles of internationalising small and
medium-sized enterprises. International Small Business Journal. 32(7). pp.802-817.
Karadag, H., 2015. Financial management challenges in small and medium-sized enterprises: A
strategic management approach. Emerging Markets Journal. 5(1). p.26.
Moro, A., Fink, M. and Maresch, D., 2015. Reduction in information asymmetry and credit
access for small and medium‐sized enterprises. Journal of Financial Research. 38(1).
pp.121-143.
Perera, D. and Chand, P., 2015. Issues in the adoption of international financial reporting
standards (IFRS) for small and medium-sized enterprises (SMES). Advances in
Accounting. 31(1). pp.165-178.
Tolstoy, D., 2014. Differentiation in foreign business relationships: A study on small and
medium-sized enterprises after their initial foreign market entry. International Small
Business Journal. 32(1). pp.17-35.
Volery, T., Mueller, S. and von Siemens, B., 2015. Entrepreneur ambidexterity: A study of
entrepreneur behaviours and competencies in growth-oriented small and medium-sized
enterprises. International Small Business Journal. 33(2). pp.109-129.
Wang, M.H. and Yang, T.Y., 2016. Investigating the success of knowledge management: An
empirical study of small-and medium-sized enterprises. Asia Pacific Management
Review. 21(2). pp.79-91.
Zhou, B., 2016. Lean principles, practices, and impacts: a study on small and medium-sized
enterprises (SMEs). Annals of Operations Research. 241(1-2). pp.457-474.
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