Managing and Running a Small Business

This report focuses on managing and running a small business effectively. It covers topics such as sources of funds, cash flow forecasting, break-even analysis, and key financial statements. It also discusses the impact of regulations on small businesses.

UNIT 29 Managing and
Running a Small
Business

Executive Summary
From the report it can be summarized that small business is running by using different
sources in relation to fund that helps to run a business effectively. In competitive business
environment there are many organisation which are selling different types of products and
services. Cheshams Accountants Ltd is small business that is consulting company that providing
different services such as Tax, business decision making, business consultancy, cash flow
projections etc. that helps to run a business effectively. This report will focuses on how a
business can grow and be internationalisation by preparing different statements.

Table of Contents
Executive Summary.........................................................................................................................2
Table of Contents.............................................................................................................................3
INTRODUCTION...........................................................................................................................1
ACTIVITY 1...................................................................................................................................1
Task 1 (Completed in brochure)......................................................................................................1
Task 2 (Completed in brochure)......................................................................................................1
ACTIVITY 2...................................................................................................................................1
Task 3...............................................................................................................................................1
P4 Produce an annual itemised monthly cash flow forecast showing fixed and variable costs. .1
P5 How break even analysis can be applied to organisational situation.....................................6
P6 Key financial statement for organisation that have contributed to the successful
management.................................................................................................................................7
Task 4...............................................................................................................................................8
P7 Key legislations and regulations that has impacted on small business..................................8
CONCLUSION................................................................................................................................9
REFERENCE................................................................................................................................11

INTRODUCTION
Managing and running small business means growing of business by introducing new
technology and expansion of activities. In competitive business environment there are different
types of business and activities which are running by a person who have knowledge and
understanding about how to run a business and increases profitability. SME is a type of
organisation that involves small, medium and large performing activities and functions
effectively. To organise functions and activities managers are playing important role who
understand market demand and provide products and services. To understand about this
Cheshams Accountants Ltd that is small consulting business in Hounslow, United Kingdom.
This organisation is providing consulting to other clients for accountancy and helps to make right
business decision. This report covers small business or social enterprises plans, customer
relationship management process, development of cash flow forecast, budget and break even
analysis. Moreover, implication of regulation and legislation on small business that has impacted
on business.
ACTIVITY 1
Task 1 (Completed in brochure)
Task 2 (Completed in brochure)
ACTIVITY 2
Task 3
P4 Produce an annual itemised monthly cash flow forecast showing fixed and variable costs
Cash flow is the consider as total amount of money that being transferred in to and out of
a business which affects a liquidity. To run a business and paying the expenses there is need to
focus on fixed and variable cost that arises in organisation and needs to pay. To operating a
business and paying the liabilities there is need to use sources of fund that are as defined:
Sources of funds:
In business environment there are many resources of fund which are required to invest
the money in operational activities and functions which helps to increase the profitability.
Cheshams Accountants Ltd can use various sources of fund that are as defined:
1

Own saving – This means small businesses can be started and operate their business by
using their own savings which is uses to complete the basic needs and wants and processes to
continue the activities (Psychogios and Prouska, 2019).
Equity finance – In this Cheshams Accountants Ltd can arrange capital and fund by
issuing the equity share that helps to collect amounts and invest in business so it can be run
effectively (Amir, 2020).
Loans from family and friends – This is another source of finance which should be
used by Cheshams Accountants Ltd for collecting money and funds. This organisation have
option to take loan from family and friends who can help to run a business and increase
organisational effectiveness (Pearlson Saunders and Galletta, 2019) .
Bank loan – Cheshams Accountants Ltd has another option to arrange funds and money
for the purpose of investing get from bank loan. There is need to provide a security for loan
which can ensure that such loan amount will be paid on specified time period.
Leasing and hire purchase – The small business can raise fund by leasing and giving
their property on rent that help to receive a fixed amount on a fixed time period. As a result
management and accountant of Cheshams Accountants Ltd can continue their business
effectively (Hunter and Cohen, 2019).
.
Balance Sheet, P&L and cash flow statement of the Cheshams Accountants Ltd:
2

Profit and Loss Account at the year ended
3

Cash flow Statement
Cash budget for the year
4

Forecasting and budgeting
This is another process which is used by organisation to estimating the amounts which
can occurred in business activities and compare them with actual budgets which helps to
continue the business activities and increase organisational profitability. Budgeting is the activity
which is used to keep accurate calculation and maintain the good performance (Nouri and et. al.,
2019).
Calculating the moving average: This is a crucial method which used by organisation to
find out the views of all users by estimating the cost and expenses by presenting data. The
management of business are focusing on calculating the cost and moving them effectively. This
5

helps to create the opportunities and make profits by estimating the amounts (Bryant, 2019)
(Law, 2019).
Time series data: It signifies the span of time during which the building is finished. Thus
firm can find the time quickly. Via this Cheshams Accountants Ltd, in the period they used this
strategy, they would comfortably complete the activities. This tends to improve productivity in
carrying out both operations and duties (Haverkamp and de Vries 2019).
Dealing with seasonality – This is another technique of forecasting and budgeting that uses
by companies to deal with season in relation to business and perform it well. If there is no season
of business then organisation can face challenges due to off season. To remove this there should
be effective planning that can help to maintain the good performance and forecasting the budgets
(Jefrey, 2019).
P5 How break even analysis can be applied to organisational situation
Break Even analysis – This is consider as a financial tool which is used by organisation
to determine that at what stage organisation, new products and services will be profitable. This
states the position of business that can help to increase the profitability and productivity. By
using this, a company get information about number of selling the products and services. In other
words, break even analysis is effective tools which are used by organisation to reduce the cost of
business and maintain an equal level of position of business. Cheshams Accountants Ltd is using
this tool and suggesting to its clients for using this tool that helps o prevent to bear heavy loss.
By using this, management can get equal level of profits and loss that can maintain the brand
awareness (Kanapathipillai and Azam, 2019).
6

Uses of budgets, performance monitoring and control – Budgets are the special
document of organisation which is prepared by management by estimating all income and
expenses which helps to run a business accordingly. In context to Cheshams Accountants Ltd,
accountant prepare a budgets for companies by involving all expenses which are going to
incurred in business that needs to monitor and control effectively. Thus helps to increase the
organisation performance and maintain good performance (Knox, 2019).
Variance analysis – This is consider as a quantitative investigation which is showing the
difference between actual and planned behaviour. This analysis should be used by Cheshams
Accountants Ltd by knowing the variance. For example, the management has budgeted sale is
$20,000 and actual sales are $16,000, variance analysis yields a difference of $4,000. This is
called variance analysis which should be defined by organisation and needs to make profits.
P6 Key financial statement for organisation that have contributed to the successful management
Financial statement are the final document of company which is prepared by management in
order to know their financial position in market. For small businesses it is important that to
prepare financial statement that can help to know the financial position of business and increase
the profitability. In context to Cheshams Accountants Ltd, different statement are prepared by
management that are as defined:
Balance sheet – This is company documents that involves assets and liabilities of a company
and increase the organisational financial position. Through this, a business can maintain their
7

productivity and profitability which is required to deal with business activities. This determine
the liability which is required to pay and then state profitability (Kapitsinis, 2019).
Cash flow statement – Cheshams Accountants Ltd are preparing cash flow statement by
involving inflow and outflow of business. With the help of this, management can get operating,
investing and financing activities which helps to run a business and increase the profitability.
Profit and loss account – This refers as statement which is used by management in order to
know the profitability. This involves incomes and expenses which incurred in organisation that
helps to maintain the profits and loss appropriately (Duan Chen, Zou and Nover, 2019).
Analytical and quantitative techniques:
This is important for organisation to find the break even analysis that can help to improve
the strength and weakness of business. This helps to manage a business appropriately and
accurately.
The element of working capital are uses by chosen organisation that are as defined:
Bills receivable – This is important element of working capital that help to convert the
bill receivable in to cash in less time.
Cash inventory – This is another element which uses by organisation to run a business
as it is liquid inventory in organisation.
Inventory – Stock is working capital element which can be used by organisation to
convert the stock in to cash in less time period.
Task 4
P7 Key legislations and regulations that has impacted on small business
Rules and regulation are those legislation which should be used by organisation in their
small business that can help to maintain a business and improve the business activities. if
organisation is following all legislation then it can increase the organisational productivity and
profitability. Cheshams Accountants Ltd is facing different legal issues that involves waste and
environmental regulation which are decreasing productivity and selling activities. Not following
professional practice guidelines and local planning restriction that has impacted on business
negatively and needs to be improve.
8

To remove all problems and running a small business effectively different legislations are
followed by management that are as defined:
Recording and keeping information – According to this legislation Cheshams
Accountants Ltd should records data and keep information properly that can help to run a
business continuously (Feldmann, Kernschmidt, Wimmer and Vogel-Heuser, 2019).
Tax and employment – This means organisation should follow all regulations in relation
to tax and employment to employees that can help to retain skilled and talented person in their
organisation and increase the organisational productivity.
Data protection – This act states that all businesses should follow data protection rules and
regulation which help to provide a clear data about organisation. The management of Cheshams
Accountants Ltd should follow protect the important data from leaking that can help to retain the
employees that helps to manage the organisational performance.
CONCLUSION
From the above report it can be concluded that small business are those business which are
running at small area and uses different activities which helps to maintain the organisational
productivity. Break even analysis is a tool which should be used by organisation to know the
profits and loss of their company. There are different statements which are prepared by
organisation in order to know the financial position of company and get right information.
9

10

REFERENCE
Books and journal
Psychogios, A. and Prouska, R., 2019. Managing People in Small and Medium Enterprises in
Turbulent Contexts. Routledge.
Amir, A. M., 2020. FAMILY MANAGEMENT STRATEGIES IN MANAGING FINANCES
THROUGH SMALL BUSINESSES. Academy of Strategic Management Journal. 19(3).
Pearlson, K. E., Saunders, C. S. and Galletta, D. F., 2019. Managing and using information
systems: A strategic approach. John Wiley & Sons.
Hunter, A.P. and Cohen, S., 2019. New entrants and small business graduation in the market for
federal contracts. Rowman & Littlefield.
Nouri, F., and et. al., 2019. Managing employees undergoing total hip and knee replacement:
experiences of workplace representatives. Journal of occupational rehabilitation, 29(2),
pp.451-461.
Bryant, C., 2019. Managing development in the Third World. Routledge.
Zakarya, M. and Gillam, L., 2019. Managing energy, performance and cost in large scale
heterogeneous datacenters using migrations. Future Generation Computer Systems. 93.
pp.529-547.
Law, C. H. C., 2019. Managing Enterprise Resource Planning Adoption and Business
Processes: A Holistic Approach. Cambridge Scholars Publishing.
Haverkamp, R. and de Vries, H. J., 2019. Managing In-Company Standardization While
Avoiding Resistance: A Philosophical-Empirical Approach. In Corporate
Standardization Management and Innovation (pp. 92-125). IGI Global.
Jefrey, R., 2019. Managing global cyber security implementation project using PMI
methodology in a manufacturing company.
Kanapathipillai, K. and Azam, S. F., 2019. A Conceptual Understanding of the Critical Factors
That Induce Women Entrepreneurial Success in the Klang Valley, Malaysia. European
Journal of Management and Marketing Studies.
Knox, T. L., 2019. Organizational Strategies to Grow Mature Small Information Technology
Businesses.
11

Kapitsinis, N., 2019. The impact of economic crisis on firm relocation: Greek SME movement to
Bulgaria and its effects on business performance. GeoJournal. 84(2). pp.321-343.
Duan, W., Chen, Y., Zou, S. and Nover, D., 2019. Managing the water-climate-food nexus for
sustainable development in Turkmenistan. Journal of Cleaner Production. 220. pp.212-
224.
Feldmann, S., Kernschmidt, K., Wimmer, M. and Vogel-Heuser, B., 2019. Managing inter-
model inconsistencies in model-based systems engineering: application in automated
production systems engineering. Journal of Systems and Software. 153. pp.105-134.
Online
About Cheshams Accountants Ltd. 2020. [Online]. Available through:
< https://www.cheshams.com/ >
(Psychogios and Prouska, 2019) (Amir, 2020) (Pearlson Saunders and Galletta, 2019)
(Hunter and Cohen, 2019) (Nouri and et. al., 2019) (Bryant, 2019) (Law, 2019) (Haverkamp and
de Vries 2019 Jefrey, 2019) (Kanapathipillai and Azam, 2019) (Knox, 2019) (Kapitsinis, 2019)
(Duan Chen, Zou and Nover, 2019) (Feldmann, Kernschmidt, Wimmer and Vogel-Heuser, 2019)
12