BUS 101: Managing and Running a Small Business Report

This report provides a comprehensive analysis of managing and running a small business, using Goodhood, a clothing company, as a case study. It covers key considerations in business planning and resource allocation, emphasizing the importance of premises, raw materials, financial resources, and strategic goals. The report evaluates customer relationship management strategies, including customer portfolio analysis, customer intimacy, and network development, highlighting their impact on customer loyalty and business success. Furthermore, it explores transnational business development, discussing the benefits and drawbacks of entering international markets through mergers, joint ventures, and exporting. The report also includes cash flow forecasting, examining fixed and variable costs, and illustrates the use of financial statements like balance sheets and profit and loss accounts to assess business performance. Finally, it outlines key legislation and regulations influencing small enterprises, providing a holistic view of the challenges and opportunities in the small business landscape.

MANAGING AND RUNNING
A SMALL BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Evaluation of customer relationship management for a small business................................1
TASK 2 ...........................................................................................................................................2
P2 Examining and evaluating customer relationship management.............................................2
P3 Small business can develop transnationally and determine benefits and drawbacks............4
TASK 3............................................................................................................................................5
P4 Cash flow forecasting showing fixed and variable cost.........................................................5
P5 Break even analysis applied in an organisational situations..................................................6
P6 Key financial statement which contribute in successful management...................................8
TASK 4............................................................................................................................................9
P7 Key legislation and regulation which influences small enterprise.........................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Small business play an integral part in a country, provides services related to convenience
store, small grocery shops, bakeries and many more. Therefore, small business can be operated
from houses or single room as it doesn't require a business license. For running their business in
an effective manner it is necessary that a proper strategies and plan of action is formulated so
that they can follow them for effective growth (Schaper and et. al., 2014). Goodhood is a small
company in London, United Kingdom and deals in clothing. Currently they are selling products
of 200 brands from their stores and because of which the are able to increase brand image. The
report will throw light on main considerations that are required to be addressed while planning
and allocating resources. Other than this, different process of customer relationship management
is evaluated that is essential for small business. To develop the small business by determining the
benefits and drawbacks. Annual itemised monthly cash flow forecast showing fixed and variable
costs to set against income is mentioned in this report so as to understand it in a better manner.
Lastly, key financial statements of an organisation in relation to know how they can contribute
for operating a successful business.
TASK 1
P1 Main consideration for business while planning and allocating resources
Goodhood is a small organisation that is operating its business in United Kingdom and
selling their product that are mostly clothing whether men's or ladies wear. Although the
company is running in small level but they are providing job opportunities to many people.
Company is taking help form consultancy firm so that they can expand their business in an
effective manner (Bridge and O'Neill, 2012). Therefore, all the employees are working together
in order to achieve a common goal so as to increase their market shares and values at the same
time. Some of the important considerations that are following by Goodhood are mentioned
below:
Planning Resources: For managing a small business there are some of the criteria which
have to be followed by an organisation and planning is one of them. This factor includes some of
the components which are given beneath:
Premises and equipment: Before making any plan it is important that superiors have a
proper knowledge about the tools, technologies and resources that are available to them. This,
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will help the organisation in providing better training to employees so that they can give
effective results. Other than this, a perfect environment at workplace should be given to
employees so that they can help the organisation for better growth.
Raw Materials: This is an important element which company need to focus because
without this firm cannot manufacture goods and resources. In context with Goodhood company,
their prime requirement is of threads, fabrics etc., so there is a need of maintaining a better
relation with their suppliers in order to get stuffs on time and in a right way.
People and skills: For running a business it is necessary that they company have ample
number of employees with effective skills and knowledge that they can apply for future
proceedings. Therefore, organisation also help them in doing so by providing them proper
training programmes.
Hence, for accomplishing the targets it is necessary that a strategic planning is done along
with the limited resources that are available to them (Keller, Parameswaran and Jacob, 2011).
Financial Resources: It is categorised as the most important element because in order to
implement new and innovative idea it is necessary that company has sufficient amount of finance
which they can use for future happenings. Goodhood has maintained a record of their financial
status by maintaining cash flow, balance sheet and many more. Other than this, for getting
appropriate funds they can take loans from financial institutions like bank, stakeholders etc.,
moreover, company will be able to produce goods right on time.
Goals, objectives and Vision: These are the essential components which help an
organisation in attaining the objectives and goals in certain period of time. Goodhood is
maintaining a healthy relations with their employees and conveying the message in an effective
manner so that all the task are accomplished right on time.
Goodhood at their workplace have implemented hierarchical structure under which
superiors have assigned all the work according to the capabilities of an individual. The are giving
importance to Transactional sales values, culture and beliefs of different people so that a mutual
understanding can be maintained which will enable them in obtaining the goals and objectives.
Therefore, management should have a set mission and vision that can be achieved in a
limited period of time (Brown, 2013).
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TASK 2
P2 Examining and evaluating customer relationship management
Customer relationship management consist of certain strategies, practices and
technologies which an organisation can optimise for having a better result in terms of
relationship with customers. For formulating better strategies company is taking feedbacks and
reviews form its consumers whom they are providing the products. Some of the steps are
mentioned below:
Customer portfolio analysis: It is considered as an essential element as it is related to the
needs and wants of customers. By manufacturing products as per the satisfaction level of
consumers they can generate more profits and revenues (Awais Ahmad Tipu and Manzoor
Arain, 2011).
Customer intimacy: This helps an organisation in knowing the requirements of clients as
a result it will assist the organisation in maintaining a healthy relation with consumers. It will
also aid them in having better communication with others.
Network development: For developing interaction between customers, Goodhood are
using appropriate tools and technologies that is helping them in sustaining loyalty with
consumers. Along with this, it is assisting them in communicating with employees and clients as
well.
Value proposition development: To sustain in the market for longer period of time it is
necessary that company make those product which can add value in their market shares.
Therefore, it is necessary that organisation should produce goods according to the preferences
and choices of customers (Wellin, 2016).
Customer life cycle management: To win the loyalty of consumers it is necessary that
products that are manufactured are as per the needs and wants which can fulfil their requirements
of customers. It will assist them in retaining the loyalty of consumers for longer period of time.
Therefore, customer relation is very important in order to get into a superior position at
market place. Other than this, some of the factors that helps a manager in having a better relation
are given below:
Assessment of customer value, acquiring and retaining customers: To retain the
consumer value it is important that company produce goods as per the preferences and choices of
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clients. Implementing new and innovative ideas will help the organisation in attracting more and
more consumers towards their company (Abouzeedan, Klofsten and Hedner, 2013).
Developing an effective channel for communication: In order to have a better outcomes
it is important that firm uses tools and technologies through which they can easily communicate
with customers and employees as well.
Therefore, Goodhood company is using internet for promoting their activities in better
manner as they are optimising this for making their customer aware of the products they have
introduced for selling.
P3 Small business can develop transnationally and determine benefits and drawbacks
Transactional Business Operations: This is an approach through which company try to
establish themselves internationally. There are many firms who first analyse market area and
than launch its business. Therefore, with this it provides an organisation an idea related to what
things company can mention in their strategies for attaining a better position at market area.
Henceforth, according to the choices and preference of customers in regards with products
Goodhood can make alteration in their action plan. As a result it will assist them in delivering
best quality products to its consumers. Other than this, company can face complications and
issues while establishing its business in different countries like rules and regulations, laws &
legislations etc., therefore, it will assist company in operating its business in an effective manner.
There are various kinds of ways through which company can enter into market area are
discussed below:
Mergers and acquisition: Under this component, Goodhood will lookout for foreign
company with whom they can merge so as to get better results in terms of sales and profitability.
Therefore, it will help company is establishing themselves in a better manner.
Joint Ventures: In this, two and more than two companies joint hands together so as to
operate its business commercially. Henceforth, it helps company in enhancing its sales and
profitability.
Exporting: Under this, sitting within the home country Goodhood company can sell its
commodities in different locations. As a result it is easier and firm can handle its operations form
their nation itself.
Benefits of transactional business development:
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Boarder market base: With the help of transactional business development Goodhood,
can increase its customer base as a result its range will be increase and gradually profitability.
Brand recognition: When company establish themselves in different market area not
only its sales will increases but also provides recognition to the brand. Therefore, in this context
company can use different platforms for promoting its activities.
Drawbacks of transactional business development:
Risk of failure: Establishing business to new place can lead to failure as people may not
trust the brand easily.
Expensive: For some people products which are provided by Goodhood can be expensive
because of which sales mat decrease and company can face loses.
TASK 3
P4 Cash flow forecasting showing fixed and variable cost
For every organisation it is important to forecast their business so that they can have an
overview of their company's growth whether it is increasing or decreasing. Goodhood is using
appropriate tools an technologies for making appropriate strategies which they can utilise for
having an effective growths (Harris, Rae and Misner, 2012). Other than this, organisation has
formulated a budget plan which will provide an overview of how much money will be required
for conducting the process in a systematic manner. Chances of failure can be reduced by
forecasting the future proceeding in a better manner. Therefore, by monitoring the performance
of employees on a regular basis company can evaluate the needs and wants of workers in order
to provide them the facilities through which all the set targets and goals are accomplished in
given period of time.
Therefore, fixed and variable cost on monthly basis is mentioned below so as to
understand it in a better manner:
Balance Sheet, cash flow statement, profit and loss account of Austin Fraser:
Year 2017 (value in 000, £) 2018 (value in 000, £)
Fixed assets 120 220
Stock 30 45
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Debtors 80 65
Bank 30 35
Total 230 340
Creditors 130 150
Bank overdraft 80 50
Total 670 905
Working capital 30 80
Profit and Loss Account at the year ended
2017 2018
Sales 40 60
Cost of sales 20 17
Gross profit 20 43
Overheads 8 9
Net. profit 12 34
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Cash flow Statement
Cash budget
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Beginning cash
balance 28000 26650 26470 26150 24450 24290 23990 22910 21760 20510
Sub. Fees 2500 3200 3550 2150 3500 3200 3400 3500 2500 3200
Total cash
available 30500 29850 30020 28300 27950 27490 27390 26410 24260 23710
Cash
distributed
Direct material 1500 1050 1650 1500 1550 1600 1750 1800 1450 1500
Direct labor 1300 660 850 850 680 780 1200 1250 1200 800
Overhead 500 650 630 700 670 580 650 700 500 450
Selling and
distribution 550 750 740 800 760 540 880 900 600 550
Total cost use 3850 3110 3870 3850 3660 3500 4480 4650 3750 3300
Cash surplus/
deficit 26650 26740 26150 24450 24290 23990 22910 21760 20510 20410
With the help of above mentioned table i.e. balance sheet, workers in an organisation
will know about liabilities and assets and accordingly they will execute their business operations.
According to the forecasting index the assets will be maximised by £50 in 2018 and also the
profitability level of firms will be increased and this is an important factor which results in
achieving growth and success for firms (Dugguh, 2015). All the activities of business should be
carried out according to the set business goals and objectives in order to achieve effectiveness in
their operations.
P5 Break even analysis applied in an organisational situations
Break even analysis is being considered as when firm is at a stage of no profit and no
loss. Both managers and leaders do not make any sort of changes as there is a possibility of
facing losses. Another name of this is Cost volume profits analysis. In order to calculate the
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break even point a formula which can be used by administration of Goodhood that is given
below:
BEP (per unit): Fixed cost/ Selling price per unit – Variable cost per unit
A small business firm named as Goodhood which is dealing in clothing sector in London
have to calculate this so that effective decisions can be made right on time when company is
dealing with some sort of risk. Firm has almost 50 staff members that are rapidly giving good
services to consumers of this organisation which is helping them in enhancing profitability and
productivity level (Thomas, Shaw and Page, 2011). Along side this, effective staff members
takes feedback from customers in order to enhance their standardisation of products and services.
Break even analysis helps in locating the economical weaknesses and strengths including
thoughts which may aid in generating revenue in huge amount. Goodhood can implement BEP at
workplace so that to monitor the profit and loss margins in effective manner. With the help of
this, overall performance can be maintained by company. In regards to make determinations in
this context some of points are given beneath:
 Safety is one of the biggest concern as with the help of this company can increase the
affordability of sales by eliminating the chances of losses.
 Further, in order to gain maximum profits superiors can give set targets which workers
can help them so as to achieve goals and targets in an effective manner. Through this,
more and more revenues can be generated. Therefore, by monitoring the performance of employees on a regular process they can
increase the quality of the products. Thus, company is hire skilled and knowledgeable
candidates who can help them in gaining maximum profits.
Application of break even points on distinctive organisational situation:
To evaluate points of profitability: This helps an organisation in order to know the
problems that are acting as a barrier in the whole process of business operations. If the company
is not giving much benefits than survival in the market can be difficult so it is necessary that
manager and superiors have a backup plan for eliminating such problems (Poba-Nzaou and
Raymond, 2011).
To price a product or services: Therefore, in order to operate the business in an effective
manner it is necessary that company has a better understanding of break even point.
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