Detailed Report: Managing and Running a Small Business - Austin Fraser

This report provides a comprehensive analysis of managing and running a small business, using Austin Fraser, a UK-based consultancy firm, as a case study. The report covers crucial considerations for small businesses, including financial resources, human resources, and goal setting. It delves into customer relationship management (CRM) processes, emphasizing the importance of customer portfolio analysis, intimacy, network development, digital marketing, and customer lifecycle management. The report also explores the potential for transnational business development, outlining the benefits and drawbacks of international expansion. Furthermore, it includes an annual itemized monthly cash flow forecast, explaining fixed and variable costs, along with break-even analysis and the interpretation of key financial statements. Finally, the report addresses relevant legislation and regulations impacting small business enterprises.

MANAGING AND
RUNNING A SMALL
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1) Main considerations a small business or social enterprise needs....................................1
TASK 2............................................................................................................................................3
P2) Various processes of customer relationship management in an organisation..................3
P3) Small business can develop transnationally and benefits and drawbacks.......................4
TASK 3............................................................................................................................................5
P4) Annual itemised monthly cash flow forecast showing fixed and variable costs.............5
P5) Way of break-even analysis applied to an organisational situations...............................8
P6) Interpretation on key financial statements for an organisation........................................8
TASK 4............................................................................................................................................9
P7 Legislation and regulations which have major implications on small business enterprises. .9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Today, in every nation small enterprises are establishing their business at high rate. These
firms are organised, operated and controlled by private owners. Along with this, as compared to
large companies, relatively SME's have minimum staff members also. It includes consultancy,
small departmental stores, restaurants, software developers and more. Due to occurrence of large
manner, small enterprises help nation in reducing rate of unemployment as well as increasing
economy of country. In this manner, a report has been prepared on Austin Fraser. It is a small
consultancy firm of UK which has near about 200 employees at workplace (Ali and Babiker,
2017). This firm provides candidates in other companies related to IT, project management, web
developers and more. This assignment has shown the main consideration which are needed to
consider small enterprises while launching their business. Along with this, different sources of
funding, break-even analysis and financial statement are also explained in concise manner.
TASK 1
P1) Main considerations a small business or social enterprise needs
In UK, small business organisations are developing at fast rate which gives various
benefits to nation in reducing unemployment as well as increasing economy. Companies under
this section are privately owned basically in three sections as partnership, sole proprietorship and
joint business. These firms have less staff members and revenues as compared to other large
corporation and regular-sized organisations. Austin Fraser is a small consultancy business in
United Kingdom which provide clients either on contract or permanent roles especially in
technology, automation, digital and life science industries (Chauma, 2017). The main aim and
purpose of this company is to provide accurate employment to job seekers and help them in
maximising living standard.
In order to design a proper plan, there are various factors available through which
entrepreneurs can achieve growth in their business. In this regard, they are required to consider
on few points in social as discussed below:
Financial resources: This factor consider as most important stream which is required by
every enterprise in running all operational activities and functions within set period of time. In
context with small business organisation like Austin Fraser, without ample amount of finance, it
cannot achieve its success in proper way. With this assistance, it is essential for managers of this
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consultancy to manage whole financial statement which includes profit and loss account, cash
flow statement, balance sheet and more. It will help them in reducing extra expenditure, control
expenses as well as interpreting P&L of business as well.
Human resource and their skills and qualities: Employees are considered as the main
factor for small and large companies both in achieving success of business. Since Austin Fraser
is a consultancy company so it needs to have high skilled and knowledgeable people at
workforce who will help in accomplishing long term goals in a predetermined period. In this era,
managers are also needed to provide effective training to workers so that they can work as per
requirement of business as well (Cojoacă, 2017). In addition to this, for boosting their morale it
is necessary for employers to include them in decision making activities.
Goals, vision and targets: These factors are the most important one in which companies
are required to set achievable goals, vision, objectives. These predetermined targets are helped
employees to understand their role and support in a better way for accomplishment of the same.
Along with this, it also gives better chance to manager of Austin Fraser in assigning job roles and
responsibilities to workforce. For this process, they can provide essential training and
development programs to staff members. This would help in enhancing working performance of
employees and make them able to work in a proper manner.
For allocation of resource and planing managers of Austin Fraser can use two essential
tools which are helping them in formulating proper strategies and designing an action plan.
These tools are explained as below:-
Critical Path Analysis: This technique is used in measuring run time of activities by
identifying starting and ending period. It will help in maximising performance level as well as
determining ways through which targeted goals and objectives can be completed in a set limit of
time.
Gantt Chart: It is incorporated by every enterprises used to overview the schedule of
project (Durst, Yip, and Lee, 2015.). This technique render accurate information in context with
activities and functions of business.
Some of the major importance of above factors in planning resources can be explained as
below:-
 Assist entrepreneurs in obtaining maximum benefits
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 All mentioned factors can aid in enhancing skills and knowledge of employees in a more
better way
 Setting achievable target aid in increasing capability of internal strengths through which
modifications and new technologies can be easily adopted.
 Appropriate resources also aid in achieving set target on time.
TASK 2
P2) Various processes of customer relationship management in an organisation
Customers are like God whose involvement help small and large organisations in
increasing growth and success of business in a proper manner. Thus, it is necessary for
enterprises to consider their demands and needs more while producing services or products at
market-place (El-Rafei, and et. al., 2017). In this manner, customer relationship management is
taken as an effective tool, strategy or policy which help entities in developing good relations with
consumers and handle their problems in a proper way. In this process, manages of small business
companies are required to provide entire information of business to customers related to products
or services as well as whole manufacturing process in an accurate manner. In order to get loyal
consumers and their retention with services for long period of time, managers are needed to pay
attention on CSR i.e. Corporate Social Responsibilities also. CRM and CSR activities aid
employers in measuring how business interact with them. In context with Austin Fraser, this
company used various kind of communication channels to gather information related to measure
effectiveness of way of interaction to clients through social sites and email services. Some major
processes of customer relationship management can be determined as beneath:
Customer portfolio analysis: This is consider as the first phase in which managers are
required to identify those customers who are profitable for longer period of time.
Customer intimacy: This is the most effective process used to gain attention of targeted
consumers by developing good relations with them. In this order, employers used to determine
needs and demand of customers as well as providing the same in a predetermined period of time
(Javaid and Iqbal, 2017). In addition to this, it will also help in getting feedback of consumers
related to business products as well through they can make modification in products or services
accordingly.
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Network development: It refers to the determination and implementation of strong and
better relationship with business, network and persons that are valuable to the progress in
rendering better services to customers. These type of relationship will consider external partners
namely investors and suppliers as well as internal partners also i.e. employees.
Digital marketing: This process would help in making good interaction with people as
well as developing effective relations in a proper manner. By making business digitalised and
using social media platform, employers can provide current information to customers easily.
Customer life cycle management: This tool is helpful for enterprises in increasing the
satisfaction and value of their customers. This factor focuses on driving customer lifetime value
through deep analytics, optimising loyalty programs. Implementing front-line transformational
change and improving experience get by customers.
P3) Small business can develop transnationally and benefits and drawbacks
Transnational sales is taken as an important tool for evaluating performance level and
profitability of business. In this process, it is considered that if small business organisations want
to gain success and competitive advantage in a higher manner then they are required to take their
business on international level (Ludmila and Stanislava, 2015). They should sales products or
services as per requirement of customers across the world in a proper way. For driving sales and
enhancing profitability, managers of Austin Fraser are needed to formulate effective strategies
and policies as well. In this manner, translational sales aid them in combining coordination and
opportunities of international marketplace.
Internationalisation is said to be as a process that assist company in expanding its
business in the international market. This assist firms in generating more and more revenues
from different areas if they have established their business in various countries.
Internationalisation includes different theories through which better outcomes can be gained.
Theories are further classified as per the requirements of business operations like for trading,
economy of scale, contingency theories etc., For example: As Austin Frazer is a small company
and for expanding its business they can adopt theories which are related to internationalisation as
a result it will provide them with maximum benefits and clients from through out the globe will
ask for solutions from the firm.
In this order, managers of Austin Fraser should make a proper action plan. It would help
in getting high revenues and return on investment as well as increasing growth of business as
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well. In addition to this, they should adopt different kind of tactics and strategies through which
productivity and profitability can be gained. But translational sales includes some drawbacks
also which are shown below along with advantages:-
Benefits Drawbacks
Translational sales aid managers to take
decision in own manner without inter-
dependence on other. This type of activity is
conducted in enterprise on regular basis
therefore, taking quick decision help in running
business operations in a more profitable way.
For taking business on international level, an
association is required to make a proper plan,
effective strategies and policies in an accurate
way. Along with this, they should consider on
each and every action of implementation of
business strategy as well. Thus, these process
will consume much time for getting desired
result.
When a firm sale its products or services in
international market then it will aid in getting
high amount of revenue and return on
investment in a short period of time.
In addition to this, for selling commodities or
services at international market will includes
many kind of risks also which directly effect
budget of company as well.
TASK 3
P4) Annual itemised monthly cash flow forecast showing fixed and variable costs
Cash Flow Forecast is related with a concept of determining financial requirement for
carrying out business activities in an accurate manner. There are many sources of fund are
available through which Austin Fraser can utilise cash and allocate in different departments in a
proper way (Nowotarski and Paslawski, 2015). Some of the major sources of fund which are
used by this company can be explained as below:
Equity Finance: It is identified as easy approach by which firm can raise finance through
stock exchange trade. It is an issue of equity and preference share that is considered as beneficial
sources in maximising capital for long durability.
Bank Loan: It is most essential approach through which small enterprise like Austin
Fraser can arrange required capital by taking commercial loans from specified bank. Such type
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of financial institute offer loan at fixed rate of interest which firms are required to pay on annual
basis.
Budgeting, planning and forecasting: This process is used for recognising the future
trends. It is a three-step process used to determine long and short term goals of company in terms
of finance. In this manner, planning outlines financial direction of business for next upcoming
three to five years (O’Connor and Kelly, 2017). While budgeting shows way of executing entire
plan vary from month to month by specifying expenses. On the other hand, forecasting predicts
financial outcomes for future by accumulating historical data.
Thus, in this order some techniques are followed by managers of Austin Fraser enterprise
for forecasting, planning and budgeting as described below:
Measure moving average: This tool is valuable in preference of available buyers as per
the actual trends which are existing at market (Parkin, Fielder and Ashby, 2016).
Time series data or information: It is another techniques which is used by the company
to focuses on identification of period of time which will needed to complete specified projects.
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
Debtors 80 65
Bank 30 35
Total 230 340
Creditors 130 150
Bank overdraft 80 50
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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 for the year
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
P5) Way of break-even analysis applied to an organisational situations
This is consider as most effective and valuable tool used to determine how much to sell in
a month or annual so that sales are balanced to revenue in a desired manner. Austin Fraser used
this model in recognising ration of profitability and level of performance of business as well.
Concept of this technique is based on fixed costs i.e. payroll and general expenses (Skolud and
et. al., 2016). In addition to this, it is also valuable in such case when business creates no profit
or loss.
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(Sources: Break even analysis, 2018)
In Austin Fraser, there are various situations are occurred on which employers are
required to forecast sales and production. Therefore, in this manner Break-even analysis is used
to reduce wastages and costs of production in an accurate manner. For example: variable cost is
8 per unit, fixed cost is 20,000 and selling cost is 16, then Break-even point is measured as:
=Fixed cost/construction margin per unit or product
=20000/(16-8)= 2500
P6) Interpretation on key financial statements for an organisation
Financial statement of a company includes various factors like cash flow, profit and loss
account and balance sheet which are help in determining budget and financial position of
business (Stanciu, 2015). Such type of statements are made by finance department of an
enterprise. Some key factors for an organisation related with contribution of successful
management can be explained as:-
Balance Sheet: This statement help in identifying total liabilities and assets of company
in a proper manner. In addition to this, it also display the way through which these assets are
financed either by debt or equity. It would help investors in taking important decisions related to
financial activities of business in which they make investment. As per above data of balance
sheet of Austin Fraser, it has evaluated that value of fixed assets in 2018 as compared to previous
year has expanded much i.e. from 120 thousand Pounds to 220 thousands of Pound. Along with
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Table 1: Break even analysis

this, total value of assets which was 670 in 2017 has raised to 905 in current year. As per
calculation given below, profitability ratio shows final result of company i.e. from year 2017 to
2018- it has enhanced from 50 to 71.67. While in terms of total assets and liabilities, value in
2017 was 230k Pound increases to 340k Pound in 2018. Other than this, liquidity defines ability
of business to meet financial obligations. Therefore, higher the ratio will reflect better position of
firm. As shown below, liquidity ration of Austin Fraser is 0.6 to 0.7 so, it shows growth rate of
business.
Profitability
Ratio
Net Profit
Margin
(Gross
Profit/Net
Sales)*100
2017 2018
Gross Profit 20 43
Sales 40 60
Net Profit Margin 50
71.666666
6667
Return on
Asset
Net
Income/Tot
al Assets
2017 2018
Net Income 12 34
Total Asset 230 340
ROA
0.0521739
13 0.1
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Liquidity
ratio
Current Ratio
Current
Asset/Curr
ent
Liability
2017 2018
CA 140 145
CL 210 200
Ratio
0.6666666
667 0.725
Quick Ratio
Quick
Asset-
Current
Liability
2017 2018
CA 140 145
Inventory 30 45
Quick Asset 110 100
CL 210 200
Quick Ratio
0.5238095
238 0.5
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Profit and loss account: This part of financial statement summarises revenues, costs and
expenses which are incurred in a specified period of time. It is usually measure in the end of
financial year but for small enterprises, this would consider in fiscal quarter also. Thus, this type
of statement aid owners in identifying net profit or loss as well as highlights income and
expenses of business as well. As per data of P&L A/c. Of Austin Fraser, it has examined that in
2018, sales performance has increased to 60 which was 40 last year. In terms of profitability, net
profit earned in year 2017 was 12 thousand Pound which has increased to 34,000 Pound now.
So, it shows that company is growing much.
Cash Flow statement: This one is also consider as major financial statement which is
prepared in order to know how changes in balance sheet effect cash and cash equivalent as well
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as also indicate outflow and inflow of capital in a certain period of time. From cash flow
statement of Austin Fraser, it has examined that in beginning month of January, £28000 cash
was available in business. While at the end of October month of same year, it has reduce to
£20410.
TASK 4
P7 Legislation and regulations which have major implications on small business enterprises
Every nation has its own rules and regulations which are followed by organisations to run
their business in a legal manner (Van Scheers, Botha, and van Scheers, 2018). In addition to
this, these laws are also helpful in protecting workers from discrimination which may occur with
them on workplace on the basis of some specified characteristics like different religion, caste,
colour, gender, race, sex or more. Thus, it is necessary for HR managers of companies to
consider these laws while recruiting candidates and managing their work. Some major
legislations which are followed by small firms in UK like Austin Fraser can be described as:
Health and Safety Act: This law has established in 1974 which majorly affects the
functions of enterprises which assist them to offer health and safe working environment to
workers (Winarno and Wijijayanti, 2018). In addition to this, it is amendable for companies to
provide proper training to employees so that they can work with risky equipments in an accurate
and specified manner.
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Data Protection act: This law is enacted in 1998 which also consider as most essential
for employers of a firm which states that they should recode personal information of employees
in a private manner. Along with this, they are also required to do not disclose the same to other
parties as well. This would help in reducing heavy labour turnover as well as gaining high
advantage of competition. Therefore, to store personal data of employees and business as well as
prevent the same from theft and piracy, managers of Austin Fraser has implemented Cloud
Computing technology. It gives advantages to store data for long time and in case of any
discrepancy, can recover lost data also.
Taxation Law: This act states that each and every enterprise has major responsibility to
pay tax to government in an honest manner as per profitability of business. If any firm do no pay
tax on time then it will be legally penalised. Along with this, sometime assets, authorisation or
more can be taken by regulatory bodies. So, it is necessary for Austin Fraser to pay tax within
given period of time on regular basis.
Equality Act 2010: This act of UK has merged approximate 116 separate pieces of rules
and legislations into one single act. It includes Sex Discrimination Act 1975, Disability
Discrimination Act 1995, Equality Act 2006 and more. Therefore, this new law provides a legal
framework for protecting rights of individuals. Thus, it is also essential for Austin Fraser to
amend these laws while developing strategies in business and concern on every need of
employees.
In addition to above some other laws like Employment Act 2008, Equal Pay Act 1970,
Equality Act 2010 and more are amendable for all business organisations to follow. These laws
effects on performance, productivity and profitability of business either in direct or indirect
manner. Thus, following such laws and legislations help enterprises in running operational
activities in a proper and desired way. In addition to this, it will also aid them in supplying
accurate services to customers as well as satisfying their needs and demands in a profitable way.
CONCLUSION
With this assignment it has concluded from that small business enterprises are needed to
consider on various factors through which they can establish and run operations in a proper
manner. Expanding business of these companies help nations in reducing unemployment as they
are giving various opportunities to job seekers by rendering job. In addition to this, for getting
attention of consumers employers of SME are required to adopt different process like CRM and
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CSR activities. It would help in determining needs and demands of customers as well as
completing the same in more proper manner. In support to this, they should also consider various
factors through which funds can be raised in an easy way.
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