Small Business Management and Financial Analysis Report (Rowlinson)

This report examines the management of small businesses, using Rowlinson Knitwear as a case study. It covers crucial aspects such as financial resources, vision, objectives, and the importance of skilled workers. The report delves into customer relationship management, including customer portfolio analysis and network development. It also explores transnational business development, outlining benefits and drawbacks. Furthermore, it includes a detailed monthly cash flow analysis, showcasing fixed and variable costs, and applies break-even analysis. Finally, it highlights the contribution of key financial statements and examines key regulations and legislation impacting small businesses. This report provides a comprehensive overview of essential elements for small business success.

MANAGING AND RUNNING
A SMALL BUSINESS

Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Main considerations of small business while planning to achieve business objectives....3
TASK 2............................................................................................................................................4
P2 Different process for customer relationship management.................................................4
P3 Development of a small business enterprise transnationally along with its benefits and
drawbacks...............................................................................................................................5
TASK 3............................................................................................................................................6
P4 Monthly cash flow showing fixed and variable cost.........................................................6
P5 Application of break even analysis...................................................................................9
P6 Contribution of key financial statement in management of organization.......................10
TASK 4..........................................................................................................................................11
P7 Key regulations and legislation that have implication on small business enterprise......11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Small business enterprises are considered as those businesses that are run or regulated by
a single owner and they have a small share at market areas (Bridge and O'Neill, 2012). With the
help of company’s turnover and employees who are working one can make out the classification
of such kind of enterprise. Company that is taken in this assignment is Rowlinson Knitwear, it is
small business enterprise that works and offers both cooperate and school wear and this is a U.K.
based company. The report will throw light on consideration that will be required for planning
and allocation of resources for small enterprise so that they can attain their goals and objectives.
Apart from this, various processes for evaluating customer relations are mentioned in this
assignment. Further, an annual itemized monthly cash flow for evaluating and forecast fixed and
variable cost is included in this. Along with this, break-even price that can be applied according
to various companies are mentioned in this report. Lastly, key legislations that can have
implications on small business enterprise are detailed in this.
TASK 1
P1 Main considerations of small business while planning to achieve business objectives
Although organization that come under this are small but they play an important role in the
development of any country’s economy. They help by providing new job opportunities to people
of the country along with this they perform their task according to the needs and wants of
customers. Small business majorly works at small level but there are some factors that can affect
the performance in negative and a positive manner. Therefore, it is important that company
knows all the factors and process through which they can attain their goals and objectives. As the
organization, Rowlinson Knitwear works at small level so they find it difficult to deliver or offer
clothes directly to customers and the reason behind this is inadequate resources available to
them. Therefore, to perform this activity in an effective manner it is important that company
have a proper relation with its distributors and suppliers. This will help them in distributing their
products to different areas as well (Brown, 2013). Henceforth, for increasing its sales and
profitability it is important that they manufacture goods that are best in quality as well as at low
price. For this, there are some of the factors that company must consider while doing any future
actions. Further these are explained below in order to understand it in a better manner:

Financial resources: Adequate amount of funds are very important and it must be
considered first if an organization wants to manufacture or formulate any kind of strategies.
Therefore, if a company has ample amount of cash than it enable them in execute the business
operations in an effective manner and as a result the outcomes will be better. Whereas if the firm
doesn’t have sufficient amount than they will find difficulty in doing any kind of activity such as
promotion regarding their company, making appropriate strategies and many more. In context
with, Rowlinson Knitwear they are considering all the factors that is necessary for analyzing
financial report like cash flow statement, balance sheet etc., thus, it will provide managers an
overview whether the organization is capable of taking or starting any kind of new activity.
Henceforth, through this, they can formulate best and appropriate business plans for its company
(Burns, 2016).
Vision, objectives and goals: Vision is set according to the capabilities that company
have basically, it is set for five years or beyond. It gives an insight in what position they see
themselves after some years. Therefore, it is important task of managers to put or set a desired
goals and objectives so that they can have an idea about where the company is going whether
they are moving in right direction or not. In case of Rowlinson Knitwear, their main aim or
objective is to provide best quality products at reasonable price to its customers so as to retain
their loyalty for a longer period of time. Thus, for increasing production process they are using
appropriate tools that are giving them effective results.
Workers and their skills: Workers play a prominent role in an organization as they are the
one who help the company in accomplishing their targets in speculated time frame. Managers
also play a vital role as they assign the task according to the capabilities of workers. For this, it is
important that they hire eligible candidates who can help the organization in attaining the goals
with limited sources as well. Therefore, it will enable the company in executing their plans
effectively according to the business operations. Along with this, to enhance the performance
and capabilities of employees company can implement different programs which workers can
avail for improving their skills and knowledge. Thus, all the above mentioned points can use be
use by Rowlinson Knitwear while accomplishing their set targets and objectives (Congregado,
Golpe and van Stel, 2014).

TASK 2
P2 Different process for customer relationship management
Customer relationship management of an organization is used by any company in order to
establish a good relation with its customers. By doing this firm can get competitive advancement
and this will enable them in attaining long term benefits. In context with Rowlinson Knitwear,
for analyzing their future strategies they are considering the activities that are performed in the
past and it is helping them in understanding the behavior or nature of consumer towards their
products (Crane and Matten, 2016). Therefore, by doing this firm is having a better
understanding about the choices and preferences of the consumers. For getting proper
information company has conducted surveys and taken feedbacks and reviews from its
customers. Thus, it is helping them in getting adequate information which they can consider
while making any kind of changes in their product. Further it can be understood by the points
that are explained below:
Analysis of customer’s portfolio: This is considered as the first step through which it gives
an idea about customer’s base and through this company can identify the ways by which they can
use for gaining more profit.
Customer intimacy: It is determines as the second step through which organization can get to
know about and become familiar about customer’s base. Therefore, this assists the organization
in developing a better relationship between consumers and firms. With the every single step of
interaction enterprise gets to know more about customers. Thus, developing a better customer’s
base will help company in storing relevant data which company can further optimize in their
business operations.
Network development: In order to manufacture and deliver the products in a right manner it
is essential that they develop a proper network with other individuals. This includes connection
with suppliers, investors, supplier and internal partners (Drucker, 2012).
Value proposition development: If a company wants to increase its sales that it is necessary
that they target certain areas from where they can get maximum benefits. After this, the step of
value proposition development comes and this helps the company in knowing the value of
products in front of the customers.

Customer life cycle management: Under this, the entire journey of management from the
identifying the target customers and then maintaining a better relation with them goes on.
Therefore, this cycle is important in context with developing a good customer’s base. Thus, it
should be given much attention and importance.
Henceforth, Rowlinson Knitwear is considering all the points and this is helping them in
developing a good relationship with its customers as a result sales and profitability is increasing.
P3 Development of a small business enterprise transnationally along with its benefits and
drawbacks
Transactional sales are considered as a strategy that assists the organization in focusing
on the ways through which company can increase its sales without creating a long term
relationship with customers. This is mainly used by those firms whose main motive is to gain
maximum amount of profits by producing more and more products (Durst and Wilhelm, 2012).
This assists the organization in evaluating and analyzing its profits and sales and it also gives
information about the sales company has done within the national boundaries. It is crucial for
Rowlinson Knitwear to make appropriate strategies according to the current market situation so
they can sustain in the market for a longer period of time as it will help them in enhancing their
brand image in front of its customers. Along with this, company can expand its business in
different locations and it will gradually improve its sales and profitability. Therefore, some of the
benefits and drawbacks are explained below in order to understand it in a better manner:
Benefits:
 Independence: For expanding business operations managers should be given
independence in making strategies accordingly so that market value and share of the
company can be increased (Hammer, 2015). Efficiency: Small firms that run their business at local level can implement different kind
of processes for increasing its sales and profitability.
Drawbacks Financial risk: There is a equal chance of financial risk while expanding the business in
an effective manner as they don’t have ample resources in order to operate its business at
higher level.

 Lengthy: Generating more amount of money so as to expand its business can take quite a
long period so, for attaining maximum profits company can incorporated innovative ideas
and thoughts.
TASK 3
P4 Monthly cash flow showing fixed and variable cost
Rowlinson Knitwear is small clothing organization which provides two different types of
clothes which are known as children’s and corporate wear. There are many big competitors
already have their established business in market and earning huge amount of profits such as
M&S and H&M. To sustain in the market Cited organization is required to innovate their
offerings on regular basis per current trends and preferences. It helps to attain the trust and
loyalty of customers towards the brand. So, to effectively bring changes in their structure and
offering required to raise adequate amount of funds which support to try new things. The wor
types of source are available from where funds can be raised by the organization which are called
as internal and external. Such different types of sources are defined below:
Internal sources
Retained earnings: This includes the amount which retained with the organization from
the profit after paying out the divided to the shareholder. Such amount is further used by the
organization in expansion and growth activities of organization (Jasra and et. al., 2012).
Basically this amount is used by the organization to carry their daily business activities smoothly
without any disruptions.
Own investment: Another source from where funds are come in organization is known as
the Own Capital which is taken by the director in organization to expand the business functions
in future period of time.
Sale and lease of assets: This includes the sale and lease of the current assets and
equipment of organization to third person in respect of the charge of some amount of money in
return. So, the funds which are raised by the organization using this method is also used for the
purpose of expanding the business operations and attain sustainability through grab the support
of the customers after satisfaction of their different requirements.

External sources
Bank Loan: It is the most common source from where funds are raised by the
organization easily and effectively whenever required. In respect of the amount which is raised
from banks, organization is required to pay fixed amount of interest with effective rate decided
by the bank annually (Harmon, 2015). It is the most common source which is mainly used in the
process of expanding the operation of organization at it can be availed any time as per their
convenience.
Debentures: It refers as the debt document which is issued by the organization to the
debenture holder in respect of the amount which is taken from them. All the debentures which
are issued by the organization to raise money are attached with rate of interest which needed by
them even when they not acquire profits from their business functions.
Equity shares: It is issued by the organization to raise money from the market. These
shares are traded on the stock exchange which are buying and selling by the interested
individuals. All the equity shareholders are entitled to receive divided with effective rate if
organization earn profit.
There is hue role is played by the cash flow statement is effective management of the
cash which are raised from different sources through continuously monitoring them. Cash flow
statements are the document which is prepared by the organization to ascertain the amount of
inflow and outflow of cash over the fixed period of time. This statement categorised into three
different parts which are known as operating, investing and financing activities. One of the major
aspect in which this statement helps the organization is to maintain the liquidity through which
daily functions are performed effectively and efficiently. It helps the cited organization is to
accomplish their desired results within stipulated period of time (Jenkins and et. al., 2013).
Balance Sheet, P&L and cash flow statement of the Rowlinson Knitwear:
Year 2017 (value in £) 2018 (value in £)
Fixed assets 130 210

Stock 20 35
Debtors 70 55
Bank 20 30
Total 240 330
Creditors 120 180
Bank overdraft 90 70
Total 210 300
Working capital 30 80
Profit and Loss Account at the year ended
2017 2018
Sales 20 30
Cost of sales 10 15
Gross profit 30 45
Overheads 6 7
Net. profit 24 38
Cash flow Statement

Cash budget for the year
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year
Beginning cash balance 25000 32250 31750 29750 26750
Budgeted cash receipts 12400 1600 1100 1000 15000
Total cash available 37400 34850 32850 29850 28250
Cash distributed
Direct material 1400 1150 1150 1300 1500
Direct labour 1200 650 650 650 650
Overhead 900 600 600 600 600
Selling and distribution 650 700 700 700 700
Total cost use 4150 3100 3100 3100 3100
Cash surplus/ deficit 32250 31750 29750 26750 2515
P5 Application of break even analysis
Break even analysis is financial term which is used by the organization to ascertain the ratio
of profitability. It is refers as the point where organization reached to the situation of no profit
and loss. It improves the understanding of the management of organization about the number of
quality of good required to sale to attain the pint of no loss. It helps to design their plans and
strategies to maximise the sales of their products to earn the large number of profits (Olusegun,
2012). When the organization at this point then all costs which are put by the organization in
production of their goods are recovered both fixed and variable. It also helps in understanding of

the issues which reduces their strength which restricts them in achievement of their sales targets
which can be overcome with help of appropriate solutions.
Rowlinson Knitwear uses this financial technique of Break Even analysis to attain their sales
target effectively within stipulated period of time. It assists the manager of organization
regarding preparation of the effective budget and allocation of their resources to attain their
desired results through maximum utilisation of their resources (Pinho and Thompson, 2017).
This will enhance the internal strength of the organization through wastages and amount of
mistakes are reduced in number to bring effectiveness in business operations. For example if
amount of fixed cost is 10000 and variable cost is 10 rupees per unit and selling price is 12 per
unit then amount of BEP will be ascertained as:
BEP: Fixed cost/construction margin per unit or product= 10000/(12-10)= 5000.
P6 Contribution of key financial statement in management of organization
It is compulsory for every organization to prepare the annual accounts at the end of every
financial year. These accounts cover the different aspects of the organization and depict various
information’s. Profit and loss account of the organization helps to assess the financial position of
organization. Balance sheet helps to assess the amount of assets and liabilities which are owned
by organization and cash flow statement helps to effectively manage and control the cash within
the organization. All three are key statements of the organization which not depicts the
information about what they performed whole year but helps the management is to determine the
issues which ahs negative impact upon their business. These statements are also used by the
investor to make their decision about investment in organization. So, if organization performs
effectively in the organization then helps to attract the large number of investors. The key
statement and their role and function within the organization are defined below:
Profit and Loss Account: It is the account which contains two different columns which are
of income and expenditure occurred by the organization in one financial year. Through analysis
of the information which is shown by this statement amount of profit and loss is attained which
is earn by the organization through their business operations (Sampaio, Thomas and Font, 2012).
It helps the management of Cited organization is assess the such amount of expenditures which

extra and not necessary in nature. It helps to build effective strategies through amount of
expenditure is reduced which helps to improve the profitability of organization.
Cash Flow statement: It is the document which provides the information amount of cash
which comes and goes out of the organization in period of one financial year. This information
helps the manager of Cited organization is to assess the actual amount of cash in hand and if
there is some shortage then raise timely through use of different sources. It improves the
management of cash within the organization which is effectively allocated to the different
departments as per their requirements. Through performance of these functions important aspect
of liquidity is achieved to continuously perform their functions. This statement improve the
understanding of manager through which budgets are prepared which directs the employee to
perform their function in such way achieve the cost standard which are built by manager. It plays
an important role in the process of improvement of the profitability of the organization through
achievement of their cost targets (Trevino and Nelson, 2016).
Balance sheet: It is the document which depicts the information about the amount of assets
and liabilities which is having by organization at the end of year. Through this strength of
organization is assessed in market and helps to understand the company is able to pay off their
debts or not when the situation is arise. There is huge role is played by the good balance sheet in
building of the goodwill of organization.
TASK 4
P7 Key regulations and legislation that have implication on small business enterprise
Legal bodies of every nation set various rules and regulation to manage as well as control all
the activities of the business in effective manner (Jasra and et. al., 2012). As it is important for
company to implement all the legal regulation for attaining set goals and objectives in
appropriate time frame. In this context, there are some main rules and regulations that directly
affect the overall business function. All these can be understood by following points:
Health and safety act: This act defines that manager of the company have to set positive
work environment and also provide safe and healthy services as they effectively perform their
task. By continuously providing better training and program also helps in improving their

productivity level. This will help in providing safe work environment, employees perform their
duties effectively which may lead in establishing positive image of the company (Weske, 2012).
Data protection act: According to this act manager is highly responsible to keep data
confidential and does not tell with another person. With the help of this they motivate as well as
encourage their employees. It also helps in satisfying and also reducing the turnover. This will
directly contribute in enhancing profitability level at market place.
Tax and employment act: As per this regulation, each and every business having main
responsibility to pay tax to maintain their business activities in an effective manner. In case, if
firm does not follow and pay tax then company is responsible to paying legal penalty as it
negatively affects the brand image at market place. Along with this, timely tax payment provides
better support to company to make their positive brand image (Williams, 2012).
CONCLUSION
Form the above report it has been concluded that, small firms must arrange all the
activities in an effective manner so that they can achieve the set targets in speculated time frame.
Customer’s relationship management is very crucial so as to develop a better relation with
customers. Therefore, it will assist the company in generating more and more money and
gradually its sales and profitability will be increased.

REFERENCES
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