Unit 29: Small Business Operations and Financial Analysis Report

This report provides a comprehensive analysis of managing and running a small business, focusing on various aspects essential for success. It begins by addressing key elements for resource allocation within small enterprises to achieve business objectives, emphasizing the importance of machinery, human resource planning, and financial resources. The report then explores customer relationship management, detailing methods like customer portfolio analysis, marketing strategies, communication channels, loyalty programs, and digital platforms. It discusses the transactional model for business, including export and import strategies, along with their advantages and disadvantages. Furthermore, the report includes a detailed cash flow forecast, break-even analysis, and an examination of financial statements to contribute to successful company management. Finally, it covers rules and regulations affecting small organizations and social enterprises, providing a holistic view of small business operations and strategic management.

Unit 29 - Managing and
Running a Small Business

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
P1) Cover the key elements that should be taken under consideration by small enterprises
while allotting resources to accomplish business objectives......................................................4
TASK 2............................................................................................................................................5
P2) Discuss various methods used by small business entities to maintain good relationship
with customers.............................................................................................................................5
P3) Discuss transactional model for business along with its benefits and drawbacks................7
TASK 3............................................................................................................................................8
P4 Form an annual itemised monthly cash flow forecast showing fixed and variable costs set
against income for a specific company........................................................................................8
P5 Explain break even analysis that could be applicable to an organisation...............................9
P6 Examine the main financial statements of a company in relevance to how they contributes
towards successful management of company............................................................................11
TASK 4..........................................................................................................................................13
P7) Discuss rules and regulations that affect small organizations and social enterprises.........13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Social enterprise and small companies play a major role in overall growth and success of
country. These entities create huge source of employment and consider as a major source of
revenue for individuals within nation (Julien, 2018). The report renders detailed information to
manage small businesses in an efficient manner. In this following report DCS group is taken into
consideration that deals in distribution of beauty and house hold products within UK. It was
founded in the year of 1994. The current report comprises various consideration need to be taken
by small business owners while operating business. In addition, it consist the methods to
maintain effective relationship with customers along with transnational strategies that can be
used to explore business at international level. Further, cash flow, break even and other financial
analysis are also been discussed in following report. Lastly, it also includes various legislations
which need to follow by company to operate effectively.
TASK 1
P1) Cover the key elements that should be taken under consideration by small enterprises while
allotting resources to accomplish business objectives.
Small and medium business organisation plays a crucial part in the development of a
nation. They generate a means of employment and for many citizens and help formulate
entrepreneurial abilities such as marketing and planning abilities. The presence of resources is
vital to conduct basic business operations and to manufacture the products or services for
consumers (Huntington, 2018). Funds, labour, machinery and basic building material are some of
the fundamental requirements of an organisation to conduct their operations in an effective way.
The managerial staffs at DCS group assert required control over certain resources such as capital
workers and basic production material so they are able to supply the required demand of the
market. They form suitable cooperation and communication with various divisions of the
organisation to efficiently conduct various activities of the company in disciplined time.
Management unit of the corporation takes the following points under consideration when
effectively allocating resources:

Machinery planning: Various machinery and instruments are required to finish the
manufacturing procedure. The formulation of strategies which ensure proper usage and upkeep
of various machinery used by the organisation is vital for the efficient running of the
manufacturing division. Managers at DCS make appropriate strategies for efficient utilization of
these machines and also to minimise the damage caused by any faults in these instrument.
Human resource planning: This is one of the most important assets of an organisation as
it helps the organisation in smoothly run their business. Therefore it is important to formulate
plans that help the organisation acquire talented employees(Psychogios and Prouska, 2019). The
HRM staff at DCS implements efficient policies to identify recruit and sustain talented
employees. They also encourage their employee to develop new skills and plan their training to
eliminate any in competencies so they can achieve personal career growth while with the
company.
Financial resources: funds are important aspect to conduct numerous task. Entities of
company needs to be careful during the allocations of funds for various activities like marketing,
HR production etc. In which finance can be get from various sources like equity, debt, bank loan
etc. finance team make anticipates for future funds requirements and then procure it from various
sources. Management team of DCS group ensures that they have essentials fund to attain various
task.
It is analysed that there are several functions are performed by company to attain
predefined objectives. Besides from the above stated points, it also uses outsourcing to take
benefits of expert services. In addition, they undertake several business operations to attain
desired goals.
TASK 2
P2) Discuss various methods used by small business entities to maintain good relationship with
customers
Customer relationship management is a crucial activity that includes certain steps. In
context of DCS group, these stages are given as under:
Customer portfolio analysis: It is the first step in which type of customers is identified by
company. It helps to analyse most profitable segment of consumers.

Customer intimacy: At this stage, main emphasis is to interact with buyers in an efficient
manner which creates huge opportunities for business to attract more number of customers.
Network development: Here, entity focuses to maintain long term relationship with
consumers with the use of different communication channels (Upadhyay, Kundu and Nair,
2016).
Value proposition development: In this, managers prepare their USP that will differ them
for rival forms and simultaneously provides value to end users.
Customer life cycle: It demonstrates the journey of customers from need generation to
purchase of product. Now, post sales services are also consider as an important part of customer
life cycle.
There are several methods are used by small business owners in order to maintain long
term relationship with end user. Marketing is an essential function which is performed by
mangers to attract as well as retain customers for longer run. Here, several advertisements as
well as promotional activities are performed that provide long term benefits to entity. Marketing
manager of DCS group undertake following practices to maintain positive relationship with
customers:
Communication channels: There are several channels are used by managers in order to
provide necessary information to consumers. It includes several channels such as advertisement,
billboards, hoardings and other that play a major role to grab the attention of potential buyers. In
context of DCS group, mangers adopt several marketing and promotional strategies to attract
target customers. It is crucial to increase in the number of customers thus sales and profitability
of company.
Loyalty marketing: It refers to adopt effective marketing practices that will help to build
strong brand image of organisation at market place. These approaches are helpful to create
loyalty for brand among customers (Knewtson and Qi, 2019). Here, managers of DCS group
launch loyalty programs so that customers stay with organisation for longer run. Due to this,
customers execute frequent purchases from organisation and also refer it to others.
Customized marketing: Now, there is huge competition is prevailing at market place so,
it is essential to provide customized as well as personalised experience to consumers. Here,
marketers adopt marketing strategies as per the requirement of customers. In regards of DCS

group, it adopts customized marketing strategies such as email and content marketing & more in
order to retain consumers with organisation for longer run.
Digital platforms: Digital platforms play a crucial role in attracting buyers. Here several
digital techniques such as social medial marketing, websites are used by organisations to enhance
the presence of entity. Managers of DCS group ensure their presences over various social media
platforms such as Face book, Instragram and more to stay connected with customers for longer
run.
Online chats: It is an evolved feature which is used by companies to interact with
customers in better manner (Bahl, Lahiri and Mukherjee, 2020). When, consumer visit on the
website of organization there this feature provide them necessary support. It is analysed that
DCS group use this feature to interact with consumers in better way.
Therefore, there are several methods which are used to maintain long term relationship
with customers. These are online as well as offline and play a crucial role to attract new buyers
and retain existing consumers.
P3) Discuss transactional model for business along with its benefits and drawbacks
Transactional business refers the transaction between different countries at international
level. Nowadays, it is essential to explore business at global level to sustain at market place for
longer run. There are several strategies are prepared by managers to ensure future growth and
success of business in international market place. In case of small companies, international
expansion is consider one of the best way of growth. For, DCS group, transactional strategies are
given as under:
Export and Import: With imports and exports, companies can maintain effective trade
relationship with their international counterparts. It helps to get required resources for production
and also make global presence of organization (Rebelo, Silva and Santos, 2017). Here, domestic
as well as international audience can be targeted with this framework. In case of DCS group, it is
involve in exports and imports of goods & resources that is essential to attain desired goals. It
will help entity to make it presence in different nations across the boundaries.
Advantage: Here, It plays a crucial role to enhance business presence in different
countries and consider as a better way to explore operations at international level. This provides
exponential opportunities to company of market penetration. Here, organization can make it
presence worldwide and accomplish predefined goals.

Disadvantage: In this, entity need to invest huge amount explore operations. In addition,
higher risk is also associated with this as company have to face extensive competition from
international rivalries. Here, culture of foreign countries is also different which may affect
existing policies of entity.
TASK 3
P4 Form an annual itemised monthly cash flow forecast showing fixed and variable costs set
against income for a specific company.
Cash flow: It tends to a statement that is adhere by the business entities for determining
the flow of cash foe a particular period of time (Mayer, Louw and Boness, 2019). With the help
of this mangers of company will able to manage all activities by offering appropriate amount of
cash that is required for particular activity (Hameide, 2020). This becomes vital tool for any
organisations to manage cash inwards and outwards. In this all transactions that are related with
the finance are recorded and then analysis of data is done effectively.
Budgeting, forecasting and planning: This is vital for company because the
performance of all individuals depends on all these factors. Additionally, these function helps
firm to conduct all task effectively by setting appropriate plan of budget &forecast. It is because
the business environment is dynamic in nature and with the help of these three components
company will able to adopt changes for smooth running of business. In relevance to DCS group,
they effectively carry out planning, budgeting along with forecasting for assignment of resource
in effective way as well as they will be flexible in order to adopt changes of business
environment cash flow of DCS group is shown below:

P5 Explain break even analysis that could be applicable to an organisation
Break even analysis: This refers to a tool that is use by entities of company in order to
monitor or analyse the profit ratio and margin of company as well as to determine the financial
condition of firm either a company is in profit or loss. It always look on levels of fixed cost that
are linked with the earning of each additional unit produced and sold. It has been found that a
company that has low fixed cost will have low break-even point of sales. Break-even point
means a point where no loss and no profit condition is arises. In context of DCS group, they
adhere this algebraic method in order to determine either company is in loss or profit for the
effective decision making process. Calculation process of this method is shown below:
Break Even Quantity = TFC / ( P- AVC )
Where,
TFC= Total fixed cost
AVC= Average variable cost
P=Price
It has been examined that 200 items of beauty items will be sold and cost of each items
will be around 35 pounds. Calculation of BEP for the event is as follows:

BEP (in units) = Fixed cost / contribution per unit
= 2860 / 21.5
= 133.023 or 133 items
From above BEP calculation it has been found that at least 133 items, need to be sold for
meeting Break-Even point.
BEP (In amount) = Fixed cost / PV ratio
= 2860 / 61.43%
= 4655.71 or 4656 pounds
For fulfilling condition of no profit and no loss point, firm need to generate revenues of
around 4656 pounds.
The no profit and no loss point require that the
Working notes:
Contribution per unit = Sales – Variable cost / total units to be sold
= 7000 – 2700 / 200
= 4300 / 200
= 21.5
PV ratio = Contribution / sales * 100
= 21.5 / 35 * 100
= 61.43%
All the figures discussed above are based upon assumption
Benefits of break-even analysis:
 With the help of BEP company will able to increase their productivity along with
profitability.
 It anticipated the effects of cost and efficiency of profitability changes.
 It analyse the connection between total fixed costs and average variable cost.
 It aids entities of company in order to measure profit and loss at each level of production
and sales.
From above merits of BEP tool it has been analysed that it becomes essential tool for any
company in term of determining the financial position. In relevance to DCS group, the entities of
company effectively use this tool for the enhancement of profitability of their business as well as

to enhance the volume of production & selling cost by reducing the fixed cost along with
variable cost of goods.
P6 Examine the main financial statements of a company in relevance to how they contributes
towards successful management of company.
Financial statements refers to classifications of three major reports that includes income
statements, cash flow statements and balance sheet (Arnold, 2017). In which interpretation of
this undertaken in order to determine the significance and meaning of financial statements
figures. By which forecasting can be done effectively which made successful with the aspects of
future earning debt maturities, ability to pay interests, liabilities, both current assets and the
profitability of sound divided policies. In relevance to DCS group, it helps entities of company
in order to determine the current performance by which they will able to effectively formulate
the strategies and take decision on the basis of performance. In context of DCS groups,
explanations of all three statements are mentioned below:
Balance sheet- This refers to recording of transactions related with the assists, liabilities, equity,
shares, dividends as well as capital if business of a specific time period within a firm.
Application of this is to determine the financial position of company. In context of this, below
mentioned is the balance sheet of DCS group;
Mentioned balance sheet is of DCS group
Particulars 01/04/17 31/03/18
Current assets
Cash and cash equivalents 20770 46860
Net receivables 14480 13780
Inventory 78100 75850
Other current assets 1090 16770
Total current assets 114440 153260
Long-term investments 4360 5150
Property plant and
equipment 439390 483780

Goodwill 7740 7840
Intangible assets 52180 63060
Other assets 119560 97090
Total assets 737670 810180
Current liabilities
Accounts payable 87290 96750
Short/current debt 12530 51760
Other current liabilities 22260 22430
Total current liabilities 122080 170940
Long-term debt 162290 166340
Other liabilities 109940 106240
Minority interest -250 -590
Total liabilities 394060 442930
Stockholders' equity
Common stock 40620 40620
Retained earnings 656040 661760
Treasury stock -442630 -428390
Capital surplus 41640 41640
Other stockholder equity -442630 -428390
Total stockholder equity 295670 315630
Net tangible assets 811810 929500
From above mentioned table is has been interpret that the total assets that company possess in
year 2017 is 73760 on the other hand in year 2018, it have 810180 which there is increment in
assets of company and which is beneficial for them along with this the liabilities of company is
also increased that means company have strong image at marketplace and all these will