Unit 29 Managing and Running a Small Business

Introduction

This unit will provide students with a practical understanding of the key aspects of running a small business or social enterprise. Students will learn about the activities involved in running a small business, including developing good relationships with customers, planning and allocating operational resources, forecasting and budgeting, interpreting financial statements, recruitment and retention of staff, leadership and building a team, dealing with legislation and regulation and how to put together a business plan.Students will be able to apply their learning to a simulated business of their choice that they will work on as part of a group. They will develop an understanding of how all of the different aspects of running a business interrelate to achieve success, and develop an appreciation of the benefits and importance of organisation and planning.

Learning outcomes

LO1 Discuss how a small business or social enterprise plans and allocates resources to achieve objectives

Planning resources:

premises and equipment, people and skills:
Planning of activities in a business to include capacity utilisation and management, identifying resources and skills needed to develop appropriate job specifications.

Being an employer:

Organisation structures applicable to the business purpose and organisation stage.
Establishing an appropriate organisational culture.

Consideration of human resource management:

recruitment and retention, performance management and team building.
Use of outsourcing, networks and external advisers.
Understanding key aspects of employment legislation relevant to a small business, for example, equality and diversity.

The business plan:

Effective articulation of the vision, goals and objectives.
Key components of a business plan.
Consideration of when a business plan might be needed, for example, when securing an overdraft or bank loan.
Project management techniques, including use of Gantt charts and critical path analysis

LO2 Explain and evaluate the customer relationship management process for a small business or social enterprise, including understanding the benefits and challenges of transnational operation

Building customer relationships:

Assessment of customer value, acquiring and retaining customers.
Developing effective channels for customer communications and customer care programmes.
Digital platforms for effective customer relationships to include email marketing for mobile devices, online chat and forums for real time responses and solutions, online testimonials and ratings and use of social media.

Transnational sales:

Defining transnational sales and considering why start-up and small firms internationalise.
Preparing to sell and source transnationally and application of the stage model of internationalisation.
The process of exporting and key considerations

LO3 Develop and analyse a cash flow forecast, budget and break-even analysis and interpret key financial statements

Sources of finance for start-up and small businesses:

The main sources of finance for start-up and small businesses, including own savings, equity finance or loans from family and friends, bank loans and overdrafts, leasing and hire purchase, invoice factoring.

Forecasting and budgeting:

Techniques for forecasting and budgeting: using time series data, calculating a moving average, finding a trend, dealing with seasonality
Developing budgets, including ‘What-if’ sensitivity analysis.
Using budgets for performance monitoring and control.
Variance analysis.
Break-even analysis.

Financial statements for a small business:

The key financial statements that are required for a small business and how to interpret them.
The difference between profit and cash and the vital importance of cash flow for a small business/social enterprise.
The elements of working capital and how to manage cash flow effectively.

LO4 Discuss the implications of regulation and legislation on a small business or social enterprise

Legal and regulatory issues:

The legal and regulatory issues applicable to a small business in the country it is registered: record keeping, tax and employment, health and safety, insurance, data protection and cyber space security measures.
Examples of regulatory issues that may apply to different business types, different products or services and different localities such as environmental and waste regulations, professional practice guidelines, and local planning restrictions.
The potential sources of information to determine applicable regulation.

Resources

BLANCHARD, K., ONCKEN, W. and BURROWS, H. (2011) The One Minute Manager Meets the Monkey. London: Harper Collins.
BURNS, P. (2011) Entrepreneurship and Small Business. 3rd Ed. Basingstoke: Palgrave MacMillan.
BURNS, P. (2014) New Venture Creation: A Framework for Entrepreneurial Start-ups. Basingstoke: Palgrave MacMillan.
RIES, E. (2011) The Lean Start-up. London: Penguin Books.