• Traffic
• Exposure
• Site, including:
• - Parking
• - Accessibility
• - Public transport
• - effort needed to get to premises (eg chiropractor on second floor)
• Competitors location - near/far
• Government help (eg Virgin Airlines)

Capital availability

1. How much money will I need?

2. Where will I get the money?

The main expenses to consider are:

• Fixed Assets - eg machinery, furniture and equipment
• Working Capital - money to run the business. Amount needed found by constructing a projected cash flow statement.
• Legal Fees
• Advertising
• Prepayments - eg insurance
• Expenses - rent, wages

It is best to estimate a full years running costs before establishing a business.

Where will I get finance?

Debt - Tax advantages, do not have to sell ownership.

Equity - not as risky, dilutes return on investment, owners have say in running.

Note: Revenue Statement consists of:

Trading Statement (shows Sales, GP)

+ Profit/Loss Statement (Other income, expenses)

Target market and use of SWOT analysis.

Target Market refers to the group of customers to which the business intends to sell its products

Businesses must conduct some market research to identify their customer's needs.

A business must decide the customer's motivation for buying their product before formulating the best marketing strategy.

SWOT analysis

The business should be regularly evaluated in terms of SWOT.

Internal

• performance
• products
• staffing
• prices
• services
• resources

It can lead to identification of an unsatisfied demand that the business can satisfy.

After SWOT analysis the business is in a much better position to determine:

• target markets
• performance of existing products
• weaknesses which need attention.

THE SMALL BUSINESS PLAN:

• prime function of business including nature of product - good or service

• mission statement, goals

• projections relating finance/cash, staff, production requirements, marketing, planning and controlling

A BP is a summary and evaluation of a business concept. A BP has the following advantages:

• It provides a clear direction and aim for the future. Helps with management.
• SWOT analysis provides invaluable information about the eternal business environment.
• Future problems can be anticipated and planned for in advance and solutions found.
• Helpful for borrowing.

A comprehensive BP should contain:

• A statement of the vision, mission, goals and objectives of the business
• A marketing plan which shows location, selling method, target market details, product, promotion, pricing and distribution (and people) elements.
• An operational plan, which shows sources and costs of inputs, production processes and equipment requirements.
• A financial plan, which shows cash flow forecasts, finance sources, sales projections, targets and market share analysis.
• A staffing plan, showing experience and qualifications needed, duties and responsibilities, organisation chart and remuneration.

These are the strategic parts of the BP.

Action plans are formulated to show how goals are to be achieved. They are short term.

Projected cash flow statement

Budget

• budgets, including financial statement.

Planning time frames:

• short, medium and long term.

Strategic planning involves making projections and developing strategies to achieve the broad goals of the business, and includes:

• Finance and cash flow - setting up, ongoing and expansion
• Production - accurately forecasting demand and exceeding customer expectations
• Human Resources - correct number of trained staff. Develop staffing strategy.
• Marketing approach - Monitoring size and growth potential of target market.

The planning, implementing, monitoring, evaluating and modification cycle.

Because the business environment is constantly changing, the business plan should be changed accordingly. All plans must be:

• Implemented
• Monitored
• Evaluated and
• Modified

to ensure the planning cycle is effective.

Implementation is putting the plan into action. _ 338

The planning cycle is established as follows:

3. MANAGING A SMALL BUSINESS

Use of advisers/experts and outsourcing of support services.

Management of:

- administration and information services, including use of electronic trading and electronic data interchange (EDI)

Management Information Systems are to do with gathering and processing and reporting on information useful to the business. Information is gathered from such things as:

• General publications: ABS

- production, including ordering of materials and equipment, supply contracts, scheduling, quality control

- marketing, including product, price, promotion, place

Product

The product can be a good, service or concept. It involves both tangible and intangible benefits eg roadside assistance with car. Includes:

• Packaging
• Features
• Styling
• Quality
• Brand name

There are 4 types of consumer goods:

1. Convenience - cheap, easy

2. Shopping (shop around) - TV

3. Speciality - BMW

4. Unsought - funeral service, don't go looking until need arises.

Note: Different product life cycle:

• Fad - very steep rise and drop-off.
• Reintroduction - fall and then another rise (repackaging, re-marketing)

Distribution

Getting the product to the right place at the right time. Where is the market?

Distribution mix:

• Size - area covered
• Cost
• Speed

The 4 P's, product, price, promotion and place are within the marketing environment. This relates to the internal and external environment. The internal business environment (MICRO environment) consists of such things as:

• the organisation itself
• suppliers and distributors
• customers and
• competitors

The external (macro) environment consists of:

• Economy
• Technology
• Politics and Law
• Culture and society
• Competitors

There is also a 5^th P which is relevant: people, because they are needed for that personal contact with the customer to establish a relationship.

- customer relations, including quality of service, warranties/after sales service, credit policy

Credit Policy

It is essential that there is some control over debtors and creditors. Creditors control includes:

• 14 days instead of 7
• 5% discount (bigger customer)

Debtor control includes:

• ringing up on the 8^th day - asking.

- staffing, including job design, remuneration packages, on costs, training and development, performance appraisal, enterprise agreements

Small business managers are veryconcerned with developing the skills, attidtiudes and experience necessary to their employees to enable the business functions to operate in a way to maintein their sutainable competitive advantage.

Managers should design jobs that provide high levels of satisfaction as well as high productivity work.

They need to know what future skills are needed. Many businesses are adopting a policy of multiskilling empployees.

Recruiting the right person is very impotant for the success of the business and rcruiting is a very costly function.

Performace appraisal allows employees performance to be evaluated and feedbakc given. Managers need to make decisions about what methods to use to appraise performance.

Remumeration is used as a big motivator. Rewards have both monetary and non-monetary aspects, eg fringe benefits, leave, recognition.

- finance, including needs analysis of sources and types of finance, projections of profit and loss, cash flows, balance sheet, break-even analysis

The financial strategy of a business allows the marketing and production strategies to operate which support the sustainable competitive advantege.

Managers are concerned with:

• the financial performance of the business
• making decisions about finance
• as part of planning managers are involved in revising financial projections such as cash flow.

It is important for manager to look back at the financial history of the business, say over the last three years.

- control and evaluation, including feedback controls on all stages of production, research and development, report audience and format

Managers need to evaluate the businesses performance to detirmine whether what was planned for is actually being achieved and what afctors account for the success or failure of oferation.

Evaluation does three basic things:

• finds out what happended
• compare it with forecasts
• detirmine where the differences lie

There are a whole range of controls set up within a business so managers know if plans are bining met. Controls provde feedback on what is happening in the busines

Some of the main production controls include:

• invetorry control - raw materials, work in progress and fininshed products
• scheduling
• quality control

- risk, including security measures, insurance, patents and copyright.

Insurance is one way to manage risk

Patents are a type of risk management.

4. SMALL BUSINESS MANAGEMENT CASE STUDIES

Use of case studies to illustrate the establishment and management of small business.

Situation

Mission

Execution - phases

Administration

Communications/Command