Management functions and their applicability

Small business owners generally like to rely on themselves to do the jobs.They are action-oriented. However,as the business grows,they find themselves overworked.They become owner-managers. They rely on the key employees for doing the jobs.The skills of team members complement each other.They concentrate on solving problems.Management is the process of getting the jobs done through other people to achieve objectives with efficiency and effectiveness.Efficiency is getting through best use of resource.Effectiveness is done the right things to achieve objectives.Management performs functions.The functions of management are:-

• Planning-It is predetermining future.It sets objectives and the actions to achieve them.It choose future courses of action from among alternatives.Planning is deciding in advance about what to do,how to do and when to do it.It is time bound.Plans provide targets.They allocate resources in a coordinated manner.It guides managers to focus their attention on what to do.
• Organizing-It assembles resources.It assigns duties and coordinates efforts.It establishes a structure.All the jobs necessary to achieve objectives are assigned to people who can do them best.
• Staffing-It is people who carryout jobs.Staffing is filling and keeping filled positions in the organization structure.The position are matched with skills.It is the human resource management function in small businesses.
• Leading-It is a process of guiding and influencing the subordinates to willingly contributes toward goals.It inspires people to do what needs to be done.
• Controlling-It is monitoring performance.It is the measurement and correction of performance to achieve planned targets.It is cyclical process.

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Management of Small business

Objectives are end results to be achieved.They provide direction to small business about what is to be done.They guide their actions for using resources.They serve as standards for measuring and controlling performance.All the activities of small business are aimed at achieving objectives.Objectives should be specific,measurable,acceptable,realistic and time-bound.They are future-oriented.They can be short and long term.They can be multiple.

Social responsibility of small business:-

     Small business function,survive and grow within the society.They satisfy needs of the consumers in community.It is in their long-term interest.Social responsibility is pursuit of objectives that are in the interests of the society.It implies safeguarding and enhancing interests of consumers,employees,legal ethical.Small business has obligation to make profit by complying with legal provisions.They should be ethical and do what is right,just and fair.

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Physical Facilities For Small Business

All small businesses need physical facilities.They consist of land and building,machinery and tools,furniture and fixtures,office equipments,vehicles and parking space.The layout of a business is the physical arrangement of its physical facilities.It is based on layout planning.It should produce efficiency by blending people,physical surroundings and business needs.The available space should be used effectively.The factors affecting layout of physical facilities are:-

1. Needs of the business-The needs of the business determines layout.Space,functional and structural requirements affect layout of building.The type of operations determine the needs for machinery,equipment and tools.
2. Efficiency-Physical facilities should be logically arranged to produce efficiency.They should carefully consider the flow of production and movement of customers and employees.Wastages of space should be avoided.
3. Accessibility-Materials should be easily accessible to the workers.Goods should be easily accessible to the customers.There should be places for customers and employees to sit,stand or move about.
4. Natural conditions-Layout should blend with natural conditions of the site.
5. Clear view-Layout should provide a clear view of merchandise,materials and employees to the owner and the customers.

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Location of Small Business

                       

         Location is the site where the small business is housed.Choosing the right location is a strategic decision for long-term.It is a key factor for success of small business.Customer choice of a business is influenced by convenience of location.Small business usually to stay in a location for a number of years.It is essential for their sustainability.It is expensive to move to new locations.Customers and employees may not follow to a new location.Location affects accessibility of small business to customers,suppliers,employees,infrastructure and transportation.It affects compliance with laws and regulations.It can also provide special incentives and facilities.The type and nature of small business influence location.
        The choice of location should be based on following steps:-

• Identification of potential site-Various potential sites are identified.Property dealers can help in the identification of potential sites for location.
• Attractiveness of each site-The attractiveness of each site is evaluated in terms of critical factors relevant for the success of the owner is selected for location.

       Location is a strategic decision for a small business.It determines the success or failure of the business.The small business owner should carefully make the location choice.Various agencies can assist the small business owner in choosing a location.They provide useful information.

     

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Small Business Failure

Small business suffers from high failure risk.Failure implies closing down of small business due to financial loss.It results from inability to succeed in running a business.Things don't work out as planned.

        Types of failure are as follows:-

• Formal failure:It ends up in court with declaration of bankruptcy.It involves loss to creditors.
• Informal failure:It is business termination.The owner voluntarily terminates the business.It is discontinuance of operations.The owner packs up and closes the door of business.Creditors are not the losers.The owner absorbs the loss.It is also called personal failure.The causes can be retirement of owner or his lack of interest in business or neglect or loss of market or change in the form of ownership.     

         Symptoms of failure that lead small business towards failure are:-                                                                                     

• Declining profits-The business goes on incurring loss every year.The amount of accumulated loss keeps on increasing.The reasons for declining profits can be increasing costs.The costs of raw materials, labour, overheads may increase due to inflation, shortages and other reasons. 
• Declining sales-Sales may keep declining.The reasons can be competition it attracts the customers of the business.The needs and preferences of customers may change through the new products in markets so this reduces sales.
• Lack of working capital-The working capital can be inadequate.This reduces liquidity.The reasons may be continuing losses,overdue receivables,high debt servicing in terms of principal and interest,unrealizable inventory of obsolete goods etc.
• High debt burden-The debt can be excessive in capital structure.It may require heavy interest payments.
• Inadequate management-The owner may put in too little time and effort in the business.He may not emotional attachment to business.                                                                                                             

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Franchising

                                        

         Franchise is the rights provided by a franchise contract.It is an option to enter a small business.It is an agreement,which grants the right to use a brand name for specific activity in return for a royalty.It is getting popular.It is one of the best ways to succeed in small businesses.Franchising is a marketing system whereby an individual owner conducts business according to the terms and conditions set by the franchiser.It is marketing for well-known brands or trademark.It provides exclusive rights for local distribution of specific products or service to franchise.It involves payment of royalty by the franchise to the franchisor.It covers a specific territory.
The types of franchise are:-

• Product franchise-It is used to distribute products.Franchise receives products from the franchisor.He sells them through retail business.It is also known as Trade Name franchise.A retail business can have franchise agreements with various manufactures.
• Service franchise-The franchise recives a license to use the established names to sell particular services.The frachisor controls standardization features.Accounting firms,consultants,beauty saloons use such franchise.
• Business Franchise-This involves franchising of entire business enterprise.There is a commom trade name.The appearance,products,packaging and operating procedures of the establishment are standardized.The franchisor maintains inspection and control over the business operations.Quality performance is assured.Examples are McDonald,Pizza Hut, Archies card shop.

     

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Sources of Idea Generation For Small Business

  A small business is born with an idea.Ideas provide opportunities. A small business owner should have the ability to generate a number of ideas. Such ideas should have potential to make profit.The most promising idea should be selected for establishing small business.

1. Situation Survey-This provides useful ideas for small business.It involves survey current situation in the environment.Signs of environmental changes are identified.Changes already under way are detected.The forces of changes can be political-legal,economic,socio-cultural and technological.
2. Internal sources-The idea comes from prior work experience it is the source of about 45% new ideas.The suggestions made by employees.research and development department,committees and task forces.Creativity is human faculty of generating novel,unique or improved ideas to solve problems.
3. External sources-They can be need and requirement of consumer provides new ideas.It requires outside consultants and experts can provide promising new ideas.Competitors activities provides ideas for small business too.Foreign countries can be a good source of new ideas also.Whereas television,journal,newspaper,enternet also provide the new ideas for small business.                                                                                                                                                      Legal provision can also be the source of ideas.All the ideas developed from source are pooled together.They represent potential opportunities for small business.They are evaluated for selection purposes.

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