FUNDAMENTALS OFSMALL BUSINESS MANAGEMENT

Session 1Reference: Oliver & English Ch 1 (Part 1)

THIS WEEK

Introducing the lecturerPurpose/AimsExpectations of youPlagiarismHELP!Course topicsWho are you?What is Business Management?

COURSE AIMS Knowledge of small business opportunities and

operations, including ownership options and business structures.

Knowledge of control techniques, accounting and financial processes, evaluation processes and marketing options for small business operations.

Skills in analysing information and identifying appropriate solutions for the management of small business operations.

COURSE AIMS(CONTINUED)

This course is for people who:Want to understand business in Pakistan.Intend to continue studying in business.Are working in a small-medium business.Are working in new ventures in a science or corporate

business.Want to work in the future as an entrepreneur, employer,

employee, or advisorAre studying a professional or technical qualification, and

need a basic business introduction.

TOPIC 1

Analyse options for self employment Identify characteristics of successful small

business enterprisesIdentify and assess new business opportunitiesEvaluate assistance programmes Identify specialist services available for small

business development.

TOPIC 2

Analyse ownership options and business structures

Assess options for acquiring a small businessEvaluate small business financing options Interpret legal requirements for small business

operationsEvaluate operational requirements for small

business operations.

TOPIC 3

Manage the day to day accounting functionInterpret financial and accounting informationDevelop profitability and cash flow budgets and

compare operating results to these budgetsUsing basic costing tools to ensure the business is

running profitably.

TOPIC 4

Select and implement control systems and techniques and evaluate results against business plans.

TOPIC 5

Analyse the potential market for products/services and confirm market demand

Determine the mix of products/services to be provided

Develop options for effective marketing of the business.

LEARNING OUTCOMES LO1 :Students will describe characteristics of small business.LO2:Students will compare business options, business structures and finance options of small business.L03:Students will identify sources of advice and assistance available for a small business.LO4:Students will explain the importance of marketing choices for a small business.LO5:Students will describe performance measures and controls used for small business.

EXPECTATIONS OF YOU1. Read the myCourseDetails2. Read the cases before coming to class3. Do readings as applicable4. Turn off your cell phones before entering class5. Respect each other6. Help each other7. Regular course attendance8. Attend all lectures on-time 9. If you cannot attend class I want to know by e-

mail beforehand (if possible).

PLAGARISMPlagarism is cheatingPlagarism is using someone else’s ideas or words and saying they are your own.

If you use material from a text and do not acknowledge the source, you are committing plagarism.

Several penalties can be imposed if you plagarise.

Zero marks and ultimate removal from the paper are possible.

EXAMPLES OF PLAGARISM:1. Copying from another student’s assignment with or without the student’s knowledge.2. Submitting the same assignment in two different papers.3. Getting someone else to write an assignment for you.4. Paraphrasing or copying directly from a text without acknowledging the source.5. Copying directly from a text, acknowledging the source but pretending that you are paraphrasing.6. You allow other students to copy your work7. You write an assignment for another student..

HELP!

LibraryTe Tari AwhinaMoodle

WHO ARE YOU?What is your origin?Born in NZOR arrived in NZ:Over 10 years ago5 to 10 years ago1 to 5 years ago6 to 12 monthsLess 6 months

You are from: Auckland, or overseas?Homeland? First language? Single language?Family Background?

WHY ARE YOU STUDYING THIS COURSE?1. Seek an introduction to business in Pakistan?2. Intend to continue studies in business? 3. Work in small-medium-or-BIG business now/or in the future?4. Work on a new business venture?5. Aspire to work in business in the future as an

1. Entrepreneur? 2. Employer?3. Employee? 4. Advisor?

6. Study a professional or technical qualification, and require an introduction to the elements of business?

DEFINITION: BUSINESS

A commercial or industrial establishment

Commerce, trade

Profession, occupation

Synonyms:Company, corporation, enterprise, firm, organisation, venture

DEFINITION: ORGANISATIONA collection of people working together in a

division of labour to achieve a common purpose

Synonyms:Association, corporation, federation, consortium, institution, league, syndicate

Examples???

EXAMPLES: ORGANISATIONSports clubSchoolUniversityHospitalArmy, Navy, Air ForceBank

A BUSINESS ORGANISATION

An organisation established with the purpose of;

1. making a profit for its shareholders by 2. providing goods and services to its

customers

PROFITA financial gain, esp. the difference between • the amount earned (revenue) and • the amount spent in buying, operating, or

producing something (expenses / cost).

The means through which an organisation achieves its purpose.

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HENRY FORD SAID . .

“Business must be run at a profit else it will die. But when anyone tries to run a business solely for profit then also the business must die, for it no longer has a reason for existence”

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QUESTIONSIs a one man/or woman business an

organisation?Do “not-for-profit” organisations need to make

a profit?Doesn’t the term “not-for-loss” organisation

make more sense?

DEFINITION: SMALL BUSINESS

Personally owned and managed, orDoes not have specialist managerial staff, orIs not part of a larger enterpriseAND ALSO employs fewer than:

50 ( manufacturing )10 ( services )25 ( other sectors ).

KEY DATA ON NZ SMALL BUSINESS355,000 businesses in NZ (mainly small and

medium sized), 85% employ 5 or less full-time workers.99% employ less than 100 full-time workers.50% of all workers in NZ are employed by businesses with less than 50 employees.

32% are employed in firms with fewer than 10 employees.

DEFINITION: ENTREPRENEUR1. A person who attempts to profit by risk and

initiative. 2. To undertake a project that is especially

difficult, complicated, or risky, engaging in daring action, that is a systematically purposeful activity.

3. A ‘person’ who habitually creates and innovates to build something of recognised value around perceived opportunities. (Bolton & Thompson)

ELABORATING ‘BOLTON & THOMPSON’S DEFINITION

‘Person’ – may be a team, or organisation‘Habitually’ – not just seeking a comfortable lifestyle – “they just

cannot stop being entrepreneurs”‘Creates’ – start with nothing and bring into being something that

was not there before.‘Innovates’ – they overcome obstacles that would stop most people.‘Build… recognised value’ – financial, aesthetic, or social capital. Not

just a ‘a good idea’.

DEFINITION: INNOVATION

Innovation is commonly defined as: “The act of introducing something new” Innovation does not imply that an idea, product or service has been taken to the market, but merely provides a suggested conclusion to a problem. Entrepreneurship is best defined as taking a good idea, product or service, and organising, operating and assuming the risk for a new business venture This definition can be extended to include taking the idea, product or service to the market for potential wealth creation Therefore, entrepreneurship is the answer to inactive innovation.

THE ENTREPRENEURSHIP GROWTH MODEL

TYPES OF ENTREPRENEURS

Legendary Henry Ford, Thomas Edison, Bill Gates, Walt Disney, Steve Jobs, Sony Co., James Dyson, Richard Branson

Social Florence Nightingale, Anita Roddick (Body Shop)

Aesthetic Michelangelo Buonarroti, Andrew Lloyd Webber, Gilbert Tregano (Club Med), Mozart, Peter Jackson

DAVID SLACK – SPEECHES.COM

Read the ‘David Slack’ case study and answer these questions:

DAVID SLACK – SPEECHES.COM1.What is David Slack’s business? Why did he set up the business? What was the moment of conception?

2.What skills did David bring to bear on his new business from his earlier career?

3.How long was the “gestation period” – the number of years it took before he “took the plunge” following the moment of conception?

4.What special challenges did he face in setting up his business? How did he meet those challenges?

5.What are some of the distinctive features of the business that David established?

6.Is this a successful business?

7.What makes his business valuable?

REFLECTIONS ON DAVID SLACK

HistorySkillsAttitudeOperations & Technology ChallengesCompetitive advantage Key skillsSuccess

REFLECTIONS ON DAVID SLACKWould you buy this business?Business value – intellectual property:

“priceless” domain nameDatabase of customer contactsDatabase of speechesProprietary software eg Auto SpeechwriterDistinctive reputation in market niche

Fixed assets – essentially nil

YOUR GLOSSARY OF BUSINESS TERMSNote terms:

Entrepreneur, small business small medium enterprise (SME), organisation, innovatione-commerce, intellectual property founder

Find definitions from text (use index), dictionary, commercial dictionary

Record examples

SMALL-MEDIUM SIZED BUSINESSES (SME’S)No standard definition.85% of NZ SMEs’ employ less than 5 full-time

people Examples of small businesses: Family

businesses such as - dairies, cafeterias, hair salons, bakeries, garages, restaurants

INTERESTING FACTS ABOUT ENTREPRENEURIAL BUSINESS IN NZ

1976: 6% of owner managers were women

1996: 36% - a 6-fold increase

There has been a net increase in the number of small business of around 10,000 per year

INTERESTING FACTS ABOUT ENTREPRENEURIAL BUSINESS IN NZMany small business founders lack

organisation and management skills. They are often the BEST people to start

a business, (entrepreneurs) but the WORST people to run that

business (managers).

QUESTIONS

Why is the number of SME’s growing, and the % employed in SME’s growing?

What other forced career changes (e.g. health status) can you imagine?

What are some of the reasons that smaller businesses can compete successfully with larger business?

QUESTIONS

• Small Business opportunitiesWhat are some options for self employment? Define clearly the business purpose and industry sector – (David Slack)

Examine reasons for founding small business ventures – (Necessity/Opportunity)

What are some personal business and other skills, and experiences that you might need for starting a business?

DEVELOP NATURAL TALENT INTO EXCELLENCE

Excellence

Managed temperament

Imparted skills and knowledge

Developed talent

Bolton & Thompson, 2004, Fig 2.2

structured learning and experiences

including

formal education leading to skill sets

Unstructured learning and

experiences

Natural

talent

BUSINESS PLAN ESSENTIAL ELEMENTS1. Business description (includes org &

mang)2. Market analysis3. Competitor assessment4. Market plan5. Operation plan6. Financial plan7. Executive summary