SMALL BUSINESS MANAGEMENT

1. LESSON 3.1 SMALL BUSINESS MANAGEMENT Explain the advantages a small business has over a large business Describe the key elements of a business plan

2. 3.1 Small Businesses • A small businessis an independent business with fewer than 500 employees. • The greatest percentage of businesses in the United States are small businesses, and they employ half of all private sector employees.

3. 3.1 Starting a Small Business • Characteristics of small business owners • Ideas • Preparation and research

4. 3.1 Small Business Problems • The failure rate for small businesses is quite high. • The most common reasons for failure: • Not keeping adequate records • Not having enough start-up money • Having a poor location • Lacking management experience or experience with the type of business being managed • Not controlling business expenses or managing credit to customers • Failing to have a business plan

5. 3.1 The Business Plan • When successful small businesses are compared to those that fail, one thing stands out—the successful businesses developed and followed a business plan. • All major activities and management functions are included in the plan.

6. 3.1 What Is a Business Plan? • A business planis a written description of the business idea and how it will be carried out, including all major activities.

7. 3.1 Elements of a Business Plan • Description of the business • Description of the competition • Marketing plan • Customer analysis • Operations plan • Financial plan

8. 3.1 Elements of a Business PlanDescription of the Business • The business idea • Major products and services • Ownership structure • Owner’s qualifications • Strengths and weaknesses • Long- and short-term goals

9. 3.1 Elements of a Business PlanDescription of the Competition • Industry characteristics • Condition of the economy • Strengths and weaknesses of competitors

10. 3.1 Elements of a Business PlanMarketing Plan • Description of marketing activities • Description of resources needed • Schedule of marketing activities

11. 3.1 Elements of a Business PlanCustomer Analysis • Description of customers • Location, number, and resources of customers • Sales forecasts

12. 3.1 Elements of a Business PlanOperations Plan • Organization of the company • Description of major operations • Analysis of resources needed • Human resource plan

13. 3.1 Elements of a Business PlanFinancial Plan • Start-up costs • Long- and short-term financial needs • Sources of financing • Budgets and financial statements

14. 3.1 Developing a Business Plan • The business owner is responsible for developing the business plan. • A well-developed plan will lay out an idea, require an owner to analyze her or his concept, and make decisions about key business activities such as production, marketing, staffing, and financing.

15. LESSON 3.2 BUSINESS LEADERSHIP Describe leadership traits and actions Explain five human relations activities that are important in business

16. 3.2 Leadership in the Workplace • Successful businesses depend on effective leaders to make sure that work gets done correctly, on time, and profitably. • Employees who believe that their leaders respect them have more commitment to their jobs and perform their work tasks better. • Becoming a good leader involves learning about and adopting leadership traits and developing human relations skills.

17. 3.2 What is Leadership? • Leadershipis the ability to influence individuals, groups, or teams to accomplish important goals. • Business leadership includes improving profits, the “bottom line” of the business.

18. Communication Confidence Cooperation Courage Dependability Honesty Initiative Intelligence Judgment Objectivity Stability Understanding 3.2 Traits of an Effective Business Leader

19. 3.2 Leadership Traits and Actions • Communication - Listens, speaks, and writes effectively • Formal & Informal • Internal & External • Vertical and Horizontal • Oral & Written • Confidence - Willing to make decisions and take responsibility

20. 3.2 Leadership Traits and Actions Cooperation - Works well with others; develops group relationships Courage - Takes responsible risks; makes unpopular decisions Dependability - Follows through on commitments Honesty - Is ethical in decisions and treatment of others

21. 3.2 Leadership Traits and Actions Initiative - Has ambition and motivation to get tasks done Intelligence - Has knowledge and understanding Judgment - Makes decisions carefully and objectively Objectivity - Looks at all sides of an issue before making a decision

22. 3.2 Leadership Traits and Actions Stability - Is not too emotional or unpredictable Understanding - Respects the feelings and needs of others

23. 3.2 Importance of Human Relations • Business managers spend more than half their time in human relationsactivities, that is, interacting with people. • Five basic human relations skills • Self-understanding • Understanding others • Communicating • Team building • Developing job satisfaction

24. LESSON 3.3 HUMAN RESOURCES MANAGEMENT Define human resources management Understand employee compensation, benefits, and evaluation

25. 3.3 Manage Human Resources • Human resources managementinvolves all aspects of recruiting, hiring, training, compensating, and evaluating employees. • Analyze staff needs • Determine employee qualifications • Find new employees

26. 3.3 Compensation • Compensationis the amount of money paid to an employee for work performed. • Compensation is made up of two parts: • Salary and wages • Benefits

27. 3.3 Salary and Wages • Salary and wages are direct payments to employees for work completed. • A salary is a fixed amount of money paid to an employee regardless of the number of hours worked. • Wages are payments for labor made on an hourly, daily, or per-unit basis; for example, $8 per hour.

28. 3.3 Benefits • Benefitsinclude compensation in forms other than a direct payment to the employee. • Vacations • Insurance • Other benefits

29. 3.3 Evaluation • Evaluation process • Focus on the specific job duties of each employee • Review of important work traits expected of employees • Communication, interpersonal relationships, quality and quantity of work, and ethical behavior

30. 3.3 Evaluation • Evaluation conference • Discuss the results of the evaluation • Plan for any needed improvement • End result: reasonable agreement on the employee’s performance, goals, and plans for the future • Identify the support for the employee to help him/her improve performance

31. LESSON 3.4 FINANCIAL RESOURCES MANAGEMENT Explain how budgeting relates to financial planning Describe two kinds of financial reports prepared by businesses

32. 3.4 Financial Management • One of the reasons why small businesses often fail is that they do not manage their finances properly. • Businesses must wisely manage the money they take in and pay out to become profitable and to stay in business.

33. 3.4 Financial Planning • A business budgetis a detailed plan for meeting the financial needs of the business. • Two main purposes: 1. Anticipating sources and amounts of income 2. Predicting the types and amounts of expenses for a specific business activity or for the entire business

34. 3.4 Types of Budgets • Start-up budget • Operating budget • Cash budget

35. 3.4 Financial Records • A financial recordshows the financial performance of a business.

36. 3.4 The Income Statement • An income statementis a financial statement that shows revenues, expenses, and net income profit or (loss) for a period of time. • Revenue – Expenses = Net Income or Loss

37. 3.4 The Balance Sheet • A balance sheetis a financial statement that lists a business’s assets, liabilities, and owner’s equity. • Assets = Liabilities + Owner’s Equity

38. 3.4 Maintaining Financial Records • Collecting information • Preparing financial records • Maintaining financial records