SPRING 2018 - Managing and running a small venture - CBC college - Level 3

Task 1

P1: Main considerations for business while planning and allocating resources

Goodhood is a small organisation that is operating its business in the United Kingdom and selling their products, which are mostly clothing, whether men's or ladies wear. Although the company is running at a small level, they are providing job opportunities to many people. The company is taking help from a consulting firm so that they can expand their business in an effective manner (Bridge and O'Neill, 2012). Therefore, all the employees are working together in order to achieve a common goal so as to increase their market shares and values at the same time. Some of the important considerations that are followed by Goodhood are mentioned below:

Planning Resources: For managing a small business, there are some of the criteria that have to be followed by an organisation, and planning is one of them. This factor includes some of the components, which are given beneath:

Premises and equipment: Before making any plan, it is important that superiors have proper knowledge about the tools, technologies, and resources that are available to them. This will help the organisation in providing better training to employees so that they can give effective results. Other than this, a perfect environment at the workplace should be given to employees so that they can help the organisation for better growth.

Raw Materials: This is an important element on which companies need to focus because, without it, firms cannot manufacture goods and resources. In context with Goodhood Company, their prime requirement is of threads, fabrics, etc., so there is a need to maintain a better relationship with their suppliers in order to get stuff on time and in the right way.

People and skills: For running a business, it is necessary that the company have an ample number of employees with effective skills and knowledge that they can apply for future proceedings. Therefore, organisations also help them in doing so by providing them proper training programs. 

Hence, for accomplishing the targets, it is necessary that strategic planning be done along with the limited resources that are available to them (Keller, Parameswaran, and Jacob, 2011). 

Financial Resources:  It is categorised as the most important element because in order to implement new and innovative ideas, it is necessary that company has sufficient amount of finance which they can use for future happenings. Goodhood has maintained a record of their financial status  by maintaining cash flow, balance sheet and many more. Other than this, for getting appropriate funds, they can take loans from financial institutions like bank, stakeholders, etc.; moreover, company will be able to produce goods right on time. 

Goals, objectives, and vision: These are the essential components that help an organisation attain the objectives and goals in a certain period of time. Goodhood is maintaining healthy relations with their employees and conveying the message in an effective manner so that all the tasks are accomplished right on time. 

Goodhood at their workplace have implemented hierarchical structure under which superiors have assigned all the work according to the capabilities of an individual. They are giving importance to Transactional sales values, culture and beliefs of different people so that a mutual understanding can be maintained, which will enable them to obtain the goals and objectives.

Therefore, management should have a set mission and vision that can be achieved in a limited period of time (Brown, 2013).

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Task 2      

P2: Examining and evaluating customer relationship management

Customer relationship management consists of certain strategies, practices, and technologies that an organisation can optimise for having a better result in terms of relationships with customers. For formulating better strategies, the company is taking feedback and reviews from its consumers, whom they are providing the products. Some of the steps are mentioned below:

Customer portfolio analysis: It is considered an essential element as it is related to the needs and wants of customers. By manufacturing products as per the satisfaction level of consumers, they can generate more profits and revenues (Awais Ahmad Tipu and Manzoor Arain, 2011).

Customer intimacy: This helps an organisation in knowing the requirements of clients; as a result, it will assist the organisation in maintaining a healthy relationship with consumers. It will also aid them in having better communication with others.

Network development: For developing interaction between customers, Goodhood is using appropriate tools and technologies that are helping them sustain loyalty with consumers. Along with this, it is assisting them in communicating with employees and clients as well.

Value proposition development: To sustain in the market for a longer period of time, it is necessary that companies make those products that can add value to their market shares. Therefore, it is necessary that organisations should produce goods according to the preferences and choices of customers (Wellin, 2016).

Customer life cycle management: To win the loyalty of consumers, it is necessary that products that are manufactured are as per the needs and wants of customers, which can fulfil their requirements. It will assist them in retaining the loyalty of consumers for a longer period of time.

Therefore, customer relations are very important in order to get into a superior position at the market. Other than this, some of the factors that help a manager have a better relationship are given below:

Assessment of customer value, acquiring and retaining customers: To retain the consumer value, it is important that the company produce goods as per the preferences and choices of clients. Implementing new and innovative ideas will help the organisation in attracting more and more consumers towards their company (Abouzeedan, Klofsten, and Hedner, 2013).

Developing an effective channel for communication: In order to have better outcomes, it is important that firms use tools and technologies through which they can easily communicate with customers and employees as well.

Therefore, Goodhood company is using internet to promote their activities in better manner, as they are optimising this to make their customer aware of the products they have introduced for selling.

P3 Small business can develop transnationally and determine benefits and drawbacks

Transactional Business Operations: This is an approach through which company try to establish themselves internationally. There are many firms that first analyse market area and than  launch its business. Therefore, with this, it provides an organisation an idea related to what things company can mention in their strategies for attaining a better position in the market area. Henceforth, according to the choices and preferences of customers in regards with products, Goodhood can make alteration in their action plan. As a result, it will assist them in delivering best-quality products to its consumers. Other than this, company can face complications and issues while establishing its business in different countries, like rules and regulations, laws & legislation, etc.; therefore, it will assist company in operating its business in an effective manner.

There are various kinds of ways through which company can enter a market area, which are discussed below:

Mergers and acquisitions: Under this component, Goodhood will lookout for foreign companies with whom they can merge so as to get better results in terms of sales and profitability. Therefore, it will help company establish itself in a better manner.

Joint Ventures: In this, two and more than two companies joint hands together so as to operate their businesses commercially. Henceforth, it helps company in enhancing its sales and profitability.

Exporting: Under this, sitting within the home country, Goodhood Company can sell its commodities in different locations. As a result it is easier and firm can handle its operations from their nation itself.

Benefits of transactional business development:

Boarder market base: With the help of transactional business development Goodhood can increase its customer base as a result, its range will increase and gradually profitability.

Brand recognition: When a company establishes itself in a different market area, not only will its sales increase, but it also provides recognition to the brand. Therefore, in this context, a company can use different platforms for promoting its activities.

Drawbacks of transactional business development:

Risk of failure: Establishing business in a new place can lead to failure as people may not trust the brand easily.

Expensive: For some people, products that are provided by Goodhood can be expensive, because of which sales will decrease and the company can face losses.

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Task 3

P4 Cash flow forecasting showing fixed and variable cost

For every organisation, it is important to forecast their business so that they can have an overview of their company's growth, whether it is  increasing or decreasing. Goodhood is using appropriate tools and technologies for making appropriate strategies which they can utilise for having effective growths  (Harris, Rae and Misner, 2012). Other than this, organisation has formulated a budget plan, which will provide an overview of how much money will be required for conducting the process in a systematic manner. Chances of failure can be reduced by forecasting the future proceeding in a better manner. Therefore, by monitoring the performance of employees on a regular basis, the company can evaluate the needs and wants of workers in order to provide them with the facilities through which all the set targets and goals are accomplished in given period of time.

Therefore, fixed and variable cost on monthly basis are mentioned below so as to understand it in a better manner:

Balance Sheet, cash flow statement, profit and loss account of Austin Fraser:

Profit and Loss Account at the year ended

With the help of above-mentioned table, i.e. balance sheet, workers in an organisation   will know about liabilities and assets and accordingly they will execute their business operations.

According to the forecasting index, the assets will be maximised by £50 in 2018 and also the profitability level of firms will be increased and this is an important factor which results in achieving growth and success for firms  (Dugguh, 2015). All the activities of business should be carried out according to the set business goals and objectives in order to achieve effectiveness in their operations.

P5 Break even analysis applied in an organisational situations

Breakeven analysis is being considered as when a firm is at a stage of no profit and no loss. Both managers and leaders do not make any sort of changes as there is a possibility of facing losses. Another name of this is Cost volume profits analysis. In order to calculate the break even point, a formula which can be used by administration of Goodhood is given below:

BEP (per unit): Fixed cost/selling price per unit - Variable cost per unit

A small business firm named Goodhood, which is dealing in the clothing sector in London, has to calculate this so that effective decisions can be made right on time when the company is dealing with some sort of risk. The firm has almost 50 staff members that are rapidly giving good services to consumers of this organisation, which is helping them in enhancing profitability and productivity levels (Thomas, Shaw, and Page, 2011). Alongside this, effective staff members take feedback from customers in order to enhance their standardisation of products and services. Breakeven analysis helps in locating the economical weaknesses and strengths, including thoughts, which may aid in generating revenue in huge amounts. Goodhood can implement BEP at the workplace so that to monitor the profit and loss margins in an effective manner. With the help of this, overall performance can be maintained by the company. In regards to making determinations in this context, some points are given beneath:

• Safety is one of the biggest concerns, as with the help of this company, it can increase the affordability of sales by eliminating the chances of losses.
• Further, in order to gain maximum profits, superiors can give set targets which workers can help them so as to achieve goals and targets in an effective manner. Through this, more and more revenues can be generated.
• Therefore, by monitoring the performance of employees on a regular basis, they can increase the quality of the products. Thus, company is hiring skilled and knowledgeable candidates who can help them gain maximum profits.

Application of break-even points on distinctive organisational situation:

To evaluate points of profitability: This helps an organisation in order to know the problems that are acting as a barrier in the whole process of business operations. If the company is not giving much benefit, than survival in the market can be difficult, so it is necessary that manager and superiors have a backup plan for eliminating such problems  (Poba-Nzaou and Raymond, 2011).

To price a product or service: Therefore, in order to operate the business in an effective manner, it is necessary that company has a better understanding of the breakeven point.

(Source: Use of Break even analysis, 2018)

Henceforth, it is important to know the fixed and variable cost of goods so that better outcomes can be evaluated. Hence, it will help them in maintaining a brand image in front of their customers (Use of Break even Analysis, 2018).

P6 Key financial Statement, which contribute in successful management

Cash flow Statement

There should be a cash flow statement designed as it helps in analysing the available cash flows by which all the business operations can be carried out effectively according to set business objectives.

Management of finance stands crucial for an organisation; therefore, to successfully carry out the same, it is essential for the organisation to undertake assistance from crucial financial statements (Liñán and Fernandez-Serrano, 2014). The financial statements are formulated to depict the financial condition of an enterprise and results that have been achieved through business performance. The crucial financial statement that can be employed in an organisation can be categorised on three components, which are as follows:

Income statement: These can be referred to as the most important financial statements that are to be maintained by an organisation. Income statements are known to define the capability of businesses to generate profits through their operations. The data that has been defined on the income statement are stated in terms of euros and are highly accurate. It carries a detailed record of income prior to reducing expenditure and taxes of an enterprise and will be accurate to an additional level when the basis of accounting is undertaken.

Balance Sheet: A balance sheet is referred to as the most renowned financial statement relating to a business. However, by business professionals, this statement is not considered as it does not portray direct results that have been obtained through operations and mostly rely on the historical costs (Hair Jr. and et. al., 2015). This financial statement carries its distinct importance while looking to ascertain the financial position of an organisation and is mostly paired with the income statement while identifying investment by the organisation.

According to the above data of Goodhood's balance sheet, it has been examined that total asset value in 2018 was 340 thousand pounds, which increases from 230 thousand pounds in 2017. Besides this, total value of liabilities raised to 905 from 670, that is, 2017 to 2018. Thus, working capital also increases from 30 thousand pounds in 2017 to 80 thousand pounds in 2018.

Statement of cash flows: This is referred to as a vital financial statement that records the inflow and outflow of finance for an organisation. It clearly states the expenditure that has been carried out while carrying out operations and presents modifications to the financial accounts of an enterprise. The cash flow statement are generally presented to other parties and further helps in ascertaining additional requirement of finance for an organisation.

Task 4

P7 Key legislation and regulation which influences small enterprise

The government has formed various legislations that are applicable to organisations irrespective of their scale of operations. It is essential for enterprises to conform with the laws and policies formulated by the government to avoid legal trouble (Su, 2011). The government is known to penalise organisations that do not follow defined codes of practice stated by the authorities. Here is a listing of some of the legislation that is to be focused by an organisation, such as:

Health and safety act, 1974: it is a legislation which have been formed to protect and preserve stature of health of employees. This act imposes a variety of duties upon the employer of a business to protect the health, safety, and welfare of all the employees working for the organisation. These are referred to as approaches that can be practiced by an employer, which cannot ignore such measures due to expenses that are involved with the same. The government has been very strict prior to the exposure of incidents in which employees are forced to deal with computers for longer hours and work under stress (Osotimehin et. al., 2012).

Data protection act 1998: This legislation revolves around preservation of the data which has been provided by the consumers. This law has redefined the manner in which personal data of the residents of the country has been looked up by organisations irrespective of the type and sector of the business. The government have enhanced their role in regulation and protection of the personal data of the citizens in the country. The penalties that can be applied upon violation of such data can result in a fine up to 500,000 euros and imprisonment up to 2 years. In 2017, this law has been defined, which has focused on alteration of regulation so that to match contemporary business environment.

Record-keeping act: This legislation revolves around the maintenance of adequate financial records for an enterprise. The financial records which are maintained by an organisation should match with the standards established by the government. The act also involves some of the needful activities that are to be fulfilled by the employer and some restrictions that are to be conformed to (Schaper et. al., 2014). 

Tax and Employment (1976): According to this law formulated by the regulatory bodies of the United Kingdom, it is crucial that companies follow laws and pay suitable taxes according to their business so as to run their business operations in a better manner.  If the company doesn't follow this, then they have to pay penalties.

There should be a proper record relating to members who are working with the organisation so that they could be presented upon request by the concerned authorities. Adhering to such legislation and codes of practices will ensure that there is minimum disruption and an improved market position is fulfilled.

Conclusion

From the above report, it can be concluded that, to manage a small business, it is important that they optimise all the resources that are available to them in order to increase their sales and growth. This will gradually provide a maximum number of profits and enhance the position of the company in the market area. Therefore, this can be achieved by providing facilities as per the needs and demands of customers so that it can satisfy the wants of consumers. Gradually, it will provide competitive advantages through which they can give tough fights to competitors. In this report, the researcher has discussed transactional sales that were implemented by the organisation so as to increase sales without taking much care of revenues. Some of the financial statements are also included in this assignment, which is helping the company in formulating new strategies and plans of action for their future proceedings.

References

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