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

Task 1

P1 Main consideration for business while planning and allocating resources

Goodhood is a small organisation that is operating its business in United Kingdom and selling their product that are mostly clothing whether men's or ladies wear. Although the company is running in small level but they are providing job opportunities to many people. Company is taking help form consultancy 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 following by Goodhood are mentioned below:

Planning Resources: For managing a small business there are some of the criteria which 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 a 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 workplace should be given to employees so that they can help the organisation for better growth.

            Raw Materials: This is an important element which company need to focus because without this firm cannot manufacture goods and resources. In context with Goodhood company, their prime requirement is of threads, fabrics etc., so there is a need of maintaining a better relation with their suppliers in order to get stuffs on time and in a right way.

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

            Hence, for accomplishing the targets it is necessary that a strategic planning is 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 idea 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 which help an organisation in attaining the objectives and goals in certain period of time. Goodhood is maintaining a healthy relations with their employees and conveying the message in an effective manner so that all the task 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. The 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 in obtaining 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).

Task 2      

P2 Examining and evaluating customer relationship management

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

            Customer portfolio analysis: It is considered as 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 relation with consumers. It will also aid them in having better communication with others.

            Network development: For developing interaction between customers, Goodhood are using appropriate tools and technologies that is helping them in sustaining 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 longer period of time it is necessary that company make those product which can add value in their market shares. Therefore, it is necessary that organisation 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 which can fulfil their requirements of customers. It will assist them in retaining the loyalty of consumers for longer period of time.

            Therefore, customer relation is very important in order to get into a superior position at market place. Other than this, some of the factors that helps a manager in having a better relation are given below:

            Assessment of customer value, acquiring and retaining customers: To retain the consumer value it is important that 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 a better outcomes it is important that firm uses tools and technologies through which they can easily communicate with customers and employees as well.

Therefore, Goodhood company is using internet for promoting their activities in better manner as they are optimising this for making 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 who 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 at market area. Henceforth, according to the choices and preference 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 & legislations 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 into market area are discussed below:

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

            Joint Ventures: In this, two and more than two companies joint hands together so as to operate its business 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 form 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 be increase and gradually profitability.

            Brand recognition: When company establish themselves in different market area not only its sales will increases but also provides recognition to the brand. Therefore, in this context company can use different platforms for promoting its activities.

Drawbacks of transactional business development:

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

            Expensive: For some people products which are provided by Goodhood can be expensive  because of which  sales mat decrease and company can face loses.

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 an technologies for making appropriate strategies which they can utilise for having an 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 company can evaluate the needs and wants of workers in order to provide them 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 is 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

            Break even analysis is being considered as when 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 that is given below:

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

A small business firm named as Goodhood which is dealing in clothing sector in London have to calculate this so that effective decisions can be made right on time when company is dealing with some sort of risk. 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 level  (Thomas, Shaw and Page, 2011). Along side this, effective staff members takes feedback from customers in order to enhance their standardisation of products and services. Break even analysis helps in locating the economical weaknesses and strengths including thoughts which may aid in generating revenue in huge amount. Goodhood can implement BEP at workplace so that to monitor the profit and loss margins in effective manner. With the help of this, overall performance can be maintained by company. In regards to make determinations in this context some of points are given beneath:

• Safety is one of the biggest concern as with the help of this company 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 process they can increase the quality of the products. Thus, company is hire skilled and knowledgeable candidates who can help them in gaining 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 benefits 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 services: Therefore, in order to operate the business in an effective manner it is necessary that company has a better understanding of break even point.

(Source: Use of Break even analysis, 2018)

            Henceforth, it is important to know the fixed and variable cost of goods so that a 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 cash flow statement designed as it help 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 organisation to undertake assistance from crucial financial statements  (Liñán and Fernandez-Serrano, 2014). The  financial statements are formulated to depict financial condition of an enterprise and results which have achieved through business performance. The crucial financial statement which can be employed in an organisation can be categorised on three components which are as follows:

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

            Balance Sheet: Balance sheet is referred to as most renowned financial statement relating to a business. However by business professionals this statement is not considered as it does not portray direct results which have been availed 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 financial position of an organisation and is mostly paired with income statement while identifying investment by an organisation.

            According to above data of Goodhood's balance sheet, it has been examined that total assets value in 2018 was 340 thousand Pounds which increases from 230 thousands of Pound 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 thousands of Pound in 2017 to 80 thousands of Pound in 2018.

            Statement of cash flows: This is referred to be vital financial statement which records inflow and outflow of finance for an organisation. It clearly states the expenditure which has been carried out while carrying out of operations and presents modification of 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 have formed various legislation which are application upon organisation irrespective of their scale of operations. It is essential for enterprise to conform with the laws and policy formulated by the government so to avoid legal trouble  (Su,  2011). The government is known to penalise organisation who does not follow defines codes of practice stated by the authorities. Here listing some of the legislation which are 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 put variety of duties upon employer of a business to protect health, safety and welfare of all the employees working for the organisation. These are referred to be approaches which can be practised by an employer and cannot ignore such measures due to expenses which are involved with the same. The government have been very strict prior to exposure of incidents in which employees are forced to deal with computer for longer hours and working under stress  (Osotimehin and et. al., 2012).

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

            Record keeping act: This legislation revolves around 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 which are to be fulfilled by the employer and some restrictions which are to be conformed (Schaper and et. al., 2014).         

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

            There should be a proper record relating to members which 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 ensures that there are minimum disruption and 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 which are available to them in order to increase their sales and growth. This will gradually provides a maximum number of profits and enhance the position of the company at 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 fight to competitors. In this report the researcher has discussed about transactional sales that was implemented by the organisation so as to increase the 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 plan of action in their future proceedings.

References

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