Management of Small Business, Free Essay Example

Small companies are autonomously owned companies that are limited in both size and income. Many factors that define small business they include the size of the structures, number of employees, ownership and taxes, market area and the number of business transactions that take place in the organization. Alignment and coordination of activities in any organization whether big or small needs special skills to accomplish the goals and other objectives of the company (Hatten, 2012). Small businesses serve as entry points for young graduates with little or no experience at all to acquire relevant work experience and skills. These enterprises may not be paying well but give to their country the starting point in a career for the labor market.

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Nature of Small Business Entrepreneurship

I started my business management career in the year 2000 as part owner of Kirkland and son tool equipment repair, having graduated from college with management degree the previous year. This was my first experience to work not only in the management position but also in a business environment. Immediately after joining the company, I noticed that there was much than meet the eye regarding the activities and operation s of a business entity. As a young devoted and hardworking but inexperienced individual, I had to work extra hard to keep up with the speed and the ever-changing business trends. During my first months in my job, I learned that small businesses are not small as it is put because these are the enterprises that supply multinational enterprises with products and sometimes, refined labor. Another very important thing I learned from the company was that I could be my own boss, which made it easy to align personal interests and goals with work, there was also an opportunity to provide support and jobs for my friends and family members. One major disadvantage of working in a small company as compared to multinationals is one needs to work twice as hard to achieve basic market needs and company objectives, this, as I leaned, is because of varying factors such as market share, market segment, and economies of scale. Due to many activities and long hours day work, I was able to learn a lot within a very short time, and I must say it took me three to five months to be fully experienced and from this, I would handle many managerial activities in the company single-handedly. My communication skills improved, as I was able to engage the clients in brokering best deals. At the same time, I was tasked to lead the financial department, from which I gained recommendable experience in drafting the company budget, facilitating employee salary and monitoring the expenditure of the company.

The company was relatively smaller but had many activities from the employees, lower management to the top. As the management team, we had adapted many managerial strategies to guide the company and us towards the achievement of our objectives. The nature of the company fell under the following categories:

The company had small-scale undertakings with the fixed amount of investments, which was mainly from the owners. The fixed assets of the company that included plant and machinery were also limited to require investment ceiling as per the guidelines that govern small enterprises. This made the company to operate on a small scale and offer its services locally (Sara et al., 2009). This was a great experience as the management worked hard to compete with relatively big companies, which enabled me to gain more skills on factors of business competition. Under the management of revenues and finance if the company, I realized that the revenues of the company were generally lower compared to other companies that operate on a large scale. In my first year of operations as a finance manager, I recorded less than $10 million as the total income of the company. This compared to normal business scale indicates that we still operate under the parameters of small companies. At some point, I would interact with employees on a personal level and closely monitor them to establish their input and how they expend materials as this is meant to keep expenses to a minimum.

Another characteristic of the company is the number of employees, which was not that big because the top management consisted of three people, four supervisors and a subordinate staff of 53 employees. In a small business, this is not a big number of employees to manage; we had few policies in place that would guide all employees towards the achievement of company's objectives and goals. In the finance department, I created a system that enhanced easy budget allocation to every department with strict consideration of revenue generated from each of the four departments. This ensured proportional measure as more profitable departments received more funds to facilitate their operations (Hatten, 2012). As I dealt with this, my experience and skills improved on a daily basis, and I was now conversant with budgetary allocations. On employee salaries, I coordinated with the human resource department to come up with a graduated pays lip to reward each employee according to their work, skill, time and level of education. The coordination of payslip with employee's performance for appropriate reward was my major concern and scope that I was so eager to learn in the field because it did not go down well with me in college due to the theoretical framework that was not structured to give practical guidelines on the same. But after one year in Kirkland and Son Tool Equipment Repair Company, I was not only able to comprehend the whole process but also prepare it and customize to the needs and scope of the company. I integrated my college knowledge to come up with an electronic inventory management system that kept minimum and maximum stock level on the check, and at the same time ensure demand is met.

Entrepreneurial Opportunities and Business Models

An entrepreneurial opportunity is a situation where a businessperson can see a chance take it to make a profit out of it. A business model is the main driver of any business because it becomes the main issue when discussing and planning business ventures. A good business model describes the plan on how the organization delivers value in economic, cultural and social frameworks. In the small business, finding the entrepreneurial opportunity is one of the major challenges faced followed by the knowledge to distinguish between a good and bad one. At the company as a manager, it was very prudent to team up with other co-owners to come up with a good business model and be in a position to see and take new opportunities. Business modeling involves documenting the key expectations of a given business approach and other strategic components that puts an organization in a better position to see and take on new opportunities.

I left Kirkland in 2007 to become an independent contractor with real estate. This seemed to me as an opportunity to venture into a more involving and challenging field. The real estate business is very lucrative but presents great challenges because the business is already crowded and needs great forecasting knowledge to manage. The good thing is that I came into the business with much knowledge and experience from the Kirkland Company (Sara et al., 2009). I adapted the best business model to suit the business. First, to beat the competition in the crowded market, I decide to become the middleman, which falls under the "Warby Parker" model. The reason as to this decision is the nature of real estate companies whereby big companies control the market prizes and the client base, which makes it easier for them to see new opportunities more often than other new entrants into the business (Stokes et al., 2010). The reason why this strategy worked with me is becoming a middleman gives new entrants pricing advantage, product quality control and creates a direct channel of feedback from consumers, at the same time saving the consumers from large spending.

Another business model I learned in school and one that has proved highly effective in my business is "becoming a market place." This model means that demand and supply are both brought together. After taking a good survey in the market, I decided to link up with various people with homes and wanted to sell them by doing marketing for them and later selling their houses. This idea worked so well for me because I incurred no overheads and held no inventory at all as the company operated virtually. Another major advantage is that I was never worried about costs and the market for the product. Instead, I was simply bringing sellers to buyers.

The Necessity for Attention to Cash Flow Methods of Cash Management

Cash flow is the amount of money that comes into and out of business in liquid form. It is very important for small businesses to manage their cash effectively. It is also equally important to manage the amount of money that comes into and out of business for starting companies. At the Kirkland company, I formulated electronic finance monitoring processes that kept track of the amount of money the company generated each day against cash spent during the same day (Deakins, 2009). This process enabled easy monitoring of the company finances by ensuring the balance between income and expenditure. In my own real estate company, I decided to run the finances on my own and keeping a close eye on both the money coming in and going out. The monitoring of the cash flow helps me to minimize the overheads and other expenses at the expense of maximizing revenues. The main aim behind this is to raise the profits of the business for fast growth.

Sources of Finance

How a business is financed can be a source of failure or success, if the available resources do not march with the given business proposal. A business might be financed in its inception or during its operations. There are several financial sources in a business depending on the size and structure of a given business. For small businesses, owners are made to contribute towards the capital of a business; small business financing can also be done by friends and family, or through the small business innovation research grants. When I joined Kirkland as a part owner, I had to contribute capital to the business as a form of raising shares and financing the business for expansion (Stokes et al., 2010). The good thing about it is that for a small business, the amount of financing needed is small and to realize it is easy. In many occasions, we could take the responsibility as owners of the company fetch for loans from banks to finance our business. However, this experience was not much profitable, as the repaying of the loans would eat into the profits of the business. As I ventured into my own business of real estate, I used my little saving from my previous management job at Kirkland Company and added to the contributions from my family members. The amount was not much enough, but for starters, it did a good job. This type of financing is profitable for small businesses because investing back the profits is easy and fast.

Management Requirements for Establishing Small Business

The main requirement of management in starting up small business is the clear understanding on how to set up a business and manage finances. This requires a good business plan that can match the available finances. When I started my own real estate company, I had first to determine if I was absolutely ready for the business because it meant to change so much about me including my professional, personal and financial commitments. The second thing I did was to assess the business idea through the market research, analyzing the competitor and surveying the potential customers. After this, I had to structure a business plan, which was well organized towa...