Small Business and New Venture Management

Small Business & New Venture Management
Business advisors
Accountants
Lawyers
Management consultants
Bank managers
Financial planners
Publicly funded small business
agencies
How to pick one
Qualifications
Conflicts of interest
Price
Service provided
Experience and industry knowledge
Friendliness /personal rapport
Networking
Operational Management
"The control of the process by
which a firm makes a product"
Three basic steps
Inputs (Stuff and labour)
Transformation (Combining inputs)
Outputs (The end result)
Business premises
Home Based
Serviced Office
Business Incubator
Rented Premises
Purchased Site
Location
Geographic
Public transport
Environmental aspects
Competitors
Context
Workflow
Straight line, L, U, S shape
Floor plan
Grid Layout
Open-plan
Botique
Manufacturing
Labyrinth
Inventory and Supply
Economic Order Quantity (EOQ)
Environment
Just-in-time
Operation Equipment
Phased Purchase Stategy
Hire & Lease
Buy new or second-hand
Evaluating, Improving & Securing
Set standards
Measure
Compare measured with standards
Make corrections
GANTT, PERT, CPM
Assessing & Controlling
Scheduling mechanisms
Inspection regimes
Productivity indicators
Timing of evaluation
Procedural systems
Quality assurance (QA)
ISO12001 (environment stuff)
ISO9001 (quality and procedure stuff)
Six Sigma (for production >
highest standards)
Risk management
Contingency plan
Risk number
Security
Insurance
Strategic planning
"The business's direction and scope"
Reflects owner-manager priorities
Benefits
Statement of goals & objectives
Efficient use of time
Consider alternatives
Management and staff development
Financial management
Key points to know about SME:s
and strategy
Strategy or improvisation
Lack of planned strategy
Strategy constricted by financial
constraints
More unplanned / guessed work
Formal planning is rare
Owner manager sees no advantage
Lack of strategic planning but
not strategic thinking
Trial & Error learning
Success & Failure
Statistics
7.5% of all business exit each year
1/3 after 15 years
1/2 after 10 years
2/3 after 5 years
Factors
Finance
Marketing
Production
Personnel
Personal skills & attributes
External Competition
Changing External environment
Finance
Profit & Loss statement
For Financial performance
Depreciation
Assets
Balance sheet
Financing
Debt
The bank
Creditors
Public money
> Risk (Debt holders and sell you up)
> Reward (If successful debt is
almost always cheaper)
Trade credit (buy now pay later)
Bank overdraft
Term loan
Secured loan
Current and non current
Leasing and hire purchase
Equity
Equity via partner
Profits (Owners equity)
< Risk (E holders are the lowest
ranked creditors)
< Reward (if successful)
To get money, the firm has sold
it's upside
Business angels
Venture capital
IPO Initial Public Offering
Own money (E & D)
Family & Friends (E & D)
Bootstrap finance
GANTT p. 226 in textbook
Ratio analysis
Efficiency
Profitability
Start-up costs
Licenses & Permits
Working capital
Equipment
Market
Research
Market led
Macro-environment (that is
uncontrollable factors)
Industry
Market
Research led
Firm resources
Entrepreneur's knowledge
Social networks
"The function that links the consumer,
customer and public to the marketer through
information"
Constrains
Cost
Experience & Competence
Reliability
Prejudices of researcher
Uniqueness
Time
Determining attractiveness
Risk of new competitors entering
Threat of substitutes
Bargaining power of buyers
Bargaining power of suppliers
Degree of rivalry from competitors
Definition
"Small business: a small-scale, independent firm, which is
usually managed, funded and operated by its owners, and
whose staff size, financial resources and assets are
comparatively limited in scale."
Characteristics
1-2 owners
Financed by the owner
Limited market share
Limited life span
Part-time basis
Low net profit
Entrepreneur
"The process, brought by individuals, of
identifying new opportunities and converting
them into marketable products and services."
Business plan
What?
A communication tool
A sales tool
A road map
A blueprint
An agreement
A proposition
A research paper
5 tests
Comprehension
Appropriateness
Sustainability
Feasibility
Accountability
Why?
Clear statement of direction and
purpose
Encourages goal setting
Holistic perspective
Encourages better research
Used to raise finance
Integrates operations, finance
and marketing aspects
Why not?
Not a guarantee of success
Cannot eliminate uncerrtainty
Inaccurate or outdated info Reliance
on a predetermined plan can do
damage
For who?
VC
Bankers
Investors
Large customers
Laywers
Suppliers
How to write it
Brief, professional, point of
view, self-explanatory
Starting a new business
Advantages
Shape your own vision
Flexibility
Cheap to start
New lifestyle goals
Finance
Market
Legal
Sole proprietorship
Also known as a sole trader. "A person
who wholly owns and operates a
business."
Partnership
"A relationship that exists between people
carrying on a business in common with a view
to making a profit."
Company
"A separate legal entity that has an
existence independent of its owners and
mangers."
Structure
Questions to ask
Evaluation
5 tests!
Traps to avoid
6 Steps when starting
Market Research
Statuory Requirements
Find resources
Evaluate
Buy an exisisting
Begin trading immediately
Easier to arrange finance
Easier to evaluate performance
Questions to ask
Why being sold?
Includes staff?
Debts/liabilities?
Licenses and permits?
Accurate financial accounts?
Price valuation?
Market based
Asset-based
Cash flow
Start-up
Franchise
Relationship between owner and entrepreneur
concerning
Trade name
Product manufacturing & dristribution
Pure
Licensing for permission to sell.
Remain independent from parent
company
Advantages
Lower failure rate
Easier to raise capital
Financial projections
Business plan
IP
Trademark,Copyright, Trade
secrets, Industrial designs
Law & Patents
Establishing
Who owns the technology?
Is it patentable?
Innovation patent?
Standard patent?
Evaluation
Does it work?
Better than rivals?
Applications?
Often valuable asset important
to keep identified and
safeguarded
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