BBA 3004

SMALL BUSINESS MANAGEMENT

TAN WAH TIONG

940928-14-5531
201565

LOH YONG CHIANG

OCTOBER 2014
NO
1.0
2.0
3.0

DETAIL
Content
Introduction
Body
-

Background

Organization of the report

PAGE
1
2
3-15

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Early life

Business plan

Operational Plan

Marketing plan

Organizational plan

Financial Plan

4.0

Conclusion

16

5.0

References

17

6.0

Coursework

18-23

2.0 Introduction

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Small businesses are normally privately owned corporations, partnerships, or sole

proprietorships. What businesses are defined as "small" in terms of government support
and tax policy varies depending on the country and industry.
Besides, small businesses range from 15 employees under the Australian Fair Work Act
2009, 50 employees according to the definition used by the European Union, and fewer
than 500 employees to qualify for many U.S. Small Business Administration programs.
However, in 2006 there were over 18,000 "small businesses" with over 500 employees
that accounted for half of all the employees employed by all "small business". Small
businesses can also be classified according to other methods such as sales, assets, or net
profits.
Small businesses are common in many countries, depending on the economic system in
operation. Typical examples include: convenience stores, other small shops (such as
a bakery or delicatessen), hairdressers, tradesmen, lawyers, accountants, restaurants, gue
st houses, photographers, small-scale manufacturing, and online businesses,

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2.0 Body
2.1 Background
Background
Who is really an entrepreneur? A person who takes risks to create change? Or anybody
of those multitudes who hide under the title of an entrepreneur to make ends meet?
Why this argument is on our discussion table?
Because many people going about with the title of an entrepreneur are not really in it to
create change (significance); they are in it to make a living (survival). And when
survival is the focus, then mediocrity becomes the outcome.
In our country, Malaysia, the entrepreneurs has a lot more obligations to face for their
survival rather than trying to create any significance. But statistics and the general trend
of our business shows that small businesses are still now mostly contributing to our
economy. The small business entrepreneurs who are surviving in todays business, they
survive because of providing quality in their products or services.
In this report, our concern is about such a small business entrepreneur, who has started
his business from scratch, an ordinary mediocre surviving from day to day and now has

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been flourishing in to a successful entrepreneur. In this report, we have interviewed Mr.

Vincent, Managing Partner of SYF Ltd.

Organization of the Report

The report has been organized as the interviewee described the interviewers. The first
person narrated speech has been transformed to statements while writing this report.
Early Life
Mr. Vincent is from Selangor. He was graduated from Taylor University of Engineering
& Technology in Mechanical Engineering. After graduation, he was in job as design
engineer in Best Air Co. Ltd. a Singapore based multinational company. He was doing
pretty well in the job, though his intention was higher education. So Mr. Vincent left his
job in the mid of 2009 and went to England to studying business.
Going England was really a tragic part in his life. In UK , it was a very struggling time
for immigrant students. As a result, Mr. Vincent has to come back from England after
one year without completing his MBA. After getting back from UK, Mr. Vincent is
started his venture at the beginning of 2011.
We asked Mr. Vincent, Why he decided to become an entrepreneur? In reply what he
said was more or less like that, Going into business simply because you want to make
money (profit) is far too much a price to pay as an entrepreneur. I mean isnt that what
employees do; working nine-to-five in order to make ends meet? Why in the world
would you choose to become an entrepreneur, be your own BOSS, just because you
want to make a living when there is already a far easy alternative for that employment.

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If you are so much in need of money in order to make a living, you should go get a job
and stop wasting your precious time posing as an entrepreneur! Entrepreneurship is
about using your life to do what you really love and truly care about.
Business Plan
Name and Address of the Business: COAR Global Sourcing
Office: House - 03, Road - 54,
Warehouse: Shop-297, (1st floor)
Cheras Selatan Jusco Complex
Batu 9, 43200
Name and Address of Principal: Vincent
Managing Director
Nature of Business:
SYF Global Sourcing Ltd.s main business concentration is Interior and Exterior
Designing solution. The company also provides electrical, lightings & ambiance
solution for homes and offices. The companys future concern is to become importer
and large scale supplier.

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Business Concept:
As the Selangor city is progressing through 21st century, the problem of housing is
increasing rapidly. In todays Malaysia, nobody wishes to build his own house on his
own land on his own at the end of life unless he or she is a billionaire. In todays
Malaysia the general trend of housing is to settle on an apartment. So a rapid burst of
Real Estate Developers Company has grown to fuel this trend. The real estate
companies usually offer a complete package of bundle, which end result is a ready
apartment. There are almost 2500 real estate companies registered under REHAB and
growing more in Malaysia. The real estate companies usually perform only the civil
construction of an apartment house and outsource other small jobs to complete a flat.
Here comes the scope of SYFs business venture. The jobs that real estate companies
outsources are the supply of various kinds of electrical and lighting equipments along
with the interior and exterior decoration items, which can be provided by SYFs
business solutions. SYF also provide with interior design professionals in case of
customizable design features.
Uniqueness of Business Concept:
There are many companies working on this kind of business, many of them are small
and a few are big companies. So the business concept of SYF is not unique, but there is
always a handsome demand for these kinds of business solutions. Though the business
concept of SYF is not so unique in nature, the business owner tries to make the solution
convenient to their customers in the following ways:
1. Providing one stop solution for multiple activities like, interior & exterior designing,
interior & exterior dcor supplier, electrical protection gear supplier, lighting solution
etc.

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2. Make the business solutions highly customizable according to their customer needs.
3. Providing solution at highest quality and at possible lowest price
Revenue and Profit Potential:
The venture has been running for almost two years, starting from the beginning of 2011.
The company has made profit in some deals, and incurred lose at one or two. The
entrepreneur tells us that, the profit margin of large deals are high but the small
solutions make a small margin of profit. The business owner also tells us that, their
revenue earning is comparatively a bit lower than their competitors. This might be as
they are new in the market and still working on to build a regular loyal customer group.
The company is looking further to acquire a few big corporate as their client.
Future Outlook and Trends:
In future, the SYF Global Sourcing wants to emerge as an importer and general supplier.
They also want to broaden their focused customer base. The company also always looks
for new trends in design of offices and homes and tries to adopt the solutions with their
existing business.

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Description of Venture:
Products
-

Wooden Doors & Door Frames

PVC Doors & Door Frames

Prefabricated Aluminum Window

Window Blinds

Shaped Wood and Plywood

Electrical goods

Electrical Protection Switch Gears

Services
-

Interior and Exterior Designing

Interior and Exterior Solution

Mechanical Solution

Electrical Solution

Lighting Solution

Office equipment and personnel

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Desks and chairs to accommodate five employees.

One design desk

two desktop computers

One Printer-Scanner-Photo copier

Small Arrangement for hosting clients.

Operational Plan:
The operational plan deals specifically with the internal operations and equipment
necessary to produce the product or service. The following are selected areas that need
to be addressed in this section
Location:
SYF Global Sourcing occupies two business locations for some strategic competitive
advantages. They have their corporate office for meeting the clients at Selangor office
and at the Cheras selatan Jusco place, they used to store their inventory purchased from
the nearby Melaka and Negeri Sembilan So they can meet the customer responsiveness
and also can procure raw materials timely and cheaply.
Equipments & Human Resource:

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SYFs interior design wing is situated at the Selangor office. They have sufficient
technological and ICT resources they needed for interior designing. There is one hired
design professional working for SYF global sourcing. Also two employees in
procurement, two employees in marketing wing are working 09:00-05:00 in COAR.
The owner he himself looks over their work and also he keeps accounting record
himself. They have also a manager for Selangor office.
Labor:
SYFs business operations require extensive use of skilled labors. The company mostly
relies on outsourced labors for getting their jobs done. In two years of operation, they
have build up a small group of skilled labors for wood works, glass works, paint works
and electrical works. As the labors are not their fulltime employees, the company tries
to maintain a good relationship to keep their labors motivated and loyal to the company.
Flow of Orders for Goods and/or Services:
When a work order for any job is placed in SYF, the owner himself delegates the
authority and responsibility among the employees. If it is a supply work order, then the
manager at Selangor office is notified about the order. After providing him with
sufficient money, he then procures the raw material from Melaka and Negeri Sembilan
to supply to the respective site. If the work order is for any services, like door frames
and door fixing, then the materials are procured and respective labor forces are hired
and they along with raw materials reaches the site and perform the job as per
specification.
Technology Utilization:
The degree of technology utilization in SYF is good for a small business. Information
Communication Technology is extensively used for accounting record keeping,

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communicating within two offices, designing and sometimes communicating with their
clients.

Marketing Plan
Market Segmentation:
The company has segmented their customer base in two categories, which are
geographically and by customer type. Geographically they have expanded their service
in Singapore besides Malaysia to explore the un-ventured markets there. They also have
divided their customer base by customer type, which are home customers and corporate
customers.

Pricing:
The company follows the conventional formula for determining price for their service.
The easiest formula to use is this one also have divided their customer base by customer
type, which are home customers and corporate customers.
Pricing:
The company follows the conventional formula for determining price for their service.
The easiest formula to use is this one:
Price = Costs + Profit

They did not provide us any other information about their pricing strategy. Probably the
profit margin varies with the volume of service and supply. Although they mentioned
that they also consider another two aspects of pricing which are

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Current market price and

Competitors price offered.

The company always tries to serve customers quality products and services at possible
lowest prices.
Promotion:
The classical promotional mix is as follows 6.0 Reference
-

Advertising

Publicity

Sales Promotion

Personal Selling

SYF Global Sourcing heavily relies on publicity and personal selling. The company also
frequently tries to make relationships with small real estate developers to get works
from their projects. It helps them greatly in generating bulk amount of their revenue.
The company usually spends more or less 2% of their revenue for promotion which is
significantly lower than their competitors.

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Organizational Plan
Form of Ownership:
The ownership of SYF Global Sourcing is Sole proprietorship.
Management-Team Background:
Amazingly Most of the employees are university graduates, and many of them are the
owners friends or affiliated and family members

Organizational Chart:

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And SYF Global Sourcing as a small business, its business operation perfectly suits the
Management by Objectives (MBO) process. In this company, more or less every goal is
set and operational decision is taken with the participation of all the employees. The
review of performance is done by the managing director of the company.

Financial Plan
Sources of Money:
From the interview of the entrepreneur of SYF Global Sourcing we could not get
sufficient information to draw up the companys financial planning. Although the
entrepreneur mentioned about their need loan for investment, they have applied for
SME Loan in a commercial bank.

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In SYF Global Sourcing, initially the investment was made by the owner of this
company from private lenders, his friends and family. The capital of the business was
made by his elder brother, who is also a buying house owner. Now the company has
applied for SME loan in a commercial bank at Malaysia

Concluding Remarks
The starting point of every entrepreneur is
-

The recognition of and the conception of

As Debt Capital
From Private Lenders

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- Friends & Family

- Banks
From the interview of the entrepreneur of SYF Global Sourcing we could not get
sufficient information to draw up the companys financial planning. Although the
entrepreneur mentioned about their need loan for investment. They have applied for
SME
Loan in a commercial bank.
When an entrepreneur recognizes a need (problem), he goes in search of a solution
(product or service) to meet that need. And when an entrepreneur conceives an idea for
a product or service, he goes in search of a group of people who have a need for it.
An entrepreneur is but an instrument of nature; a servant to customers functioning as a
problem solver to humanity. This is why entrepreneurship is a calling and not a moneydriven venture (profit) but rather a value-adding venture (service). And like every other
calling, it has its own reward. Thats why being small business, they are the most
contributing percentage in countrys GDP, small business is the field where most of the
jobs are created, and small businesses are leading the development of ordinary peoples
life all over the world

4.0. Conclusion

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Going into business simply because you want to make money (profit) is far too much a
price to pay as an entrepreneur. I mean isnt that what employees do; working nine-tofive in order to make ends meet? Why in the world would you choose to become an
entrepreneur, be your own BOSS, just because you want to make a living when there is
already a far easy alternative for that employment.
Because many people going about with the title of an entrepreneur are not really in it to
create change (significance); they are in it to make a living (survival). And when
survival is the focus, then mediocrity becomes the outcome.
Thats why being small business, they are the most contributing percentage in countrys
GDP, small business is the field where most of the jobs are created, and small
businesses are leading the development of ordinary peoples life all over the world

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5.0 Reference
- www.google.com
- http://en.wikipedia.org/
- www.scribd.com
- http://www.investopedia.com/university/small-business/

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7.0 Coursework

TAN WAH TIONG

940928-14-5531
201565

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017-6853251

LOH YONG CHIANG

Coursework
1.0 Please describe SIX financial drivers.
Financial drivers
Accounting systems can provide enormous amounts of information, including full profit
statements, balance sheets and details of outstanding debtors, creditors and stockholding levels. Sometimes they produce so much information that owner-managers
cannot cope and prefer to ignore them. In fact, most small firms can be controlled by
monitoring, on a timely basis, just six pieces of information that tell the owner-manager

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different, but vital, information on the performance of the business. These are called
financial drivers. They are like the instruments on a car dashboard. They tell you
different things about the engine of the business and different pieces of information are
important at different times and in different circumstances. On a road with a speed
restriction you watch your speedometer. When changing gear at speed you watch your
rev-meter. When low on petrol your eye never strays from the petrol gauge. The
financial drivers tell you all you need to know about driving the business. The six
financial drivers are:
1 Cash
As we have already seen, it is vital to monitor cash. Without cash the bills cannot be
paid. For a start-up or when it is in short supply cash may have to be monitored on a
daily basis, but most small firms need to keep an eye on it at least on a weekly basis.
Actual balances need to be compared to forecasts.

2 Sales
This tells the firm about the volume of activity it is experiencing. This should also be
compared to forecasts. If sales are running ahead of forecasts, does the firm have the

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resources to meet these demands? Current sales may be a good indicator of future sales,
but if not, then order books may also have to be monitored. It is sales that always drive
cash flow and profitability. It should be monitored on a daily or weekly basis for most
start-ups and at least monthly even for an established business.
3 Profit margins
In the process of setting prices in line with projected costs, the owner-manager will also
be setting profit targets. These can only be achieved if the sales volume targets are met,
at the appropriate prices, and costs are controlled. Profit margins give the owner
manager this information. They should be compared to original forecasts and kept as
high as possible. Margins probably need only be monitored on a monthly basis. It might
be that it is sufficient simply to monitor contribution margin. This would be the case if
fixed overheads are unlikely to change dramatically or quickly. In the example of Jean
Young, there are no variable costs and in this case it is therefore more appropriate to
monitor net profit margins. The net profit margin is net profit expressed as a percentage
of total sales. In the previous example of Jean Young this is:
Net profit 100
Sales

11985 100
17200

= 70%

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4 Margin of safety or break-even

Break-even is an important reference point and we shall be looking at this important
concept in more detail in the next section. However, as a business grows the break-even
point is likely to increase. That is a fact of business. In order to grow most businesses
must, at some point, take on more fixed overheads. This increases the break-even point.
What is important is not so much the absolute level, but rather how much above it the
firm is operating.The margin of safety is a measure of how far sales are above breakeven, expressed as a percentage of total sales. In the example of Jean Young, because
she has no variable costs, this happens to be the same as the net profit margin and is:

17200 5215 100

Total sales Break even sales 100
17200
=70%
Total sales

The higher the margin of safety the better, because that makes the firm safer in
terms of maintaining its profitability should sales suddenly decline. Margin of safety is
therefore a measure of operating risk. However, it reflects a number of factors: level of
sales, ability to maintain contribution margins and ability to control fixed overheads. It
is therefore a powerful piece of information and needs to be checked monthly.

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The margin of safety is of great interest to bank managers. If you start up in

business manufacturing, say, umbrellas and anticipate sales reaching 2000 per month
shortly after the factory opens, and at this level of sales your margin of safety will be in
per cent, banks would be worried about granting a loan with such a small margin of
safety. They know from bitter experience that sales forecasts, particularly for new
ventures, are notoriously unreliable. On a risky lending proposition most bank managers
would be looking for a margin of safety of at least 5o per cent. However, realistically, if
sales were actually to start falling and the company was approaching its break-even
point, a prudent businessman would try to cut their fixed costs - particularly
discretionary ones that they control and thus reduce the break-even point and perhaps
restore the margin of safety. In other words the break-even point, and therefore the
margin of safety, are not set in concrete, they can be engineered to minimize the risks.
5 Productivity
For most firms the single largest and most important expense they face is their wage
costs.It therefore needs to be controlled carefully. However, as with break-even, as a
firm grows its wage costs are likely to increase. Wages are therefore best measured in
relation to the productivity that they generate. For many firms this is most easily
measured by the simple percentage of wages to sales. Often there are industry norms
that can be used to measure productivity. For example, in the licensed trade the
benchmark for this is 20 per cent. Wages of bar staff should be about 20 per cent of

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sales. If higher, the pub is over staffed, if lower, it is under-staffed a crude but simple
and effective measure that needs to be checked weekly or monthly.
6 Debtor or stock turnover
Similarly most firms will have one important current asset on their balance sheet that
represents over 5o per cent of their total assets. For a service business this will be
debtors. For a retail business it will be stocks. For a manufacturing business it could be
both. This asset needs to be monitored on a monthly basis. However, as with previous
figures, as the firm grows it is likely to increase, so what is important is not its absolute
size but rather its relationship to the level of activity or sales of a business. Two
statistics are widely used:

1. Debtor turnover
Sales
Debtors
If sales were 120000 per year and debtors stood at 20 000, debtor turnover would be
6. This means that debtors turn over six times a year. In other words, debtors pay after
every 2 months. This can be compared to the plan, the terms of trade and the industry

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norm to judge whether debtors are being controlledeffectively. If they are not, the firm
will be having problems with its cash flow.
2. Stock turnover
Sales
Stocks
If sales were 120 000 and stocks stood at 30 000, stock turnover would be 4, meaning
that stock turns over four times a year, equivalent to every 3 months. This can be
compared to the plan and the industry norm to judge whether stock is being controlled
effectively. If not, the firm is likely to be having problems with its cash flow. It is
important for a growing firm to have appropriate and relevant financial information that
can be produced promptly and on a timely basis, at an acceptable cost. The financial
drivers give the owner-manager simple, understandable information. They can be
reproduced on a single piece of paper. They provide the headline information on how
the business is doing. If they disclose a problem then more information might be needed
to decide on the appropriate course of action. For example, if debtors are not being
controlled effectively then a detailed list of debtors and when the debts were due for
payment (called an aged listing of debt rs) will provide the information needed so that
action can be taken.

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