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FUNDAMENTALS OF SMALL BUSINESS MANAGEMENT

Session 1 Reference: Oliver & English Ch 1 (Part 1)

THIS WEEK
Introducing the lecturer Purpose/Aims Expectations of you Plagiarism HELP! Course topics Who are you? What is Business Management?

COURSE AIMS
Knowledge of small business opportunities and operations, including ownership options and business structures. Knowledge of control techniques, accounting and financial processes, evaluation processes and marketing options for small business operations. Skills in analysing information and identifying appropriate solutions for the management of small business operations.

COURSE AIMS(CONTINUED) This course is for people who:


Want to understand business in Pakistan. Intend to continue studying in business. Are working in a small-medium business. Are working in new ventures in a science or corporate business. Want to work in the future as an entrepreneur, employer, employee, or advisor Are studying a professional or technical qualification, and need a basic business introduction.

TOPIC 1
Analyse options for self employment
Identify characteristics of successful small business enterprises Identify and assess new business opportunities Evaluate assistance programmes Identify specialist services available for small business development.

TOPIC 2
Analyse ownership options and business structures Assess options for acquiring a small business Evaluate small business financing options Interpret legal requirements for small business operations Evaluate operational requirements for small business operations.

TOPIC 3
Manage the day to day accounting function
Interpret financial and accounting information Develop profitability and cash flow budgets and compare operating results to these budgets Using basic costing tools to ensure the business is running profitably.

TOPIC 4
Select and implement control systems and techniques and evaluate results against business plans.

TOPIC 5
Analyse the potential market for products/services and confirm market demand
Determine the mix of products/services to be provided Develop options for effective marketing of the business.

LEARNING OUTCOMES
LO1 :Students will describe characteristics of small business. LO2:Students will compare business options, business structures and finance options of small business. L03:Students will identify sources of advice and assistance available for a small business.

LO4:Students will explain the importance of marketing choices for a small business. LO5:Students will describe performance measures and controls used for small business.

EXPECTATIONS OF YOU
1. 2. 3. 4. 5. 6. 7. 8. 9.

Read the myCourseDetails Read the cases before coming to class Do readings as applicable Turn off your cell phones before entering class Respect each other Help each other Regular course attendance Attend all lectures on-time If you cannot attend class I want to know by e-mail beforehand (if possible).

PLAGARISM
Plagarism is cheating Plagarism is using someone elses ideas or words and saying they are your own. If you use material from a text and do not acknowledge the source, you are committing plagarism. Several penalties can be imposed if you plagarise. Zero marks and ultimate removal from the paper are possible.

EXAMPLES OF PLAGARISM:
1. 2. 3. 4. 5. 6. 7.
.

Copying from another students assignment with or without the students knowledge. Submitting the same assignment in two different papers. Getting someone else to write an assignment for you. Paraphrasing or copying directly from a text without acknowledging the source. Copying directly from a text, acknowledging the source but pretending that you are paraphrasing. You allow other students to copy your work You write an assignment for another student.

HELP! Library Te Tari Awhina Moodle

What is your origin? Born in NZ OR arrived in NZ: Over 10 years ago 5 to 10 years ago 1 to 5 years ago 6 to 12 months Less 6 months You are from: Auckland, or overseas? Homeland? First language? Single language? Family Background?

WHO ARE YOU?

WHY ARE YOU STUDYING THIS COURSE?


1. 2. 3. 4. 5. Seek an introduction to business in Pakistan? Intend to continue studies in business? Work in small-medium-or-BIG business now/or in the future? Work on a new business venture? Aspire to work in business in the future as an 1. Entrepreneur? 2. Employer? 3. Employee? 4. Advisor? 6. Study a professional or technical qualification, and require an introduction to the elements of business?

DEFINITION: BUSINESS
A commercial or industrial establishment
Commerce, trade

Profession, occupation
Synonyms: Company, corporation, enterprise, firm, organisation, venture

DEFINITION: ORGANISATION
A collection of people working together in a division of labour to achieve a common purpose Synonyms: Association, corporation, federation, consortium, institution, league, syndicate Examples???

EXAMPLES: ORGANISATION
Sports club
School University

Hospital
Army, Navy, Air Force Bank

A BUSINESS ORGANISATION

An organisation established with the purpose of; 1. making a profit for its shareholders by

2. providing goods and services to its customers

PROFIT
A financial gain, esp. the difference between

the amount earned (revenue) and


the amount spent in buying, operating, or producing something (expenses / cost). The means through which an organisation achieves its purpose.

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HENRY FORD SAID . .


Business must be run at a profit else it will die. But when anyone tries to run a business solely for profit then also the business must die, for it no longer

has a reason for existence

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QUESTIONS
Is a one man/or woman business an organisation?

Do not-for-profit organisations need to make a profit?


Doesnt the term not-for-loss organisation make more sense?

DEFINITION: SMALL BUSINESS


Personally owned and managed, or Does not have specialist managerial staff, or Is not part of a larger enterprise AND ALSO employs fewer than:
50 ( manufacturing ) 10 ( services ) 25 ( other sectors ).

KEY DATA ON NZ SMALL BUSINESS


355,000 businesses in NZ (mainly small and medium sized), 85% employ 5 or less full-time workers. 99% employ less than 100 full-time workers. 50% of all workers in NZ are employed by businesses with less than 50 employees. 32% are employed in firms with fewer than 10 employees.

DEFINITION: ENTREPRENEUR
1. 2.

A person who attempts to profit by risk and initiative. To undertake a project that is especially difficult, complicated, or risky, engaging in daring action, that is a systematically purposeful activity. A person who habitually creates and innovates to build something of recognised value around perceived opportunities. (Bolton & Thompson)

3.

ELABORATING BOLTON & THOMPSONS DEFINITION Person may be a team, or organisation

Habitually not just seeking a comfortable lifestyle they just cannot stop being entrepreneurs
Creates start with nothing and bring into being something that was not there before. Innovates they overcome obstacles that would stop most people. Build recognised value financial, aesthetic, or social capital. Not just a a good idea.

DEFINITION: INNOVATION
Innovation is commonly defined as:
The act of introducing something new Innovation does not imply that an idea, product or service has been taken to the market, but merely provides a suggested conclusion to a problem.

Entrepreneurship is best defined as taking a good idea, product or service, and organising, operating and assuming the risk for a new business venture This definition can be extended to include taking the idea, product or service to the market for potential wealth creation Therefore, entrepreneurship is the answer to inactive innovation.

THE ENTREPRENEURSHIP GROWTH MODEL

TYPES OF ENTREPRENEURS
Legendary Henry Ford, Thomas Edison, Bill Gates, Walt Disney, Steve Jobs, Sony Co., James Dyson, Richard Branson

Social Florence Nightingale, Anita Roddick (Body Shop)


Aesthetic Michelangelo Buonarroti, Andrew Lloyd Webber, Gilbert Tregano (Club Med), Mozart, Peter Jackson

DAVID SLACK SPEECHES.COM

Read the David Slack case study and answer these questions:

DAVID SLACK SPEECHES.COM


1. 2. 3. What is David Slacks business? Why did he set up the business? What was the moment of conception? What skills did David bring to bear on his new business from his earlier career? How long was the gestation period the number of years it took before he took the plunge following the moment of conception?

4.
5. 6. 7.

What special challenges did he face in setting up his business? How did he meet those challenges?
What are some of the distinctive features of the business that David established? Is this a successful business? What makes his business valuable?

REFLECTIONS ON DAVID SLACK


History Skills Attitude Operations & Technology Challenges Competitive advantage Key skills Success

REFLECTIONS ON DAVID SLACK Would you buy this business? Business value intellectual property:
priceless domain name Database of customer contacts Database of speeches Proprietary software eg Auto Speechwriter Distinctive reputation in market niche

Fixed assets essentially nil

YOUR GLOSSARY OF BUSINESS TERMS


Note terms: Entrepreneur, small business small medium enterprise (SME), organisation, innovation e-commerce, intellectual property founder Find definitions from text (use index), dictionary, commercial dictionary Record examples

SMALL-MEDIUM SIZED BUSINESSES (SMES) No standard definition. 85% of NZ SMEs employ less than 5 full-time people Examples of small businesses: Family businesses such as - dairies, cafeterias, hair salons, bakeries, garages, restaurants

INTERESTING FACTS ABOUT ENTREPRENEURIAL BUSINESS IN NZ

1976: 6% of owner managers were women


1996: 36% - a 6-fold increase There has been a net increase in the number of small business of around 10,000 per year

INTERESTING FACTS ABOUT ENTREPRENEURIAL BUSINESS IN NZ

Many small business founders lack organisation and management skills. They are often the BEST people to start a business, (entrepreneurs) but the WORST people to run that business (managers).

QUESTIONS
Why is the number of SMEs growing, and the % employed in SMEs growing?
What other forced career changes (e.g. health status) can you imagine? What are some of the reasons that smaller businesses can compete successfully with larger business?

QUESTIONS

Small Business opportunities


What are some options for self employment? Define clearly the business purpose and industry sector (David Slack) Examine reasons for founding small business ventures (Necessity/Opportunity) What are some personal business and other skills, and experiences that you might need for starting a business?

DEVELOP NATURAL TALENT INTO EXCELLENCE

Excellence

Natural talent
Bolton & Thompson, 2004, Fig 2.2

1. 2. 3. 4. 5. 6. 7.

BUSINESS PLAN ESSENTIAL ELEMENTS Business description (includes org & mang) Market analysis Competitor assessment Market plan Operation plan Financial plan Executive summary