Small Business Management
USC course
USC course
Kartei Details
| Karten | 39 |
|---|---|
| Sprache | English |
| Kategorie | BWL |
| Stufe | Universität |
| Erstellt / Aktualisiert | 29.03.2014 / 23.02.2017 |
| Weblink |
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Difference between small and large business
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.
Small business charachteristics
• Usually only 1 or 2 owners
• Financing provided by the owner
• The business has limited market share
• Often has a limited life span
• Sometimes run on a part-time basis
• There is a low level of net profit
• Owners management discretion
• Limited product or service offering
• Is frequently a home-based business
• Geographically limited
• Often a family-based business
• Only located in the private sector
Differences between small and large businesses 2
• Be less likely to access government assistance
• Be less likely to export
• Use less external financing
• Be less likely to want to grow bigger
• Be more likely to fail
• Differences in managerial perspective
Small firms tend to:
• Have more female owner/managers
• Have managers with fewer qualifications
• Have fewer unionised employees
• Operate for fewer hours each week
• Less likely to use formal management methods
Issues to consider before going into business
q Starting a new business
q Purchasing an existing business
q Entering a franchise system
q Comparison of options
q Procedural steps when starting a business venture.
• Why is the business being sold?
• Will existing staff remain if the business is sold?
• What debts/liabilities exist?
• Can all licenses and permits to operate be transferred?
• How accurate are the financial accounts?
• Is the business part of a Franchise?
Steps when starting new business
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Purchasing firm
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Establishing the novelty, patentability and ownership
• Is it novel?
• Who owns the technology?
• Is it patentable?
• Does it work?
• Is it better than rivals?
• What are the applications?
• Are there commercial advantages?
Business strategy and planning
Business strategy and planning
Critical questions to ask in evaluation
1 Can the product / service be patented or copyrighted?
2 Has a prototype been thoroughly tested?
3 Has it survived trade shows?
4 Is it easily understood?
5 What is the overall market? What are the market segments?
6 What has market research revealed?
7 What distribution and sales methods?
8 How will the product be made? cost?
9 Will it be developed and licensed or sold away?
10 Do you have the necessary skills?
STRATEGIC PLANNING
– is the process of determining how to move to a desired future state.
Strategy Formulation Process
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SWOT Analysis, five forces
- Degree of Rivalry among existing competitors
- “Threat of New Entrants
- Bargaining Power of Suppliers
- Bargaining Power of Buyers
- Threat of Substitute Products & Services
Where does environmental scanning fit in the strategic planning process?
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Competitive analysis
• What drives your competitors goals?
• What likely moves will the competitor make?
• Where is the competitor vulnerable?
• How is the business currently competing?
Benefits of Strategic Planning for Small Business
1. A statement of goals and objectives
2. Efficient use of time
3. Consideration of alternatives
4. Better internal management and staff development
5. Better financial management
Small business assistance
A business adviser is someone who works with client businesses to provide specialised skill and knowledge in one or more particular aspects of business operations.
Business adviser types
l Accountants
l Financial Advisors
l Tax Advisors
l Venture Capitalist Advisors
l Lawyers
l Marketing Research Specialists
l Logistics Advisors
l Government Support
Benefits of a Business Adviser
- Specialist skills
- Provide an objective perspective
- New ideas
- Time, skills or inclination
- Costs
Attributes of an effective adviser
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Three types of advisers
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Adviser selection criteria
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Types of incubators
l Embedded incubators — are often part of, or share premises with, another organisation (such as a BEC in Australia, or within a university campus).
l Independent incubators — ‘stand-alone’ facilities that operate on their own, with its own management and advisers.
l Specific-purpose incubators — incubators designed to cater for the needs of a particular industry or trade.
Services Offered by Business Incubators
l Access to convenient, reasonably-priced tenancies
l In-house business services
l Business advisory services
l A network of business support, mutual support, peer help and assistance.
Four main types of information systems found in SMEs?
l Transaction Processing Systems (TPS) – a system that records the daily routine transactions (eg. Purchasing, inventory processing)
l Office Automation Systems (OAS) – a system that facilitates everyday information tasks (eg. Text, image, calculating, scheduling)
l Management Information Systems (MIS) – (at management level system – assists with planning, controlling & decision making)
l Decision Support Systems (DSS) – a system that provides support to managers during decision making (eg. Symulation software)
Information Systems for SMEs
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Evaluating Legal Structures
- Sole proprietorship (other wise know as Sole Trader) 29%
- Partnership 16%
- Company 33%
- Trusts 22%
Sole Trader (Sole Proprietorship)
l No distinction between business and individual owner
l All assets, liabilities and profits are owners
l Advantages:
– ease of formation
– total control over the business
– relatively cheap to set up
– few regulations
l Disadvantages:
– unlimited liability
– limited resources
– lack of continuity
– tax
General Partnership
A relationship between people carrying on a business in common, with a view to sharing profit
l Advantages:
– ease of formation
– ease of operation
– distinct existence
– combined resources and direct rewards
- Partnership agreement counters disadvantages
l Disadvantages:
– unlimited joint liability
– potential conflicts
- dividing authority
– lack of continuity
- Transfer / Adding ownership difficult
General Partnership - how many
l Limited to between 2 – 20 partners (by law)
l Exceptions to the law
- 50 medical practitioners, patent attorneys, share brokers
- 100 Architects, pharmaceutical chemists, veterinary surgeons
- 400 Legal practitioners
- 1,000 Accountants
Limited Partnership
l Must be registered with State Fair Trade Office
l 1) General Partner – managerial control & authority to act on behalf of the business
l 1) Limited Partner – can not take part in the management of the business & can not act on behalf of the business & limited LIABILITY
l Limited partnerships – good for contributing money to business but not involved in management and running of business
“Incorporated Limited Partnership” – where partnership actually becomes a separate legal entity like a company
Company
l A company is a separate legal entity which has an existence independent of its owners and managers
- private companies and
- public companies
l Advantages:
– perpetual existence
– limited liability
– rights of a natural person
l Disadvantages:
– high set-up and maintenance costs
– spread ownership
Trusts
A trust is an obligation imposed on a person (called a trustee) to deal with the trust property over which he or she has control, for the benefit of persons (called beneficiaries).
l Advantages:
– income splitting
– lower capital gains tax
– control
– asset protection
– stability
l Disadvantages:
– small business capital gains tax
– potential conflicts following divorce or death
– high risks if assets are hidden
– legislative risk
Five main types of Intellectual Property rights
1) – trademarks
2) – industrial designs
3) – copyrights
4) – trade secrets
5) - patents
IP represents the property of the mind
or intellect.
IP is often a valuable asset and it is important that it be clearly identified and safeguarded.
The Law & Trade Marks
l A trademark is a sign that is used to distinguish the products and services of one trader from those of another.
l It can be a letter, number, word, phrase, shape, logo, picture, aspect of packaging or a combination of these.
l While a patent protects the function, the trademark protects the look of a business.
The Law & Industrial Design
l A design refers to any aspect of the shape or configuration of the whole or part of an article.
l The right provided by a design registration is in many ways similar to that provided by a patent but the protection is limited to the appearance of the product.
The Law and Patents
l Patents are exclusive rights to exploit (e.g. produce and sell) a particular product or use a specific process for a certain period of time.
l Patents are only granted for inventions that are new
The Law & Copyright
l Copyright is an exclusive legal right to literary, musical or artistic work and the right to produce or reproduce that work by making copies or performing the work.
l Many copyright laws also contain provisions for the protection of ‘works of applied’ art, for example artistic jewellery, furniture and greetings cards.
l Copyright is an automatic right that arises when a work is created.
The Law & Trade Secrets
l A trade secret is any idea, formula, pattern, device, process or information that provides the owner with a competitive advantage in the marketplace
l Includes marketing plans, financial forecasts, employees’ rosters and laboratory notebooks
Licences and permits
l Industry regulations administered by a number of different authorities. (eg. Plumbers Licensing Board)
l A business owner must comply with all necessary permits and licences.
l Ability to Licence your business / service - can be a primary indicator of the viability of a proposed business idea:
Trade Practices Law
l Most countries have laws governing what is ‘acceptable’ business conduct
l These laws generally prohibit
anti-competitive behaviour such as:
– deliberately misleading customers
– price-fixing
– the formation of cartels
– unfair conduct against competitors
