SMALL BUSINESS MANAGEMENT Lesson 3.1 11/24/2018 LESSON 3.1 SMALL BUSINESS MANAGEMENT Explain the advantages a small business has over a large business Describe the key elements of a business plan INTRO TO BUSINESS

3.1 Small Businesses A small business is an independent business with fewer than 500 employees. The greatest percentage of businesses in the United States are small businesses, and they employ half of all private sector employees.

Starting a Small Business 3.1 Starting a Small Business Characteristics of small business owners Ideas Preparation and research

Small Business Problems 3.1 Small Business Problems The failure rate for small businesses is quite high. The most common reasons for failure: Not keeping adequate records Not having enough start-up money Having a poor location Lacking management experience or experience with the type of business being managed Not controlling business expenses or managing credit to customers Failing to have a business plan

3.1 The Business Plan When successful small businesses are compared to those that fail, one thing stands out—the successful businesses developed and followed a business plan. All major activities and management functions are included in the plan.

3.1 What Is a Business Plan? A business plan is a written description of the business idea and how it will be carried out, including all major activities.

Elements of a Business Plan 3.1 Elements of a Business Plan Description of the business Description of the competition Marketing plan Customer analysis Operations plan Financial plan

Elements of a Business Plan Description of the Business 3.1 Elements of a Business Plan Description of the Business The business idea Major products and services Ownership structure Owner’s qualifications Strengths and weaknesses Long- and short-term goals

Elements of a Business Plan Description of the Competition 3.1 Elements of a Business Plan Description of the Competition Industry characteristics Condition of the economy Strengths and weaknesses of competitors

Elements of a Business Plan Marketing Plan 3.1 Elements of a Business Plan Marketing Plan Description of marketing activities Description of resources needed Schedule of marketing activities

Elements of a Business Plan Customer Analysis 3.1 Elements of a Business Plan Customer Analysis Description of customers Location, number, and resources of customers Sales forecasts

Elements of a Business Plan Operations Plan 3.1 Elements of a Business Plan Operations Plan Organization of the company Description of major operations Analysis of resources needed Human resource plan

Elements of a Business Plan Financial Plan 3.1 Elements of a Business Plan Financial Plan Start-up costs Long- and short-term financial needs Sources of financing Budgets and financial statements

Developing a Business Plan 3.1 Developing a Business Plan The business owner is responsible for developing the business plan. A well-developed plan will lay out an idea, require an owner to analyze her or his concept, and make decisions about key business activities such as production, marketing, staffing, and financing.

BUSINESS LEADERSHIP Describe leadership traits and actions Lesson 3.2 11/24/2018 LESSON 3.2 BUSINESS LEADERSHIP Describe leadership traits and actions Explain five human relations activities that are important in business INTRO TO BUSINESS

Leadership in the Workplace 3.2 Leadership in the Workplace Successful businesses depend on effective leaders to make sure that work gets done correctly, on time, and profitably. Employees who believe that their leaders respect them have more commitment to their jobs and perform their work tasks better. Becoming a good leader involves learning about and adopting leadership traits and developing human relations skills.

3.2 What is Leadership? Leadership is the ability to influence individuals, groups, or teams to accomplish important goals. Business leadership includes improving profits, the “bottom line” of the business.

Traits of an Effective Business Leader 3.2 Traits of an Effective Business Leader Communication Confidence Cooperation Courage Dependability Honesty Initiative Intelligence Judgment Objectivity Stability Understanding

Leadership Traits and Actions 3.2 Leadership Traits and Actions Communication - Listens, speaks, and writes effectively Formal & Informal Internal & External Vertical and Horizontal Oral & Written Confidence - Willing to make decisions and take responsibility

Leadership Traits and Actions 3.2 Leadership Traits and Actions Cooperation - Works well with others; develops group relationships Courage - Takes responsible risks; makes unpopular decisions Dependability - Follows through on commitments Honesty - Is ethical in decisions and treatment of others

Leadership Traits and Actions 3.2 Leadership Traits and Actions Initiative - Has ambition and motivation to get tasks done Intelligence - Has knowledge and understanding Judgment - Makes decisions carefully and objectively Objectivity - Looks at all sides of an issue before making a decision

Leadership Traits and Actions 3.2 Leadership Traits and Actions Stability - Is not too emotional or unpredictable Understanding - Respects the feelings and needs of others

Importance of Human Relations 3.2 Importance of Human Relations Business managers spend more than half their time in human relations activities, that is, interacting with people. Five basic human relations skills Self-understanding Understanding others Communicating Team building Developing job satisfaction

HUMAN RESOURCES MANAGEMENT Lesson 3.3 11/24/2018 LESSON 3.3 HUMAN RESOURCES MANAGEMENT Define human resources management Understand employee compensation, benefits, and evaluation INTRO TO BUSINESS

Manage Human Resources 3.3 Manage Human Resources Human resources management involves all aspects of recruiting, hiring, training, compensating, and evaluating employees. Analyze staff needs Determine employee qualifications Find new employees

3.3 Compensation Compensation is the amount of money paid to an employee for work performed. Compensation is made up of two parts: Salary and wages Benefits

3.3 Salary and Wages Salary and wages are direct payments to employees for work completed. A salary is a fixed amount of money paid to an employee regardless of the number of hours worked. Wages are payments for labor made on an hourly, daily, or per-unit basis; for example, $8 per hour.

3.3 Benefits Benefits include compensation in forms other than a direct payment to the employee. Vacations Insurance Other benefits

Evaluation Evaluation process 3.3 Evaluation Evaluation process Focus on the specific job duties of each employee Review of important work traits expected of employees Communication, interpersonal relationships, quality and quantity of work, and ethical behavior

Evaluation Evaluation conference Discuss the results of the evaluation 3.3 Evaluation Evaluation conference Discuss the results of the evaluation Plan for any needed improvement End result: reasonable agreement on the employee’s performance, goals, and plans for the future Identify the support for the employee to help him/her improve performance

FINANCIAL RESOURCES MANAGEMENT Lesson 3.4 11/24/2018 LESSON 3.4 FINANCIAL RESOURCES MANAGEMENT Explain how budgeting relates to financial planning Describe two kinds of financial reports prepared by businesses INTRO TO BUSINESS

3.4 Financial Management One of the reasons why small businesses often fail is that they do not manage their finances properly. Businesses must wisely manage the money they take in and pay out to become profitable and to stay in business.

3.4 Financial Planning A business budget is a detailed plan for meeting the financial needs of the business. Two main purposes: 1. Anticipating sources and amounts of income 2. Predicting the types and amounts of expenses for a specific business activity or for the entire business

3.4 Types of Budgets Start-up budget Operating budget Cash budget

3.4 Financial Records A financial record shows the financial performance of a business.

3.4 The Income Statement An income statement is a financial statement that shows revenues, expenses, and net income profit or (loss) for a period of time. Revenue – Expenses = Net Income or Loss

3.4 The Balance Sheet A balance sheet is a financial statement that lists a business’s assets, liabilities, and owner’s equity. Assets = Liabilities + Owner’s Equity

Maintaining Financial Records 3.4 Maintaining Financial Records Collecting information Preparing financial records Maintaining financial records