PowerPoint Presentation by Charlie Cook The University of West Alabama Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Part 5 Managing Growth in the Small Business Professional Management in the Entrepreneurial Firm

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 18–2 Looking Ahead After studying this chapter, you should be able to: 1. Discuss the entrepreneur’s leadership role. 2. Explain the distinctive features of small firm management. 3. Identify the managerial tasks of entrepreneurs. 4. Describe the problem of time pressure and suggest solutions. 5. Explain the various types of outside management assistance.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 18–3 The Entrepreneur’s Leadership Role Entrepreneurs must establish and communicate a vision of the firm’s future. Founding entrepreneurs need a tolerance for ambiguity and a capacity for adaptation. Entrepreneurs need a resolve to make the business succeed more than they need a flashy personality. An entrepreneur exerts strong, personal influence in a small firm. Progressive managers use various leadership styles, including participative management, empowerment, and work teams.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 18–4 Management in the Small Firm A founder’s less-than-professional management style can adversely affect business growth. Founders tend to be more action-oriented and less analytical than professional managers. Small firms are particularly vulnerable to managerial inefficiency. Small firm managers face special financial and personnel constraints. As a new firm grows, it adds layers of supervision and increases formality of management. A firm’s growth necessitates that the entrepreneur become more of a manager and less of a doer.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 18–5 Managerial Tasks of Entrepreneurs Both long-range planning and short-range planning are required but often postponed or neglected. Managers must create an organizational structure to provide for orderly direction of operations. Informal groups within the organization can be encouraged to make a beneficial contribution to the firm. Managers who delegate authority successfully can devote more time to more important duties. Managers exercise control by monitoring operations in order to detect and correct deviations from plans.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 18–6 Managerial Tasks of Entrepreneurs (cont’d.) Effective two-way communication is important in building a healthy organization. Managers must be able to negotiate with both insiders and outsiders.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 18–7 Time Pressure Time pressure creates inefficiencies in the management of a small firm because the entrepreneur’s energies are diffused. The greatest time saver is the effective use of time, which requires self-discipline. A manager can reduce time pressure through such practices as eliminating wasteful activities and planning work carefully.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 18–8 Types of Outside Management Assistance Outside management assistance can be used to remedy staff limitations and reduce entrepreneurs’ sense of isolation, among other things. –Business incubators provide guidance as well as space for beginning businesses. –Three government- and/or university-sponsored sources of assistance are student consulting teams, the Service Corps of Retired Executives (SCORE), and Small Business Development Centers (SBDCs). –Management assistance may be obtained by engaging management consultants and by networking with other entrepreneurs. –Professionals such as bankers and CPAs also provide management assistance.

Copyright © 2006 Thomson Business & Professional Publishing. All rights reserved. Student 18–9 Key Terms professional manager negotiation management functions long-range plan (strategic plan) short-range plan budget business policies procedures standard operating procedure empowerment work teams line organization chain of command line-and-staff organization line activities staff activities unity of command span of control delegation of authority Service Corps of Retired Executives (SCORE) small business development centers (SBDCs) networking