Welcome to Unit 6 Seminar If you can see this screen, share the following with your classmates: The greatest thing that happened all week was……. Audio will start promptly at 8 pm.

AGENDA Review Classroom Reminders Review Highlights Chapter 9, 15, and 21 Review Assignment

MT209 Small Business Management Unit 6 – Operating the Business

Operating the Business A working business consists of not only the entrepreneur’s vision, plans, and strategies; it also represents a physical collection of resources – equipment, people, and processes. These must be configured and managed in such a way as to reflect both the mission and vision of the firm and the environmental realities that exist for the business. The operational plan addresses the day-to-day operation of the business as it produces products or provides services.

Unit 6 Outcomes Describe the implications of choosing a brick-and-mortar start- up versus an at-home or Internet start-up. Understand the challenges associated with growth in a small business. Specify the major considerations in structuring a distribution channel. Explain the importance of supply chain management. Discuss the nature of the operations process for both products and services.

PowerPoint Presentation by Charlie Cook The University of West Alabama © 2010 South-Western, Cengage Learning, Inc. All rights reserved. The Location Plan PART 3 Developing the New Venture Business Plan

Exhibit 9.1Location Options for the Startup © 2010 South-Western, Cengage Learning, Inc. All rights reserved. As you think about the business you are developing for the final project, where will it be operated?

Location Plan: 5 Key Factors Customer Accessibility – How easy will it be for your customers to find you? Business Environment Conditions – Things like weather, geography, taxes, legal requirements, competition; can impact the location decision. Site Availability and Costs – An appropriate but affordable site must be selected. Resource Availability – Proximity to things like suppliers, raw materials, public transit, parking, transportation, etc. required for the business must be considered. Personal Preference of The Entrepreneur – This includes considerations important to the founder like proximity to the entrepreneur’s residence, image, intrinsic reasons, etc.

Additional Location Considerations: Costs and Work in: Providing Necessary Equipment or Machinery. Outfitting and Modifying the Physical Facilities to Support the Particular Business. Projecting the Desired Business Image

Home-Based Businesses Advantages: Low Start-up Costs Life-style Considerations Disadvantages: Business Image Legal Considerations What are some reasons for starting a home-based business?

9–11 Exhibit 9.4 Some Common Reasons for Starting a Home-Based Business Source: Adapted from “Potential Reasons for Starting a Home Based Business,” accessed January 13, 2009.

Internet Business Models ). B2C (Business to Consumer) – Business serves retail customers directly. B2B (Business to Business – Business serves other businesses. Auction Site Model – Embraces both B2C and B2B models (eBay, Amazon, Overstock.com, etc.)

© 2010 South-Western, Cengage Learning, Inc. All rights reserved. 9–13 Exhibit 9.7 Selling Your Item on eBay Step 1:Register as an eBay member, which is free of charge. Step 2:Sign up to accept electronic payments, which is required. Step 3:Research your items and rules of play; eBay provides information for both. Step 4:Create a listing for the item to be offered for sale. Step 5:Check your listing to see how bidding is going. Step 6:Wrap up your sale with the buyer. Source: Adapted from accessed January 5, Have you sold an item on eBay before? If so, what item, and what did you learn?

PowerPoint Presentation by Charlie Cook The University of West Alabama © 2010 South-Western, Cengage Learning, Inc. All rights reserved. Product and Supply Chain Management PART 4 Focusing on the Customer: Marketing Growth Strategies

Supply Chain Management Defined: Supply chain management is a management approach that seeks to coordinate all of the resources that a business uses to produce a product or provide a service from the inception of the product or service, to distribution, and payment. Other intermediaries are often involved in a business creating value for their customer! These may be middlemen, agents, or brokers. These specialized intermediaries can often handle the distribution of products more efficiently than the business over wide geographic areas. Managing the supply chain is critical to: Control costs Increase customer satisfaction  Question: Why would effectively managing the firm’s supply chain control costs and increase customer satisfaction?

Channels of Distribution Defined: Channels of distribution are the relationships that exist to manage the flow of products from their source to ultimate consumer or end-user. Direct Channel – A channel of distribution without any intermediaries. Product flows directly from source to end-user. Indirect Channel - A channel of distribution containing intermediaries. Dual Distribution – A system of distribution that incorporates multiple channels.

PowerPoint Presentation by Charlie Cook The University of West Alabama © 2010 South-Western, Cengage Learning, Inc. All rights reserved. Managing Operations PART 5 Managing Growth in the Small Business

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.21–18 Competing with Operations OperationsOperations  The processes used to create and deliver a good or service (value) to customers. Operations ManagementOperations Management  The planning and control of a conversion process that includes turning inputs into outputs (products and/or services) that customers desire.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.21–19 Competing with Operations (cont’d) Important Questions about Operations Factors:Important Questions about Operations Factors:  How much flexibility is required to satisfy customers over time?  What is customer demand today? for the future? Are facilities and equipment adequate to keep up with demand?  What options are available for satisfying customers?  What skills or capabilities set the firm apart from its competitors such that the firm can best take advantage of these distinctive features in the market?  Does the competitive environment require certain capabilities that the enterprise lacks?

Managing Operations: The Business Is a System! Inputs – All businesses require inputs in the form of resources. These include financial resources (capital), knowledge resources (managerial resources), physical resources (equipment, supplies, etc.) and a variety of other resources. Processes – All businesses perform some process on the input resources to produce some good or service. The exact nature of the process will vary with the type of business. Output – All businesses produce some form of outputs in the form of goods or services.  Question: How would this work in a bakery baking bread?

Service Versus Products Service-based businesses offer customers services rather than products. The operations of these vary in the following ways: Difficult to measure and control quality of service Involve intensive personal interaction with the customer Require personnel committed to customer satisfaction Technology can greatly assist service-based businesses

Manufacturing Operations Vary widely in forms: Job Shops – Produce limited runs of unique products. Project Manufacturing – Produce products that are similar but differentiated. Repetitive Manufacturing – Produce large quantities for extended periods of time. Continuous Manufacturing – A form of repetitive manufacturing that more closely resembles a stream of output. Flexible Manufacturing – Production that is usually computer assisted and produces smaller and flexible quantities of products.

Inventory Considerations Managing optimal inventory levels can be a complex task. Managing inventory reduces costs and contributes to profitability. Traditional methods such as economic order quantity or ABC method can be used. More sophisticated computerized methods such as statistical inventory control or just-in-time inventory systems can also be used to more efficiently manage inventories.

Inventory Considerations (Continued) At a minimum, the following factors should be considered: Storage Theft, Spoilage, Weathering, Obsolescence Cost of Capital tied up in inventory Transaction Costs associated with ordering, receiving, transporting, and distributing inventory Insurance and Security costs Disposal costs of unsold inventory

© 2010 South-Western, Cengage Learning, Inc. All rights reserved. 21–25 Operations Management and Quality Quality as a Competitive Tool -Quality is a must in international competition Quality -The features of a product or service that enable it to satisfy customers’ needs. -A perception of the customer as to the suitability of the product or service of a firm. Total Quality Management (TQM) -An aggressive, all-encompassing management approach to providing superior, high-quality products and services.

The Customer Focus of Quality Management Customer Driven – The customer’s needs and wants are the core. Organizational Commitment – While management must lead, all in the organization must participate Culture of Continuous Improvement – Must be the ongoing focus.  Question: What is the role of customer feedback in quality focus?

© 2010 South-Western, Cengage Learning, Inc. All rights reserved. 21–27 Tools and Techniques of TQM Employee Participation -Employee performance is a critical quality variable. -The implementation of work teams and empowerment of employees to build workplace involvement. -Quality circle -A group of employees who meet regularly to discuss quality-related problems.

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Unit 6 Assignment Using the MT209 Project Template and MT209 Project Instructions, complete the Operational Plan section in the Descriptive Business Plan. This should include the following elements (where applicable): 1. Information about your products or services including how and where your products or services are produced, production techniques, quality control, customer service, inventory control, and product development; 2. Information about your proposed business location including any location requirements such as space, type of building, zoning, power, and other utilities, access, parking, etc., estimated total location expenses, business hours, any major required building alteration; 3. Information about your proposed venture’s legal and regulatory environment including any licenses required, any health, workplace, or environmental regulations affecting the business, any special professional requirements, zoning or building code requirements, insurance coverage, and any trademarks, patents, or copyrights held or required; 4. Information about proposed personnel including the number of employees (excluding management), type of labor, source of this labor, pay structure, required training, and any possible use of contract workers;

Unit 6 Assignment (Continued) 5. If Applicable, information about the inventory including the type of inventory (raw or finished goods), any seasonable impacts, and ordering lead times; 6. Information about key suppliers including a listing and discussion of key suppliers, their credit policies, history of reliability, need for backup suppliers, any expected delivery problems, and any anticipated increases in supply costs; and 7. Information about your proposed venture’s credit policies including any plans to sell on credit, needs to sell on credit, credit policies, credit limits, credit terms, any discounts, and cost estimates of the use of credit.

Thank you for joining me today! I look forward to joining you next week!