1. Professional Management in the Growing Firm
part 6
Small Business Management 18
Professional Management in the Growing Firm
PowerPoint Presentation by Charlie Cook
12e
Copyright © 2003 South-Western College Publishing.
All rights reserved.

2. Looking Ahead After studying this chapter, you should be able to:
Discuss the distinctive features of small firm management.
Identify the various kinds of plans and approaches to planning.
Discuss the entrepreneur’s leadership role.
Describe the nature and features of an organizational structure for small businesses.
Discuss the way in which control is exercised in a small firm.
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3. Looking Ahead (cont’d)
Describe the problem of time pressure and suggest solutions.
Explain the various types of outside management assistance.
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4. Issues Affecting Small Firm Management
Professional Management
Founders as Managers
The Manager as Negotiator
Small Firm Management
Managerial Weakness
Firm Growth and Management
Resource Constraints
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5. Distinctive Characteristics of Small Firm Management
Professional Manager
A manager who uses systematic, analytical methods of management.
Founders as Managers
Are not always good organizational members.
Have difficulty fitting into conventional roles.
Have a different orientation from that of professional managers.
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6. Firm Growth and Management
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7. Organizational Stages of Small Business Growth
Intermediate
Supervision
Stage 4
Formal
Organization
Stage 2
Player-Coach
Stage 1
One-Person
Operation
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Fig. 18.1

8. Intermediate Supervision
Managing Versus Doing
STAGE 1
STAGE 2
STAGE 3
STAGE 4
One-Person Operation
Player-Coach
Intermediate Supervision
Formal Organization
Time spent managing
Time spent doing
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9. The Manager as Negotiator
Negotiation
Two-way communication used to resolve differences in needs, goals, or ideas.
Win-lose negotiations
One party must win and the other party must lose.
Win-win negotiations
Both parties find a solution that satisfies both parties’ basic interests.
End result of negotiations promotes long-term continuing relationships.
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10. The Nature of Managerial Work
Planning
Leading
Managerial Work
Controlling
Organizing
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11. Planning Activities The Benefits of Formal Planning Planning Time
Improved productivity
Better focus on goal attainment
Increased credibility with stakeholders
Planning Time
“Tyranny of the urgent”
Planning requires discipline
Planning should not be postponed
Employee Participation
Employees are an excellent planning resource
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12. Planning Activities: Types of Plans
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13. Leading and Motivation
Personal Involvement of the Entrepreneur
Creates a significant personal relationship with employees based on loyalty and respect.
Directly influences employees’ understanding of how the firm operates (e.g., its ethics).
Makes the firm attractive to new employees.
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14. Leading and Motivation (cont’d)
Leadership That Builds Enthusiasm
Empowerment
Giving employees authority to make decisions or take actions on their own
Work teams
Groups of self-managed employees with the freedom to function without close supervision
Benefits
Workers are more satisfied with their working environment
Productivity and profitability are enhanced
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15. Effective Communication
Stimulating Two-Way Communication
Conduct periodic performance review sessions to get employee feedback
Use bulletin boards to keep employees informed about developments affecting them
Make suggestion boxes available to solicit employees’ ideas
Hold staff meetings to discuss current issues and problems
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16. Creating Organizational Structure
Structure of the Firm
Structure evolves as the firm evolves.
Growth creates the need for structural change
Chain of Command
The official, vertical channel of communication in an organization.
Unity of Command
A situation in which each employee’s instructions come directly from only one immediate supervisor
Entrepreneurs’ personal relationships with employees creates problems in complying with the chain and the unity of command in their firms.
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17. Creating Organizational Structure
Line organization
A simple organization in which each person reports to one supervisor.
Line and staff organization
An organizational structure that includes staff specialists who assist management.
Line activities
Activities contributing directly to the primary objectives of the firm.
Staff activities
Activities that support line activities
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18. Line Organization President Sales Manager Production Financial/Office
Salespeople
Plant Employees
Office Employees
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Fig. 18.3

19. Line-and-Staff Organization
President
Human Resources
Manager
Sales
Production
Financial/Office
Salespeople
Plant Employees
Office Employees
Assistant to
the President
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Fig. 18.4

20. Factors Determining Optimum Span of Control
Fewer Subordinates
Complex work
Inexperienced workers
Superior with limited ability
Greater Number of Subordinates
Simple work
Very experienced workers
Superior with much ability
More Subordinates
Moderately difficult work
Moderately experienced workers
Superior with moderate ability
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21. Delegation of Authority
Granting to a subordinate the right to act or make decisions
Benefits of delegation
Frees up superior to perform more important tasks
Develops subordinate’s skills
Improves two-way communications
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22. Exercising Control Planning and Goal Setting Establishing standards
Measuring Performance
Taking Corrective Action
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23. Stages of the Control Process
Preventive Control
Concurrent Control
Corrective Control
Input Stage
Process Stage
Output Stage
Examples:
Quality control of
work in process
Check of adherence
to safety procedures
Inspection of
completed product
Comparison of actual
expense with budgeted
expense
Inspection of raw
materials
Careful selection of
employees
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Fig. 18.5

24. Time Management The Problem of Time Pressure
Many owner-managers work hours per week.
Effect of overwork is inefficient work performance.
Time Savers for Busy Managers
Effective use of time (time management)
Analyze how time is normally spent
Eliminate practices that waste time
Carefully plan available time
Use a daily planner to prioritize activities
Don’t avoid unpleasant or difficult tasks
Limit conference and meeting times
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25. Outside Management Assistance
Business Incubators
Other Business and Professional Services
Student Consulting Teams
Outside Management Assistance
Entrepreneurial Networks
Service Corps of Retired Executives (SCORE)
Management Consultants
Small Business Development Centers (SBDCs)
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26. Services Provided by Business Incubators to New Firms
Photocopying, Receptionist, and
Word-Processing Services
Links to Accounting, Legal,
Other Professional Services
Photocopying, Receptionist,
Low-Cost Space
Credibility
Management Counsel
Access to Financial Resources
Entrepreneurial Education
Computer Services
Practical Business Expertise
Services Provided by Business Incubators to New Firms
Fig. 18.6
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