Small Business Management - Remarks

As it appears, this Small Business Management weblog will be my final project for this class as well. This is the second time I create a blog as a final exam, and hopefully - I will go through it successfully. Some explanations about this blog: Each week we cover several chapters in class. I have done my outmost to cover all chapters, so each "week" or each posting on this blog, covers the same chapters we studied in class.Because of the length of the postings, some "weeks" were divided into part A, Part B etc'. The chapters' numbers appear on the headlines. I have added some links to some interesting articles and websites that I thought were relevant to the specific chapter's objectives. Some chapters include an analysis of a closing case studied in class because I thought they would serve as a good demonstration tool. So... Enjoy ! Shirley.

Small Businee Management - week # 5 - chapters 17, 18

* This posting covers chapters 17 & 18*

Chapter 17 - Human Resource Management

On this chapter we have -

* Discussed the importance of hiring the right employees. *Defined the job analysis process and the functioning of job descriptions and job

specifications. *Evaluated the advantages and disadvantages of six sources of employee

recruitment. *Described the three steps of employee selection. *Discussed the need for employee training and the seven methods of doing so. *Explained the two components of a compensation plan and the variable

elements of a benefits system. *Profiled an effective sequence for disciplining and terminating an employee.

People, workplaces, and how they work together...

They say people are the most valuable asset of a business. Choosing the right employees should be done carefully and correctly. Human capital can either drive your business to success or sabotage its chances to become one.

Can small businesses afford NOT to spend resources on hiring people ? the answer is no. Small business, more than any other business, relys on the quality of human resources , quality of service provided by human capital, and the way human capital functions will have a great effect on the existance of a business.

Some "personals" on the matter :

I used to work for a very well known tourism company in Israel. It was my second job in the tourism field and when I first came for an interview, the manager who interviewed me made a point that this company emphasizes customer service over anything else. The policy was that the customer is always right, no matter what.

At first, I thought this was a great policy. Great concern for the customer's satisfaction always seemed right. But what about standing behind your employees and backing them up ? I did not give it alot of thought then.I was inexperienced and naive. But time showed me that when looking for an employer - one should check what is the attitude towards employees. What kind of benefits does the employer offer ? are all benefits related to money ? or does he offer other benefits that are more important to ME than money: mental support, encouragement, freedom to make your own decisions, and the anknowledgement that you have someone behind you who will back you up when necessary...

After I quit that job, I was so much more experienced... I knew what to look for and found it. My new employer, and my last one in Israel since relocating to the States , was everything I was looking for ; supportive, loyal, honest, and knows how to express gratitude.

I think gratitude that is expressed in ways other than money are more important to me and more motivating (altough money is good too... ;-) ) - I appreciate having an aesthetic surrounding in my workplace ,comfortable work-zone, a good atmosphere, a sense of self actualization, the freedom to make my own decisions and knowing that my employers count on me to do the right job.

Checkout the following article about Recruiting and Hiring Top-Quality Employees http://www.entrepreneur.com/partners/msnbc?story=/article/0,4621,319988,00.html

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Chapter 18 - Operations management

On this chapter, we have -

-Described the elements of an operating system. -Explained how manufacturers and service providers use operations management. -Described how to measure productivity. -Recounted the four methods of scheduling operations. -Explained the role of quality in operations management. -Identified the three ways to control operations.

Control systems include the following components:

- Inputs (everything you put into a product - materials, money, skills etc')

- Transformation process (basically the business itself, turning inputs into outputs).

- Outputs (Goods, services).

Feedback is a tool used to control your business, without feedback - how will you know if your business functions well.

Some personals ...

What interested me the most on this chapter, is the tie between Ergonomics, motivation and productivity.

Ergonimics is the interaction between a person and machinery. If a person is granted with a good comfortable working zone and equipment, motivation to work increases and as a result so does productivity.

An example from my past work-experience:

When I started to work for Eshet Incoming tourism company, our department was part of Eshet tours travel agency, and was located on the 2nd floor of a 3 story building. The offices were crowded, busy, noisy and basically - not every employees dream. When Eshet Incoming separated from Eshet tours, we moved to a new building adjacent to the old one. The offices were completely renovated, custom made for our department. Each employee got a cubic that had a brand new desk,ergonomic chair, storage area, PC, and best lighting. The working zone was highly improved comparing to the old one. New rules forbiddened the use of cell phones in the office. Guests needed to schedule appointments in advance go through the reception area before entering the office. The atmosphere was highly improved, working conditions were excellent. Personally, I could feel my motivation was rising and so was my productivity: I managed to complete more tasks within a given time, I made much less errors, and my personal mood improved and I could enjoy my work alot more.

This is a simple example of the influence of ergonomics on productivity and motivation.

Here's a link to an article about the uses of Ergonomics for job designs and more...

http://www.ergonomics.org.uk/ergonomics/uses.htm

Small Business Management - week # 4 chapters 15,16

* This posting covers chapters 15-16*

Chapter 15 - International Small Business

On this chapter we have - - Listed the factors to consider when preparing an international business plan. - Enumerated the five ways for small businesses to conduct international trade. - Analyzed the advantages and disadvantages of exporting for small businesses. - Discussed the factors to consider when importing products and materials. - Explained how small businesses can manage their finances in international trade. - Articulated the cultural and economic challenges of international small business activity. I don't know how relevant this issue will be for me if I do manage to make my plan work and one day become an independent interior designer. don't know if I want to go international with my business, don't know what kind of direction my business will follow. It's much too early to know. But I do realize the importance and the potential of international small business. Since I am a foreign student (waiting for permanent citizenship...) - I would like to talk about the importance of getting familiarized with the culture of a country you're doing business with. Where I come from, Israel, greeting customs and courtesies are abit different than in the States. Being a country of warm, temperamental, passionate people – Israel is accustomed to friendly gestures even among business partners. It is customized to shake hands, and even kiss on both cheeks (depends on how close the relationship is). Exchanging presents and meeting over dinner or lunch is a regular thing, and sometimes you can even get invited to a business partner’s house for dinner with his wife and kids. Business meetings tend to be less formal than in Europe, for example.

As they say - When in Rome...

You have to get to know the culture of the people you are planning to do business with. It can make the business process much smoother and prevent simple mistakes that can sabotage your work.

Joint Ventures and Strategic Alliances ....

I really like the idea of using a strategic alliance in order to penetrate a market abroad. I think it can deffinitely make the whole process of starting a business abroad - much easier and faster.

Closing case # 6 , brings a story of a windsurfing school that has a potential of expanding business abroad. here it is -

http://college.hmco.com/business/hatten/small_business/3e/students/case/international.pdf

Closing case # 6 – International Windsurfing school S.N.C Summary: Benno Schmieder, German in origin, is the owner of a windsurfing school and boat rental company in Italy. For many years, he used to run his company illegally, without keeping any financial records nor paying taxes. For a long period of time he had to maintain a low profile due to those reasons, as well as deal with an Italian partner who basically pushed his way into Schmieder’s business by blackmailing & threatening him. In 1995, after years of attempts and struggles to keep his business profitable, Schmieder finally decided to keep proper books and advertise his company. Questions: Using theories, concepts, and models from the course, explain to Schmieder why he should, and how he could, expand beyong Italy. - I think that Schmieder can expand beyond Italy because he offers a unique product that has a demand in the world; his windsurfind lessons and boat rentals were popular in Italy so there’s a good chance they’ll be popular in other contries, especially Western European countries like Spain, France, Greece, and even countries like Turkey who serve as resport & vacation destinations for many Europeans. - Schmieder obviously has managerial skills (keeping his company going for so long despite all the difficulties ! ) and lots of experience working in a country other than his origin’s country. He also traveled a lot and is familiar with foreign markets and cultures. I don’t see a reason why he should not go international. There are several options for Schmieder to expand his business outside Italy: 1- Create a Strategic alliance or a Joint venture ; find a large well established company looking for fresh ideas and create a strategic alliance with them so his penetration into the local market will be faster and easier. 2- Direct Investment – Set up a permanent location in another country. Of course, both options involve finding the right market for your product, finding investors and raising capital. Serve as a marketing communications consultant to Schmieder, creating a realistic advertising program consistent with a viable international marketing plan. As Schmieder’s marketing communication consultant, I would firstly advise him to write an international business plan. Such a plan, should identify issues such as target market, countries that may serve as potential opportunity, ways to raise capital, the chances of finding a strategic alliance or a partner for a joint venture, Application for licensing and all legal documents needed. Once a target market is defined and selected, I would reaserch social courtesies of this market and cultural characteristics in the specific country. I would research competitors products and compare them to Schmieder’s, to verify and identify his competitive advantage. I would probably recommend him to find a strategic alliance, meaning a partner, because that would most likely assist Schmieder in penetrating the market and speed up the process. Once capital has been raised, a location has been set, licenses applications submitted and authorized, alliance legally signed and a target market has been identified - I would publish the business on the internet, in travel agencies and local tourist information desks. Invite travel agents for an OTH (“on the house”) windsurfing lessons day at the beach, create promotional deals with travel agencies, youth summer camps, and offer “fun windsurfing day” packages to large corporations who wish to forge team spirit among their employees. I would even contact sports organizations and promote Schmieder’s windsurfing school through them, while offering their representatives free lessons as a PR tool . In reality, Schmieder decided not to internationalize. Justify his strategy and prepare a realistic advertising program consistent with his decision. Since Schmieder did not keep financial records nor paid taxes for many years, it will probably be difficult for him to find investors who can trust him, and raise capital that will allow him to start an international business. He will need to get legal permission and licensing to operate his business in a foreign country, and not keeping records for so many years will make his background checking difficult or actually impossible. Raising capital for expanding a business abroad can be difficult enough without the problems mentioned above. In addition – penetrating a foreign market can be tough. Travelling will be necessary and Schmieder will have to devide his time between the two locations of his business or hire a manager to manage one of them, a fact that will make quality control difficult for him. Windsurfing season lasts about five months, and tourism & watersports activities (like windsurfing ) can be influenced by many factors such as political situation, which makes it an unstable, risky business. Trying to be realistic, I would offer Schmieder to start a promotional campaign for his business all around Italy. As windsurfing season approaches, by the end of winter and beginning of spring, advertise the windsurfing & boat rental company in travel agencies in large cities around Italy. Many Italians like to go on vacation during the whole month of August for example – so I’d try to create some kind of a travel package in conjuction with travel agencies in large cities like Rome, Florence and Milan, and offer windsurfing lessons and boat rentals in addition to hotel accommodations close to the beach areas. I’d offer large corporations to take their employees out for a day of fun and windsurfing at the beach at a special promotional price. If financial situation allows - I’d consider purchasing a couple of large Yachts that can be leased for summer dinner parties. I’d offer windsurfing deals for children’s summer camps, and perhaps contact International summer camp agencies and offer them summer windsurfing lessons and water activities for kids. Conclusion: Going international can increase profits and serve as an opportunity for growth – but not for everyone. There are many factors that need to be taken into consideration. Licensing, capital raising, and market identification are only part of the things that need to be compeleted before expanding business overseas. Sometimes finding the right alliance abroad can speed up and ease-up the process but again – it needs to be well considered and there needs to be full commitment on the business owner’s side – to run a business in a foreign country, with all that comes along with it. -------------------------------------------------------------------------

Chapter 16 - Professional Small Business Management

On this chapter we have -

- Described the functions and activities involved in managing a small business. - Explained the stages of small business growth and their consequences for managing your business. - Discussed the significance of employee leadership and motivation to small business. - Applied the foundations of total quality management to running a small business. - Discussed the special management concerns of time and stress management. What is management ?

Management is the process of getting things done through others.

The four functions of business are Planning, Organizing, Leading and Controlling.

What is delegation ? Granting authority and responsibility for a specific task to another member of an organization; empowerment to accomplish a task effectively.

On the first half of this blog I have discussed the priciples of management and have brought an analysis of a manager I used to work for. I have mentioned that part of his job was to delegate responsibilities to other people. Delegation allowed him to clear more time for planning, meeting with clients, searching for new potential clients and more.

When I worked for Eshet Incoming in Israel (An Incoming tourism company) - the company's management planned to promote me to manage a small team of people and call it the FIT Department (Fundemental Individual tourism ). One of the things that concerned me the most when considering my promotion - was the question whether or not I will be able to delegate?

I always took upon myself to do alot of work, and I found it hard to pass on responsibilities to others. But I guess that If I want to become a business owner one day - I will have to learn to do so. I will not have a choice ~!

Last semester I had a chance to manage a small team on a group project. I got a chance to delegate and I kinda' got comfortable with it after some time, so there's still hope for me...;-)

The following link brings an article about ERG - a family owned small business, that used to be overdependable on the two owners - Claude and Sherrie. The change they have implemented into the company turned it into a successful growing business.

http://college.hmco.com/business/hatten/small_business/3e/students/case/erg.pdf

Leadership is important to every business, but Delegation is an inevitable part of it. A manager cannot possibly do everything ! a manager cannot make all decisions . Some freedom and decision making authority should be given to employees. It also increases motivation among employees because one of the most basic needs of a person is self actualization. Letting employees become involved in the company's being - can satisfy this need to contribute to the businesse's success.

Small Business Management - week 3 - Part C - chapters 12,13,14

* This posting covers chapters 12-14*

Chapter 12 - Small Business Marketing: Product.

On this chapter we have - *Defined the term marketing mix. *Discussed the different forms a product can take, and identify the five levels of product satisfaction. *Outlined the importance of purchasing and its procedures. *Discussed the main concerns in selecting a supplier. *Calculated how much inventory you need and when. *Described seven methods of inventory control. What is a marketing mix? The Marketing mix is a combination of four components that can be changed and controlled in order to bring your product to your target market. These four components are : Product Place Price Promotion Some personal thoughts... Competitive advantage is highly important for the small business. It allows a business to make profits by selling product or services that are unique. How can you do that ? Search for an idea that is innovative and unique. Provide best quality of service Look for something that has a demand on the market Price it accordingly (you can start hight and when competitors arise - lower your rates in order to stay competitive). As an Interior Designer - how could I do that ? How can I make MY DESIGN a unique one ? how can I create a competitive advantage ? Price places a role, customer service, and uniqueness too. During my Interior Design classes, I have developed a style that fits my personality: I have used very bright colors, interesting flooring plans, and unique fabrics that all comminucate well together and have a common theme. I remember my professor told me I should stick to this style because it is ME, My own THING ! So this would be my competitive advantage as an Interior Designer... a unique, non-conformist style......

Chapter 13 - Small Business Marketing - Place.

On this chapter we have - *Described small business distribution and explain how "efficiencies" affect channels of distribution. *Explained how the location of your business can be your competitive advantage. *Described factors in selecting a state in which to locate your business. *Described factors in selecting a city, and compare location sites within the city. *Explored the central issues of choosing a particular site. *Compared the three basic types of locations. *Explained the types of layout you may choose. *Presented the circumstances under which leasing, buying, or building is an appropriate choice. Product distribution, business location and business design and layout are all important parts of the marketing plan. These are factors that contribute to a business's success and profitability. Location can provide a competitive advantage. Layout can increase sales. Channels of distributions that are right for one's business - play a serious role in the business's profitability. Sometimes buying a location is better than leasing, and sometimes building a new building for your business can be better than buying or leasing. It all depends on the type of business and there are advantages and disadvantages to every option. Some personal thoughts.... I love shopping. It may sound silly, but as a shopping-lover, going to the city for a day of shopping makes my shopping experience more fun. I love to be able to travel by public transportation without having to look for expensive parking lots and get stuck in heavy traffic during rush hours, I love having all my favorite shops close by, and to be able to stop at the Starbucks for a refreshing Caramel Machiatto. Other people like to drive from one place to another and shop in large retail stores (Why do all MEN LOVE BJ'S ??!). It all depends what kind of products people are looking for. It makes sense to open a designer clothing butique on Newbury street in the beautiful Back Bay in Boston instead of Shopper's World Shopping area in Framingham... What do you expece to see when you enter a large retail store like WalMart ? do you expect to enter a free-flow shopping area, and then go through the whole store in order to find your favorite laundry detergent ? or do you prefer to go directly to a marked aisle that has a big blue "Cleaning supplies" sign over it , get your detergent, and hit the cashier ? so layout is also important to the type of business. You have to find the right design that will match your products and type of product / service you are offering. Know your product, know your place.Find a match, combine them wisely and you're half way to success.

Chapter 14 - Small Business Marketing - Price and Promotion.

Ahhhhhh... the last two P's . Price and Promotion.

On this chapter we have -

*Established the three main considerations in setting a price for a product. *Explained breakeven analysis and why it is important for pricing in a small business. *Presented examples of customer-oriented and internal-oriented pricing. *Described why and how small businesses extend credit. *Described the advertising, personal selling, public relations, and sales promotion tools that a small business owner uses to compile a promotion mix.

Some personal thoughts about Pricing and Promotion... People want to know they paid a reasonable price for the most reasonable product. Nobody likes to pay alot of money and get low quality mechandise. We all want Good Value for Money. That is what pricing is all about. Setting what consumers think is the value of your product. Three factors affect how much you can charge for your product: - Competition - Customer Demand - Costs You have to stay competitive pricewise otherwise you won't get any business. If you're product has a high demand - it can allow you to set higher rates. Operating costs will have to be covered by your price and leave a profit in your pocket. Promotion includes all actions taken in order to help sell your product to customers. It can include giving out free samples, advertising, special package low rates, public relations, personal selling and many more. I have chosen to add closing case # 5 - "Reborn to be wild" - as an example for a unique product that can be priced accordingly and my suggestions to promote it.

Closing case # 5 – Reborn to Be Wild. Summary: Dave and Dan Hanlon are the founders and owners of Excelsior-Henderson Motorcycle Manufacturing Company in Belle Plaine, Minnesota. Their competitive advantage is the fact they are different; the company’s history, name and product are all different than what is offered on the market. Their product is priced accordingly; more expensive than other competitors’ products. Questions: 1. Analyze and discuss Excelsior-Henderson’s pricing strategy of making its motorcycles more expensive than those of the primary competitor, Harley-Davidson. Do you think this is a good strategy for a startup company competing against an established one? - Dave and Dan Hanlon claim they sell higher technology, comparing to others. Their product is more expensive than others’, but they claim to be selling a “piece of American history”, a reason for them to believe that no competition can beat that. The pricing strategy of the company works in conjunction with its prestige: the company is different in its mentality, its name, the quality of product and therefore the price as well. - In general this would not be a good strategy for a startup company competing against an established one. A startup company should start with low prices in order to gain customers. Competing with a well known & established company can be tough. Most of the times clients will prefer to do business with the company that have years of good reputation rather than a start up business. However; in this case, the company offers a better quality of product. In this case, when customers shop for heavy motorcycles – they would probably look for quality rather than price. I would have to say that in this case, the strategy is right for the specific business. 2. Harley-Davidson is an American Icon. If a motorcycle is shown on TV of movies, it’s usually a Harley. Consumer passion runs strong for Harleys – after all, how many other company names are tattooed on customers? How can Excelsior compete against that loyalty? Suggest ways that the Hanlons can create a promotional campaign that will convince people that Excelsior is more attractive than a Harley. - I think that since Harley Davidson has been such an Icon in America for so many years, the Hanlons can take advantage of that and present the Excelsior as the “NEW GENERATION” of heavy motorcycles in America. Such a campaign will have a hidden-but well understood-hint that Excelsior comes to replace the “good old Harley”. Advertising can show a “hip” grandfather riding a Harley, while his grandson, a young man with an updated modern ensemble – rides an Excelsior next to his grandfather. And as Grandfather stays in the background; the young Excelsior rider sails away on his brand new Excelsior with an American flag in his back pocket. Such an ad can say: “Excelsior –preserves history and constructs the future” (or something similar that will still have a connotation to history yet appeals to the future as well). - The Excelsior Company can aim its marketing and advertising towards younger populations – put ads in younger magazines like “People” and TV guide, publish ads online, have TV commercials during primetime hours. Publish posters in places that are known to be packed with young populations (night clubs, entertainment and shopping areas, colleges and universities) and also subway & bus stations (for those planning to purchase a motorcycle…), sport fields etc’. - Possibly have a celebrity that appeals to younger populations – participate in the campaign – like a famous baseball or basketball or football player, famous artist that is an American icon like Benjamin McKenzie or Adam Brody who play on “The O.C” TV series. - As far as sales promotions - I would recommend the company to emphasize the quality of their product but still offer convenient payment terms. Provide a long warrantee (like minimum 10 years of warranty). Guarantee quality of service. Conclusion: The proper use of a company’s marketing mix is the key to successful marketing. A business owner should know to whom to direct his marketing, how marketing should be done and in what channels, and what issues should be emphasized on an advertising campaign.

And a link to an article I brought to class, about a bike company that promotes their products through Lance Armstrong http://www.msnbc.msn.com/id/8645920/ And an interesting website that offers promotion via the web. http://www.allwebpromotion.com/pricing.htm Link to an interesting article about increasing number of clients and selling your business better http://www.businessweek.com/smallbiz/content/may2005/sb20050517_3509.htm nd last but not least - a free promotion guide website http://www.apromotionguide.com/

Small Business Management - Week 3 part B - chapters 10,11

*This posting covers chapters 10 & 11* Chapter 10 - The Legal Environment

On this chapter we have discussed the following issues:

* Laws and regulations that affect small business. * Types of bankruptcy. * The elements of a contract. * Ways to protect intellectual property.

Imagine there were no laws in our world, and each one of us could do whatever poped on our mind... sounds dreamy ? not quite. With abscense of laws come chaos and crime. Laws exist to protect us. In the world of business laws exist to protect both business owners and employees. There are laws to protect employees from being taken advantage of by employers , like the Fair Labor Standards Act, Civil Rights Act, Americans with Disabilities Act and more. There are laws that protect intellectual property (an idea, a product, a design etc') such laws include patents, copyrights and trademarks. A brand is a name, term, symbol, design, or combination of these elements that clearly identifies and differentiates your products from those of your competitors. Copyright is a form of protection for intellectual property provided to the creator of a literary, musical, or artistic work for a period of the creator's life plus 50 years. A Patent is a form of protection for intellectual property provided to an inventor for a period of 17 years. A Trademark is a form of protection for intellectual property provided to the owner of a brand name or symbol. On the following closing case analysis, I have tried to explain why Intellectual Propery protection laws are so important in the competitive environment of the world of business.

Closing case # 2 – Knocking off the Superclip Summary: Linda Froehlich is the owner of a wire products manufacturing company, who developed an idea called Superclip, a high carbon steel paper clip. The article brings her story as an example and explanation about the importance of Laws to protect intellectual property. Questions: Linda Froehlich believed that patenting her SuperClip would be all the legal protection she needed. Why did that turn out not to be the case? Obtaining patent rights is not enough to protect intellectual property. In addition, one should obtain copyrights as it allows you to take to court anyone who violates these rights by trying to copy your idea. Did Froehlich make a mistake in approaching Acco regarding the purchase of her patent rights? Froehlich made a mistake by contacting Acco before obtaining copyrights, and by doing so without consulting with an attorney. Approaching Acco without being protected from infringement left her with no case after her idea had been knocked off. How can a company prevent a patented product like the SuperClip from being knocked off? A company can prevent an idea such as Superclip from being knocked off by registering the idea as a patent, applying for copyrights through WIPO (World intellectual property Organization) and PTO (Patent trademark office). Analyze Froehlich’s initial decision to insist on making SuperClips in Pennsylvania, rather than moving production offshore as competitors had done. Linda Froehlich and her husband always believed in American manufacturing and saw themselves as such for many years. She and her husband wanted to keep control of the quality of their product and as a result refused to go offshore like their competitors. What advice would you give Froehlich at this point? My advice to Froehlich at this point would be to reduce the price of her product by reducing costs – manufacture the product outside the States in order to lower costs, try to supervise the quality of product by staging an American representative close to the factory, and in the future consult with an attorney regarding any ideas that might become a patent. Conclusion: The laws that protect intellectual property exist for a reason and are highly important. In order to avoid any disputes with competitors, the patent owner must register his idea as a patent but obtain copyrights as well. Any propositions to competitors should be done via an attorney. The world of business is a tough and competitive one, you must be well aware of your rights for protection before stepping into the deep water.

Chapter 11 - Small Business Marketing - Strategy and Marketing

On this chapter, we have discussed the importance of marketing to the small business, explained the process of developing a small business marketing stratergy, and learned why is the marketing research so important to the small business and what steps it involves.

Some personal thoughts on the subject...

I want to be an Interior Designer. In fact, this class is the last class that completes my Interior Design certificate. I am planning to continue to a bachelor degree in art or Interior Design, and one day, when I feel experienced enough, perhaps I could open my own Interior Design business. So as a small business owner, I will need to write a business plan. I have previously mentioned the importance of a business plan. What about marketing ?

One of the main parts of a business plan, is the marketing plan. Who am I going to sell my products or services to? who will be my Target Market ? to whom should I aim my marketing plan ? where will I advertise? All these questions require a thorough research. You also need to know who your competitors are and what is their product like - compares to yours.

Setting marketing objectives is very important. Marketing objectives define the goals of your plan. Marketing research is the process of gathering all the necessary information that will link consumers to marketers in an attempt to imrove marketing efforts.

Planning market research involves the following stages:

- Identifying the types of info you need

- Identifying sources of info

- Selecting a sample the represents the population you're studying.

- Selecting a research method and measurements techniques.

Abit about...

Niche Marketing. Niche marketing allows a small business to identify a group of people who would most likely be the business’s customers and then direct marketing efforts towards them. Small businesses cannot do everything for everyone, therefore they should concentrate on marketing their products and services to the right niche that has more potential of becoming clients.

So what will be my niche as an interior designer ? time will tell !...

Small Business Management - Week # 3 chapters 8,9

Week 3 on this blog covers chapters 8-14. Chapters 8 & 9 -

Chapter 8 - Accounting records and Financial statements - BOY OH BOY !!!

When people think about accounting for a small business, there are two popular reactions: either they panic (like me !) or they fail to give it the importance it deserves. The first reaction - well, it's normal for those who failed math in high-school (again, like me, at least on the first two years of high school. I guess it was the shock caused by numbers or something...). The second one is a common mistake among small business owners.

Why is it so imporant?

Believe it or not, a small business owner can get alot of essential information by holding financial records. He/She can evaluate the financial health of a business about to be purchased. He/She can prevent mistakes and can make the right financial decisions according to financial history and financial forecasts.

The bottom line is that the accounting process helps you translate numbers (the language of business ) into plain English.

Are you planning to be a small business owner ? do yourself a favour and hire a professional accountant!

After this short lecture from someone who feels very intimidated by accounting and financing in general - here are this chapter's objectives:

Further to reading this chapter, we should be able to:

* Discuss the importance and uses of financial records to a small business. *Itemize the accounting records needed for a small business. *Explain the 11 ratios used to analyze financial statements. *Illustrate the importance of and procedures for managing cash flow.

MONEY MONEY MONEY.... NOT SO FUNNY !

Cash flow has been described as the lifeblood of a business. In simple words cash flow is the net amount of money that is brought into a business including any non-cash expenses and after deducting operating costs. Cash flow is important because if you do not have enough money to operate your business - you will be out of business, as simple as that.

So what do you need?

The three primary financial records that are needed by small business owners are: - Track record of prior business success – this will assist a business owner in showing investors that he is a competent manager. - Financial statements that show a solid record of earning. Showing investors that investing their money in the business has low risks. - Ability to make money to attract money – a business owner will have to show investors he can put personal capital into the business. Once the business has been established, the business owner will have to have financial statements like a balance sheet, income statement and a statement of cash flow.

still don't get it ? (don't worry, you're not alone ! ) - check out this cool website for all kinds of accounting definitions

http://www.aicpa.org/members/glossary/a.htm

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Chapter 9 - Small Business Financing

So by now you must think: here's another posting from hell. Financing.

It's not that bad, actually.

Check out this chapter's objectives. You should be able to:

- Determine the financing needs of your business. - Define basic financing terminology. - Explain where to look for sources of funding.

Something you should know before starting your own small business:

Initial capital requirements is a process of determining the required financing for the purpose of opening a new business. It is composed of several stages / requirements:

1. listing a businesse's assets essential for its proper function

2. Determining the market value of each asset

3. Identify how much capital can an owner provide

4. subtracting the total of the owner provided funds from the total of the assets required.

Some personal thoughts.....

I hate standing in debt... If there's something that worries me and keeps me awake at night (for about 15 minutes, then I fall a sleep usually ;-) ) - it's credit card debts.

I guess banks don't like it too much either, but this is how they make their money - interests etc'.What if I was a small business owner ? will I have another choice ? and what about small businesses' suppliers? Why do they extend credit to clients ? why do they allow you, the small business owner, to stand in debt?

Well firstly, because they want to establish a relationship with you, the small business owner.

Having you stand in debt, or having them extend a line of credit - means you have established a relationship, a commitment. They also want your business. Want it ? they depend on it ! their existance depends on you, the small business manager. So why not encourage you to spend more or to make plans to spend more - by extending a line of credit ?

Not all businesses / suppliers will do that. You will have to prove you've got the Five C's of credit :

- Capacity – the applicant’s ability to pay a loan - Capital – personal financial strength - Collateral – Assets owned by the applicant that can serve as financial securities. - Character – Applicant’s willingness to pay his debt

- Conditions – General factors that can effect a lender’s decision to grant a business owner with a loan, such as deteriorating political situation, economic recessions etc’

Check out this link for a more elaborate explanation about the Five C's of credit:

http://www.onlinewbc.gov/docs/finance/5C.html

And check out this website for information about Debt financing

http://www.toolkit.cch.com/text/P10_3000.asp

Small Business Management week 2 - part B - chapters 5,6,7

* This posting covers chapters 5, 6 & 7 *

Franchising- chapter 5

Further to reading this chapter, we have:

* Established what a franchise is and how it operates. * Articulated the difference between product-distribution franchises and business-format franchises. * Compared the advantages and disadvantages of franchising. * Explained how to evaluate a potential franchise. * Explored franchising in the international marketplace.

Franchising - What did you say it was ??? ....

A Franchise is a contractual license to operate an individually owned business as part of a larger chain.

In simple words - I like Starbucks coffee. Say I want to open a similar coffee shop opposite my house ? why open a "similar" one if you can franchise a Starbuck's branch ?

Franchising allows a franchisor to operate a product that has already been proven, already has regular customers who are loyal to it. Open a franchise omits some of the risks that creating a new business involves. Opening a franchise may also provide a manager with a chance to learn the business without investing too much, obtain quality control standards , efficiency and opportunity to grow.

Where is it going ?

Basically everywhere ! Franchising is all over the place. From food business to entertainment to travel, and all over the world : the Far East, Mexico, Canada - Franchising is getting its blood from the Westernizing trend all over the world. The whole world wants to become America;-)

Some personal thoughts...

Is franchising for me ? do I have what it takes to become a franchisee?

yeah, I like Starbucks, and yeah - it's one of my dreams to run a successful coffee shop opposite my own house... but no - I don't think I'd like to become a franchisee. I want more challenge, I want more flexibility.

Being a franchisee is kinda' like being a condo owner. You are the owner, you are the king of your castle, but you still have to pay a condo fee. and you still have to

ask the condo assn. permission when you want to put new replacement windows instead of the old crapy ones that they put in when they built the place...

Now guess what I am - a happy condo owner or a single family house wanna-be ?!

and check out this link :

http://www.franchising.com/

Taking over an existing business - chapter 6

Further to reading chapter 6, we have -

* Compared the advantages and disadvantages of buying an existing business. * Proposed ways of locating a suitable business for sale. * Identified ways to measure the condition of a business and determine why a business would be sold. * Differentiated tangible and intangible assets, and assess the value of each. * Calculated the price to pay for a business. * Understood factors that are important when finalizing the purchase of a business. * Described what makes a family business different from other types of business.

Checkout this website -

http://www.ehow.com/how_7490_buy-existing-business.html

Some personal thoughts about purchasing an existing business.....

An existing business is already a functioning operation. As I mentioned before, it already has regular clients who are likely going to continue business through it even after ownership changes. If the business has been making money, the new business owner will breakeven sooner than he would if he had started from scratch. Planning for an exisiting business can rely on the history of the business which makes it safer and easier to do. Equipment, suppliers and employees already exist. Financing through previous owner may be available and even bargain purchase are possible to find sometimes.

Is this something I would be interested in doing? possibly yes. I am sure though, that I might make modifications to it. It can be challenging to adjust a business to your own vision and still keep main characteristics the same in order to keep old clientelle.

Hey - check out this link - perhaps you can find here your dream small business for sale...

http://www.franchisegator.com/

Starting a new business - chapter 7

On this chapter we have -

- Discussed the advantages and disadvantages of starting a business from scratch. - Described types of new businesses and discuss the characteristics commonly shared by fast-growth companies. - Evaluated potential startups and suggest sources of business ideas. - Explained the most important points to consider when starting a new business.

If this interests you - check out this website

www.sba.gov - This is the home page of the Small Business Administration, the organization within the federal government dedicated to assisting small businesses

So what is a window of opportunity? what does it mean for the small business owner?

The term window of opportunity means a period of time in which an opportunity is available. Same way as new products go through the states of introduction, growth, maturity and decline, so do windows of opportunities go through several stages. Starting with the creation of an idea, development with no competition at first (that is when the window of opportunity is wide open), onto the stage of increasing competition, growth, and then finishing with decline of profit margins due to expansion of consumer expectations.

Small Business Management - week 2 - chapters 3,4

* This posting covers chapters 3 & 4 *

Chapter 3 - Social responsibility, Ethics and Strategic Planning.

On this chapter, we have covered the following objectives:

- The relationship between social responsibility, ethics, and strategic planning. - The levels of social responsibility. - How to establish codes of ethics for your business. - The strategic planning process, and the importance of competitive advantage. - Ways to influence the organizational culture of your new business.

Let's talk about Social responsibility and your business...

Social responsibility, Ethics, and Strategic planning are tied in together, and are all an inevitable part of Business Management. Your social responsibility is the affects of your business on its surroundings and society, and knowing what’s important to your business affects your strategic planning. One’s values, which can be defind as ethics, have a strong influence on the culture of the business you create.

Competition and your business - How to Deal ?!

The value of competitive analysis to the small business owner is that it provides an opportunity to improve business and especially weaknesses that may become a disadvantage for business. By analyzing other businesses in comparison to one’s business - the owner can learn what areas need to be improved and where to invest more in order to beat competition. The sorts of things a business owner should know about his competition are : Image, location, layout, products, pricing, advertising, and sales methods. The analytical methods that can be used to find out this information are : - Read articles in trade publications. - Listen to customers and sales people reviews about competitors. - Keep files on main competitors with essential information. - Meet regularly with key employees and evaluate information. - Attend industry trade shows. - Buy competitors’ products and examine them to determine quality etc’ (reverse engineering). - Consult published credit reports on competitors. Some personal thoughts....

Social responsibilities.

I appreciate business owners who do good. I appreciate even more, those who do "goodwill".

One's contribution to society is very valuable. It can icrease quality of life for needed populations and create a better world to live it. It all sounds like the ideal dream, but there's alot of truth in it.

Maintaining a code of ethics is essential. The Sarbanes Oxley Act holds executives responsible for anything illegal that happens in their company. I support this law because it prevents people from taking law into their own hands, and committing business frauds. From now on - managers are being held responsible, personally guilty or not !

here's a link that provides an explanation about the Sarbanes Oxley Act

http://www.google.com/search?hl=en&lr=&rls=GGLD,GGLD:2004-41,GGLD:en&oi=defmore&q=define:Sarbanes+Oxley

And an article from MSNBC.COM about the conviction of Enron executive (Enron fraud case triggered the formation of the Sarbanes Oxley Act).

http://www.msnbc.msn.com/id/8647843/

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Chapter 4 - The Business Plan -

On this chapter we have -

- Explained the purpose and importance of the business plan. - Described the components of a business plan. - Recognized the importance of reviewing your business plan.

By Definition a Business Plan is a document describing a business that is used to test the feasability of a business idea, to raise capital, and to serve as a road map for future operations.

Business plans are important because they can assist in raising capital, they can help plan the company’s future and they can assist in preventing common mistakes and termination of business. A Well written business plan can aim to a point at which you would like to see your business in the future. It can prevent costly oversights and assist business owners in making the right decisions along the way.

Please find below my analysis for closing case # 1 - " Oyster Communications - Is the World its Oyster ? "

Summary: Closing case # 1 brings the story of the development of Oyster Communications, a company developed by Entrepreneur Margot Langstaff. The company’s roots were in the Colorado guide to financial sources for the entrepreneur and small business owner, and developed from there , starting as a marketing and distribution company and growing into and information network. Questions: - How would creating a business plan have helped Oyster Communications? Creating a business plan would have helped Oyster Communications by allowing its management to plan the company’s future and anticipate any problems or difficulties that may occur along the way. It would have helped the company to stay focused in one direction and secure its status in the rapidly changing world of technology. - What would you emphasize in writing a business plan for Oyster ? When writing a business plan for Oyster, I would probably emphasize the goals of company and where I expect it to stand in X amount of time. This would probably increase credibility in the eyes of its investors and customers because it shows Oyster has a focused path it intends to follow. - Oyster is obviously a very dynamic, changeable business. Why write a plan for this type of business ? Since Oyster is a business that changes rapidly, it is difficult to predict future problems and potential risks it might face in the future. Writing a plan for this business would provide an opportunity to strategically prepare for problems, and it can assist in preventing costly mistakes. A Business plan can provide a chance to a analyse the market and potential competitors, and prepare better for stronger competition, instead of making fast (and wrong) deicisions. Conclusion: Technology world changes rapidly and competition is high and aggressive, which makes it more difficult for a small business to survive. A Well written business plan can assist in preventing common mistakes and paving the business path. It can also help to build credibility and raise capital.

Some Business Plan News from MSNBC.COM: New plans for Toyota - read it here !

http://www.msnbc.msn.com/id/8374373/

Small Business Management - Week 1- chapters 1,2

What is a small business ?

chapters 1 & 2 on Hatten's Small business management textbook

A Business is considered small if it is independently owned, operated and financed, has fewer than 100 employees and has relatively little impact on its industry. Did you realize that small businesses - - Represent more than 99.7 percent of all employers - Employ more than half of all private sector employees - Employ 39 percent of high-tech employees - Create 60 to 80 percent of net new jobs annually. - Represent 97 percent of all exporters of goods. - Produce 13 to 14 times more patents per employee than large firms. - Create more than 50 percent of private gross domestic product (GDP) - Pay 44.5 percent of total U.S private payroll.

Small businesses are the driving force of change in the development of new technology !

The term "Creative Destruction" fits the profile of many small businesses. It means that a small business creates a new and better idea that replaces an older idea. (A simple example is Microsoft Windows software that replaced basically all other previous softwares. And even a simpler example is DVD that replaced VCR).

What makes a small business a success? what makes it fail ?

The main reason for failure in the small business world is bad management. Incapable management, lack of experience, insufficient funds, high operating costs and high competition.

In order for a small business to succeed - it needs to offer something unique, innovative, that no one else offers. There needs to be a demand for this idea / product - otherwise it will fail.

This is where the role of the ENTREPRENEUR comes in...

Chapter 2 on the Hatten book "Small Business Management, Entrepreneurship and beyond" talks about the role of the entrepreneur in the process of managing a small business.

It basically takes a good idea to make a small business. The entrepreneur needs to have an innovative idea that nobody else offers. There needs to be a demand or a market for this idea in order for it to develop into a small business.

Do I have what it takes to be a good entrepreneur ? Don't know. There are no specific characteristics for successful entrepreneurs, but it is assumed that such a person will be willing to take a financial risk, work long hours, be willing to live without pay at first. There are all kinds of negative and positive aspects for being self-employed.

Small business management is a process that begins with an innovative idea of the entrepreneur, starts up by a triggering event that leads to the implementation of the idea, continues to grow (growth stage of the process), matures and then ends with the "harvest" : the selling of the business and profit pick-up.

To be honest - I don't really know if I'd make a good entrepreneur. I like financial stability but on the other hand - I like changes , and I like them to happen fast. Thinking about it, I always go back to the book I've recently read "Who moved my cheese? " . If I'd ever have a brilliant idea that could develop into a small business I might just go back to that book and read it in order to get motivated to take an action about my idea.....

I will finish with a quote from Hatten's book :

"When you own a business - it becomes an extension of your personality ....."

("unfortunately - it can also take over your life...")

Here's a link to an article that relates to small business failure and success. http://www.businessweek.com/smallbiz/content/jun2005/sb20050622_9223_sb013.htm

"What would you do if you were'nt afraid ?!?"

Spencer Johnson, asked that question on his book - "Who moved my cheese?" , and I keep asking myself this question, like it's a new Moto in my life. I loved the book. I finally finished reading it (I took it slowly, as I don't have much reading time available these days). I recommend all business people, and in fact ALL OF YOU out there - to read it. How many times did you feel like you're stuck in a moment ? how many times did you fear quitting a job you hated ? How many times you said to yourself "if I could only throw away my fears and pursue my dreams... ! "... This book is an excellent motivator. It encourages you to take a chance and walk towards the unknown. It encourages you to often take a moment to "smell the cheese"... see if it's getting kinda' old and know to expect a change coming soon... This book is a must for all managers, and for people, in general. Taking a Small Business Management class is my first step on becoming a business owner.Do you have any plans to become a business owner? Go out there and smell the chese... or at least -in the meantime, read Johnson's book and develop your small business manager's skills ... Good luck ! ;-)

Small Business Management - preface

Hello All, Summer semester has started. This is going to be a short semester, only five or six weeks, but these five-six weeks are going to be loaded with new information. I am taking a Small Business Management class with prof. Lochiatto. I am excited to start this new class, it seems like it's going to be a fun and exciting program, though I expect to work as hard as I did on my Priciples of Management class. One of our tasks on this class is to write a blog, obviously. So, I've decided to continue my old business blog and combine it with this new & exciting field called Small Business Management. Why take a small business management class ? As mentioned before, I started my college education in the States in the Interior Design program of Mass Bay Comm College. This class is one of my business electives and completing it will grant me with an Interior design certificate. I am then planning to continue my associate degree in Business and hopefully complete my bachelor degree in Interior Design / Fine Arts at another school. Part of doing business is to know what your plans are. My plans are to complete my college education and work in the Interior Design field. First, work for a company and gain enough experience and then, become self employed as an Interior Designer. Taking a small business management class can never hurt, right? In fact, it can help me understand the basics of managing your own business. Some people enter the world of small business management without knowing what to expect... and too often they just fail, due to lack of experience and lack of management skills. So what can be better than educating yourself well in advance, before you step into these big shoes of a small business manager ?! I will start by reviewing each chapter and what I've learned from it, and continue with some personal thoughts that relate to the various subjects discussed in class. Hopefully, this class will be interesting and educating. Wish me luck ! Shirley.