Managing a Small Business - Essay Example

?Managing a Small Business Introduction The reference ‘small businesses’ significantly varies around the world on what minimum threshold that constitutes it. The term is used in business mainly to describe enterprise based on certain criteria as evaluated. In most cases, business are said to be small depending on the support they get form the government and on issues of tax policy, other criteria considers the number of employees the business has to classify it. For example if a business has 50 employees or less, it is considered a small business by the standards set by the European Union. In Australia, for a business to be referred to as small, it must have fewer than 15 people employed in it. In addition to the above-mentioned criteria, other classification of businesses also takes into consideration the aspect of total assets, sales or the net profit of the business. All over the world, small businesses forms a substantial number of businesses and it is dependent on the economic system prevailing. Small businesses supplement the ‘big’ businesses in commercial activities as they ensure that products reach the remotest parts of the country. Typically, most small businesses include; convenience stores, restaurants and pubs, hairdressers, tradesmen, and guest houses among others. In this regard, this paper endeavors to find out a number of issues related to small businesses (PUB) in Canterbury by interviewing the proprietors. Methodology The mode of information collection in this research paper was direct interview of the proprietors. Since the information was to be gathered on a single business premises, the proprietors were contacted prior and agreement was reached on the best time and day. In this case, I chose to consider a Pub in Canterbury named Dolphin. Dolphin is a modernized dining pub that provides a range of services to their customers. The information relating to the business was collected using a radio recorder coupled with note taking, the proprietors were found to be six and because of the nature of the question and considering time, all the proprietors were assigned sections of the inquiry to respond to so that the interview could not be skewed to an individual. Interviewing one person on all the areas of concern could lead to inaccurate information from the interviewee given fatigue and boredom. The questioned were then designed separately and spread amongst the six proprietors in Dolphin business from which the information regarding the business was collected. Market Research – Information Gathering Market research involves identifying what the people want and conform to it so that you can have a business competitive edge over the competitors. Market research is thus a very important tool in business survival as it enables one to make a determination on how to do marketing of their product. In this case, I interviewed the first proprietor and collected the following information about the market research. I. Primary Research Dolphin realized that they have to cut themselves a niche in the business environment by standing out as the best provider of services to the customers. They decided to do a primary research that was aimed at giving them insights on the taste of the people on varieties of foodstuffs, peak period of the business, and on issues of references. To acquire all these information, the management used questionnaire to source for information, in some instance, they asked the customers to rate their performance on specific issues like hygiene, satisfaction and so on. Rating of Dolphin’s performance was considered against what customers considered the best pub in the area where the business is situated. The information obtained from such responses is to be used for making the necessary improvement on the customer’s satisfaction. II. Secondary Research: A part from primary research for improving the performance of the business, Dolphin also relies on the secondary sources in its effort to understand the management of the business such that customer can be satisfied as well as to be retained. The business uses conventional journal publications that are released by business schools on the management of small businesses; they also depend on the topical issues that are released on the dailies referring to small businesses (Carlos and Justin, 2008). Through this, the proprietors believe they are able to connect with the universal standards of managing small businesses given that some journals specifically relates to the locality where there business is situated. They are able to understand market variability and customers demand thorough such secondary materials. Legal Format Dolphin according to the response by the proprietors in takes the format of partnership business. The respondent informed that they were motivated to initiate the business in that context following the different experiences that they have, they thought that coming together, and starting a partnership would be beneficial to them in more than one way. They explored several options that would be very difficult to be run by one person resolved on partnership. Partnership they argue, come with its own merits and undoing. It is about experience in the business and innovation that keeps the business hitting new levels every time. It was confirmed that partnership business can be more productive within a short time and that the vice versa can also happen within the same period. Asked on the advantages and disadvantages of the business, the partner informed us that the legal requirement for setting up a partnership is limited and that makes it easier to start. Pooling of risk is another critical advantage that comes with partnership since in cases of losses; it is shared amongst the partners either equally or in the ration of contribution (Allen, 2007). In addition to these, different experiences are also drawn together in the management of the business bringing about the idea of specialization and division of labor in the management. Fidelity is also guaranteed to the business account since it is not subjected to any form of legal audit and public access to the accounts is restricted. Regarding the disadvantages, the partner enumerated that it requires absolute trust of the members, liability of the debts until after death, unlike limited companies that the shareholders and the business are legal entities thus no business liability related to the shareholders (Allen, 2007). In partnership, decision-making is tedious since all the members must be in agreement over a proposed decisions. The partner also informed that incase of death or retirement of one of the partners, the business fate is destined to dissolution. Source of Funding Following interview of the second partner over the available avenues through which the business gets its capital, I was informed that the principal capital avenue for Dolphin is the individual partnership contribution from the partners. In the business, when an issue is due that requires expenditure, Dolphin will consult their excesses from capital and if it is not sufficient, then the members will contribute equally to foot the expenses. This is the principle source of income for this pub, assert the partner. In addition to personal savings, Dolphin also accrues its funding through addition of new members, as I was taken through the history of Dolphin and realized that initially the business had only two partners and because of funding purposes, four additional partners have since been added for the business expansion purposes. In adding a new member in the course of partnership I was informed requires a process of economic calculation since the partner will have equal share and say in the business, they are always required to pay for the value of assert accumulated by the previous partners before they can be accepted (Hatten, 2012). There are also other sources of funding available for partnership but I was informed that Dolphin has not been keen to exploit them. Small business loans is one such option, partners can agree to source funding from the banks and repay later according to the mode agreed with the bank but Dolphin has been hesitant on this option given the high charges of interest by the banks (Hatten, 2012). Instead, they have remained focus to personal contribution whenever more capital is required for the business. Small business line of credit as a means of funding is also available for the partnership but Dolphin has not considered the option either (Hussain or Matlay, 2007). Success and Failure The response from one of the partners here is that in business has one certain feature, crisis. How it is considered will make business either succeeds or fail depending on the prevailing situations that affects business performance. In this regard, the partner did appreciate that they have faced a series of crisis and they have managed to triumph over a legion of them with few circumstances where they have not emerged successful. With reference to success, I was informed that Dolphin has managed to expand its services and size over the years and remains one of the most stable businesses in the recording good returns every financial year. The partners have been very keen on where and what to invest on that in most cases, they score on their decisions. The business has also managed to incorporate new partners without facing major decision agreement that threatens the business despite the problem with more partners. Notwithstanding, there has also been failure on the business to convince all the partners to ratify that a bank loan can be used to give the business a new look in terms of substantial amount it can generate unlike the meager contributions given by the member that restricts serious improvement. Marketing On issues of marketing, it was confirmed that Dolphin is aware of marketing as a tool in business that will see it having more customers than before if rightfully explored. The business having a restricted geographical interest has embarked on only those marketing strategies that are relevant to the business. Having realized that the business does not draws it customers from far flung areas, Dolphin management decided to use such marketing option like interactive marketing that is advance through dialogue. This involves asking the customer about the satisfaction they have gotten and acting on their responses to advance their peculiar interest individually at the point of sale (Tucker and Lean, 2006). This strategy has really worked for Dolphin in cutting them a competitive edge. Handling customers’ needs and requirements individually has made Dolphin thrive in this area that experience cutthroat competition in the related business confirms one of the partners. Branding Through the conducted interviews, it came to my realization that the Dolphin has used several branding strategies to buy loyalty form the customers in the business (Harris, 2008). Starting with the name of the pub, Dolphin, the partner explained that the term is a cliche in the area and that is why the business settled on it in hope that it will propel the image of the business with ease in that area that experience fierce competition. Dolphin has also used a business slogan ‘serving you until late in the night’ to give a primary benefit to the customers that irrespective of time, they can still bet services from Dolphin. ‘We believe that this has really made it possible for us experience the base of customer loyalty we have today’ one of the partners confirmed. Networking One of the factors that keep Dolphin ahead of the pack compared to its competitors is their ability to involve in the networking program. The business has identified other business partners who are not their direct competitors through which they can associate with to help them succeed in the business. For instance, they have identified a tour guide company that connect with their location to provide them with customers whenever there itinerary brings them closer to the premises (Cooper, 2011). Dolphin is thus able to gain customers from far-flung areas due to their networking programs with other like-minded business partners. Today, they are in a fresh search to link up with other businesses that they can associate with on mutual assistance in terms of business activities identified. Business Relationship In Dolphin, building a business relationship both internally and externally is given priority number one since it is known that without the intimate relationship, no business can celebrate it first anniversary. With regard to the internal relationship, Dolphin has inculcated a strong relationship between the members hinged on honesty, dedication, and pro activeness for the benefit of success (Brook, 2010). Partners in Dolphin take responsibilities and believe in the action of one another as to be of the interest of the business. In terms of external relationship, Dolphin has a mutual co-existence with their supplies, customers, and vendors such that they are able to withstand extreme cases of uncertainties. For instance, they are given the first priority by the supplies in cases of scarcity of resources for the business; they are also able to get material on credit whenever they are faced with financial problems courtesy of the relationship they have built overtime (Brook, 2010). Dolphin appreciates the necessity of a strong business relationship that is built on trust and honesty as a recipe to success in business. Competitors Analysis Since Dolphin is determined in maintaining the lead in terms of market dominance in the region, I learnt through the interview that they has engaged in contemporary market analysis and has deviated from the traditional methods that revolves around conjunctures, intuition, and informal impressions. The partner informed that even though the initiative of carrying out a comprehensive competitor analysis is costly and the business cannot afford, they have engaged reasonable methods that gives them an accurate assessment of their potential competitors strengths and weaknesses so that can be able to make conclusions on their opportunities and threats (Longenecker, 2006). Through the competitor analysis, Dolphin is able to construct a competitor array that considers the following aspects; Defining their scope and nature, competitors, customers and their preferences, success factors in the company, rate competitors against their successes, and determining their successes in the industry and rating them (Rouse and Jayawarna, 2006). These analyses enable the firm to take appropriate measures that will ensure its survival in the highly competitive landscape of business activities. Conclusion There are several forms of businesses ranging from sole proprietor to limited companies; each stage of business requires different formalities and inputs. Partnership in business rating with reference to complexity rates position two after sole proprietorship. It is not uncommon to witness businesses progressing from sole proprietor to limited company if the managements understand the market trends and conforms to them timely. Because businesses are meant to progress at least in light with the profit making, it is possible then that they should rise through the ranks with time as a demonstration of positive progression. With the management of Dolphin and the kind of business minds in it, it will be a tolerable hypothesis to envisage that it will gradually rise to be a big unit with branches spread all over the country. In this regard, it is of certainty that it will be quoted in the stock market and share floated to the public following its remarkable improvement in management. Progression from two partners to six with improved efficiencies and determination, Dolphin is certainly geared into the path of success if they persist with the determination. Bibliography Allen, K.R. 2007. Growing and managing a small business: an entrepreneurial perspective. 2nd ed. Boston, MA: Houghton Mifflin Co. Brook, H. 2010. Small business management launching and growing new ventures. 4th Canadian ed. Toronto: Nelson Education. Cooper, C.L. 2011. Human resource management in small business achieving peak performance. Cheltenham, UK: Edward Elgar. Hatten, T.S. 2012. Small business management: entrepreneurship and beyond. 5th ed. Mason, OH: South-Western Cengage Learning. Hussain, J. and Matlay, H. 2007. Financing preferences of ethnic minority owner/managers in the UK. 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