Management of Small Business - Essay Example

Name: Tutor: Title: Management of Small Business Institution: Date: Executive summary This report evaluates how chief executive officers in various firms in Australia view success based on firms that are growth oriented and others that are not growth oriented. Companies have very many reasons as to why they operate. A number of them operate because they want to make profits. Others run because they want to satisfy the expectations of the client, success of the company, while others operate for personal goals like fulfilling the needs of the chief executive officer. Regardless of all these reasons, the fundamental reason as to why firms operate is to develop and have significant contribution towards the economy of the country. The paper seeks to determine how small firms operate in relation to success. The paper looks at the lifestyle and growth oriented firms. For lifestyle firms, growth was not their intention because the management basically concentrated on the satisfaction of their clients, making profits and repaying the initial investment. The firm also placed a high concern on the value of happiness, lifestyle, family, and retirement provision. On the other hand, firms that are growth oriented put a lot of concentration on the development of the firm instead of the personal situations of the chief executive officer. Introduction Leaders of small firms experience a lot of concerns related to the performance of business. There are various reasons in which small firms continue to exist and grow, while others do not. A number of people think it is because of marketing strategies that are well targeted, good selection and support of staff, customer service that is outstanding, effective strategy of decision making, and a mutual vision of the future, among other things. Recent studies show that small businesses survive and succeed because of innovation (Verreynne, 2012). For small businesses, the limitation may be the process in which limited resources are best used to sustain innovation through. A research was conducted on 2,000 firms in Australia to see how various chief executive officers viewed success in small firms and the results were insightful. This report therefore illustrates what success means to small firms. Question 1 Goals and management of lifestyle firms Lifestyle firms indicated no intentions for growth. These companies basically concentrated on upholding the status quo or even decreasing the firm’s operations. The lifestyle firms viewed the firm’s success as the capacity to provide satisfaction to clients, generate profit and repay the opening investment. Apart from this, happiness, lifestyle, family, and retirement provision were reported to be important factors to the managers or owners of the company. Words and phrases like employees, clients and happiness imply that success is a personal issue, and is frequently moving to the chief executive officer. These businesses of lifestyle signified 20% of the respondents, and created a cluster that is important to employment and delivery of service in the economy of Australia (Verreynne, 2012). They have less ambition to develop, improve or export. Nevertheless, the companies were located in more secured regions of the economy and were still profitable. In June 2009, the statistic bureau of Australia estimated that there were 1.2 million firms that were non-employing, and other 500,000 that hired people ranging from one to four (Verreynne, 2012). Goals and management of growth-oriented firms Unlike the lifestyle firms which indicated no plan for growth, growth-oriented firms basically aim at development. The chief executive officers of these companies focused more on a wide range of stakeholders, including employees, shareholders and clients (Verreynne, 2012). They also regarded success as the achievement of a wider variety of goals, which entails, shareholder goals, quality of product or service and development. A small number of comments concentrated on the individual situations of the chief executive officer. A greater focus was on the company and its stakeholders. It was also reported that firms which were growth oriented were more likely to decentralize decision making, obtain sales from innovation, grow into big companies, train their staff, have a good performance and grow better. Successful organizations set goals. A company without goals has no distinct intention and nothing to endeavor for (Weiss, 2009). Goals act as steppingstones for the ultimate result. They need to be present in all business plans and be a normal part of continuous operations of business. Question 2 The personal goals of the manager of the business versus professional management goals The manager’s personal goal is to provide products and services that are very essential to the clients, mostly personal services. Since various lifestyle companies only hire the owner, and probably a few other employees, they regarded success of the firm as more personal (Verreynne, 2012). The company has to match the chief executive officer’s lifestyle goals with regards to making a living, provision for retirement and clients’ satisfaction with whom they relate closely. To make sure that the firm succeeds, it is important to manage the expectations of the customers and stakeholders carefully (Weiss, 2009). It is important to constantly keep the stakeholders appropriately informed of the firm’s progress. Through constant process of informing them, they are able to raise their concerns or thoughts frequently. Clients need to be informed when the firm is not able to deliver at the right time, or when changes are supposed to take place. Hence, honesty and openness become the optimal tools for setting the expectations of the client. Regarding professional goals, the firm’s growth is supposed to be a priority. The firms that had the intentions of growth majorly concentrated on a wide range of stakeholders and the capacity to fulfill these needs (Verreynne, 2012). For the firms that focused on growth, the professional management goals was based on innovation, training of staff, devolved decision making process, internationalization and other reasonable practices of management. Lifestyle firms indicated the practice of personal goals. This is shown when the main objective of the company is to put a lot of emphasis on the needs of the chief executive officer or the owner of the firm. Instead of focusing on the growth of the company, focus was also put on the satisfaction of the clients who were basically related closely with the management of the company. The practice of professional goals management is seen when the client’s gratification is given attention. Verreynne (2012), contended that despite the little attention given to the lifestyle firms, they accounted for a considerable proportion of population workforce of Australia which is 11 million and were also significant to the economy. Measures of performance Measurement of performance is a process in which collection and giving information concerning the performance of a person, group or organization is made (Scarborough, Wilson & Zimmerer, 2009). The basic reason behind measures is to enhance performance. Measures that do not connect directly with performance improvement are measures that provide the channel to accomplishing the final purpose. The report indicates that growing companies measured success through the achievement of a wide range of goals, and implemented a variety of managerial practices (Verreynne, 2012). The importance of performance measurement is to assess how well an organization is performing. Managers, to assess performance, are required to determine what an organization is required to accomplish then create a clear, sound mission, strategy, and goal. For an organization to effectively evaluate performance measurement, it needs standards to make comparison to its concrete performance against the performance of the past. Another significant reason of embracing performance measurement is for control purposes. Managers need to make sure that their employees are doing the proper thing. Presently, managers are not controlling their employees mechanically. Organizations have formulated systems of measurement that specify specific actions they want to perform (Scarborough, Wilson & Zimmerer, 2009). The measures of success in the high growth firms include growth of the firm, happiness of the employees, goals of the shareholders, quality product and services, profitability and satisfaction of the client (Verreynne, 2012). Another reason for performance measurement is to motive. Providing people with considerable goals to achieve and then implement measures is to focus the thinking and work of people, and to offer periodic sense of achievement. Targets of performance may also encourage creativeness in growing better methods to attain the set goals (Weiss, 2009). Hence measure to motivate advancements may also motivate the process of learning. The primary reason behind the measures should be output; therefore managers are not able to motivate employees to influence something over which they do not have enough influence. According to Verreynne (2012), growth oriented firms tend to measure their performance regularly because their aim is to have a growing firm. Hence through performance measurement, they are able to identify where areas that need correction and reinforcement are. On the contrast, lifestyle firms may not find measures of performance to be effective because they do not aim at the growth of the company. However, little practice of performance measurement may be required when it comes to customer satisfaction. This is important because the firm will be able to mark the weaknesses of poor service delivery. Businesses that are run by the family tend to show substandard management performance (Green, 2009). Measures of performance indicate how well an organization is delivering its services or products. For instance, in the report, there were several measures that were used to determine the performance of the organization which could ultimately determine the company’s success. This includes quality of the services or products delivered and the satisfaction of the customer. Customer gratification is a measure that determines the degree to which the organization is able to please its clients or customers (Scarborough, Wilson & Zimmerer, 2009). Quality on the other hand is a measure of the degree of quality of the services or products delivered by the organization. It was evident that both firms practice these measures of performance. Treatment of employees Lifestyle firms did not give so much attention to the employees because they either hired one or two workers (Verreynne, 2012). The major goal was to satisfy the chief executive officer’s needs. For the firms that are growth oriented, it was reported that training employees is an important factor to the successful growth of the company. Training employees should be a continuous process for the development of the organization (Mariotti & Glackin, 2012). This is because employees are able to acquire the latest information regarding their areas of field and in turn contribute positively towards the growth of the company. Growth oriented firms basically implemented this process of training employees because they concentrate on the growth of the company and not the needs of the firm’s owner. When employees are trained, they become motivated and their performance is significantly noticed in the growth of the firm. A human resource management practice is to select and retain the right employees who have the right skills for the right job. When this is put into consideration, the performance of the organization is likely to improve because the right skills are being exercised by the right people at the correct job. Motivating employees through reward system is a better and simple way of showing gratitude towards employees (Mariotti & Glackin, 2012). Some small firms may not value the essence of having employees in their company while others greatly acknowledge the presence of employees in the company as a means of the company’s success. For instance, the report indicates that lifestyle firm does not greatly acknowledge having employees as a means of defining the company’s success. The other firm which is growth oriented focuses on the satisfaction of the employees as a means of defining the success of the business. Range of management practices Management is among the most significant activities of people. A reasonable practice of management is fundamental to the endurance and wellbeing of small businesses of every type (Collins, Ericksen & Allen, 2005). Improving the performance of the organization is something of concern to every leader in every small organization. Leaders in small businesses have several tools that they implement for the success of their business. This ranges from finance, to marketing, to quality customer service. When all these are implemented, the performance of the company could potentially progress. Functional performance is essential to leaders in small firms because it is a representation of the effectiveness and competence with which the organization is delivering its specific services or products (Davidson, 2008). The findings of the study indicate that practices of employee management help employers of small business to improve alignment of workforce, which was characterized by selecting and maintaining the right people who possess the correct skills in the appropriate jobs. Report indicates that firms which are growth oriented mainly employ this management practice. Since lifestyle firms do not focus on employing people, the management practice of selecting the right people for the correct jobs may not be very effective. This is because the purpose of practices of human resource management is to more efficiently manage people. Research shows that firms that are managed well perform drastically better compared to firms that are poorly managed, with greater levels of profitability, productivity, rates of growth and market values (Collins, Ericksen & Allen, 2005). Management practices concerns problem solving that keep coming up every time in the process of a business struggling to attain its goals and objectives. Solving problems need to be accompanied by identification of the problem and implementing remedies of managerial issues (Ferrell, Fraedrich & Ferrell, 2008). Planning entails selecting objectives and missions and the actions to attain them (Green, 2009). Hence there is need for decision making. When people work together in groups as collaboration, they have to achieve a number of goals and must also have some roles to play (Longenecker, 2010). Conclusion The above report illustrates how success is viewed by the various small firms. It has been shown that the firm referred to as lifestyle views success in terms of satisfying the client’s needs, concentrating on the needs of the owner which include family issues, lifestyle and retirement provision. The report has helped me understand how various people view and define success of an organization. For instance, growth oriented firm has been reported to majorly focus on the development of the company and not the personal issues of the chief executive officer or the owner. This firm has been reported to view success in terms of developing the company, training employees, profitability, making employees happy and delivering quality products and services. Nevertheless, both firms agreed that success is not just about money making. The results of the report reinforce that success is based in the capacity to work out what is essential to the business; hence necessary steps should be taken to attain it. From the report, I have learnt that whether it is through sustaining a lifestyle and giving self-employment, or developing a business for the coming generations, the key factors that determine the success of a firm include having a comprehensible vision of the future and connecting it with the correct actions. Bibliography Collins, C., Ericksen, J. & Allen M. 2005, Human Resource Management Practices and Firm Performance in Small Business, Retrieved on 27 April, 2012, from http://www.mckpeople.com.au/SiteMedia/w3svc161/Uploads/Documents/1f7b84fe-4266-414c-92f3-658a2331cb2f.pdf Davidson, P. 2008, Management. Milton, Qld, John Wiley & Sons Australia. Ferrell, O. C., Fraedrich, J., & Ferrell, L. 2008, Business ethics: ethical decision making and cases. Boston, Houghton Mifflin Co. Green, R. 2009, Management Matters in Australia: Just how productive are we? Retrieved on 27 April, 2012, from http://www.innovation.gov.au/Industry/ReportsandStudies/Documents/ManagementMattersinAustraliaReport.pdf Longenecker, J. G. 2010, Small business management: launching & growing entrepreneurial ventures. Australia, South-Western Cengage Learning. Mariotti, S., & Glackin, C. 2012, Entrepreneurship & small business management. Upper Saddle River, N.J., Pearson Prentice Hall. Scarborough, N. M., Wilson, D., & Zimmerer, T. 2009, Effective small business management: an entrepreneurial approach. Upper Saddle River, N.J., Pearson Prentice Hall. Verreynne, M-L. 2012, The secret to running a successful small firm? Mind your own business, The Conversation, Retrieved on 27 April, 2012, from http://theconversation.edu.au/the-secret-to-running-a-successful-small-firm-mind-your-own-business-4917 Vilcox, M. W., & Mohan, T. O. 2007, Contemporary issues in business ethics. New York, Nova Science Pub. Weiss, J. W. 2009, Business ethics: a stakeholders and issues management approach. Australia, South-Western Cengage Learning. Read More