SHD 3412ETR 300medec*

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Small Business ManagementAt the end of the session, students should beable to:

Differentiate between small and medium-sized business and its characteristicsUnderstand the importance of management functions in small and medium-sized businessPrepare the organization plan for their proposed business/projectETR 300medec*SESSION OBJECTIVES

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Definition of SMESME is defined as a business that employs not more than 150 full time workers and generates annual sales not exceeding RM25 millionETR 300medec*- SMIDEC -

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Definition of Small-Sized BusinessSmall-sized business is defined as a business that employs not more than 50 full-time workers and generates annual sales not exceeding RM10 million.ETR 300medec*- SMIDEC -

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Definition of Medium-Sized BusinessA medium-sized business is defined as a business that employs more than 50 but less than 150 full- time workers and generates annual sales between RM10 to RM25 million.ETR 300medec*- SMIDEC -

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Characteristics of a Small Business1. Owner-manager the business is usually owned and managed by the same person. Management spending more time on operations and less time on planning.

2. Limited resources depends on ability of owner(s) to generate resources for the business thus, often limited.

3. Flexible/Vulnerable to changes easily affected to changes in the environment. Can also be an advantage because it is more flexible to adapt to changes if not subjected to high additional capital.

ETR 300medec*

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Characteristics of a Small Business

Type of business is often labor intensive rather than capital intensiveOrganisational structure of the business is often flat and informal no clear demarcation of tasksETR 300medec*

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Definition of a Business OrganizationA business organization comprises of people or human beings who carry out specific tasks or activities in a coordinated manner for the purpose of achieving objectives of the organization.ETR 300medec*

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ETR 300medec*BusinessInputsManagementFunctionsOrganizationalObjectives

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Management FunctionsPlanningOrganizingDirecting/LeadingControllingETR 300medec*

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Organizational InputsMoney or capitalPersonnel or laborTechnology or plant, machinery and equipmentRaw materials or inventoryInformationETR 300medec*

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PlanningPlanning involves all activities of formulating company policies and procedures for the purpose of achieving the stated goals in an effective & efficient manner.Long term plan focuses on strategic plan of the company.Short term plan focuses more on operational issues.ETR 300medec*

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Vision, Mission & ObjectiveVision It is the long-term goal of the organization- value statement, what the org aspires to be.

Mission It is a statement of purpose why the organization came into being (reasons for existence), identity of business, what it does, with long term target.

Objective It is the short-term goal of the organization. Support achievement of vision & mission. More specific with a definitive time frame.ETR 300medec*

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Objective The SMART ConceptA good objective should be based on the SMART concept:SSpecificMMeasurableAAchievableRRealisticTTime-frame ETR 300medec*

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OrganizingOrganizing involves activities of dividing and coordinating the tasks and responsibilities into departments, sections or unitsIt also involves establishing managerial authorityETR 300medec*

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Directing / LeadingDirecting is a process whereby specific instructions are given to the subordinates to execute the tasks assigned to themLeading the act of getting the job done through other people.Important issues unity of command, clarity of instructions & span of controlETR 300medec*

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Leading involves: Assiging jobs & responsibilitiesMotivating teams/subordinates/workersProviding feedbackReceiving feedback

Leading requires good interpersonal & communication skillsETR 300medec*

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Controlling- involves all activities of measuring and monitoring the actual to the planned performance and taking corrective actions to rectify the discrepancies if needed.- monitor progress & take corrective actions whenever deviation is found.- making sure achievement of set objectives- an ongoing function.

ETR 300medec*

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Organizational StructureEach organization has to be structured according to the purpose and function of the specific organizationThe structure should explain the following:The hierarchyDivision of task & responsibilitySpan of control

ETR 300medec*

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Organizational ChartIt is a schematic representation of the organizational structureIt shows:The hierarchySpan of controlIntra-relationshipDivision of jobs and responsibilities*

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Types of Organizational StructureStructure based on FunctionsExample: Finance, Marketing or Operations Departments.DivisionalStructure based on productsSructure based on regions or geographical locationStructure based on clients or customerOthersStructure based on shiftsStructure based on number of workersETR 300medec*

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Designing Organisational Structure Set organisational goalIdentify & summarize all required tasks.Group / garther according to unitAssign leader for each unit (with responsiblities & authority).Arrange to show chain of command.Prepare controlling mechanism. ETR 300medec*

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Personnel PlanningStrategies to ensure:orgaisation has adequate workersorgaisation has qualified workers workers remain in the organisation workers can contribute to attainment goals.

ETR 300medec*

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Personnel / Manpower Planning1. Perform job analysisWhat task to perform and in what order?How critical or difficult is the task?How many workers are needed?Job designation?2. Develop job descriptionTask and responsibilities of each job designation3. Develop job specificationMinimum qualification needed to effectively perform the job

ETR 300medec*

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Manpower PlanningRecruitment Procedures & Remuneration ScheduleSpecify the recruitment proceduresHiringSelectionRetentionIdentify sources of personnelDetermine the remuneration scheme (basic salary, EPF, SOCSO, allowances, commission, etc)Fringe benefits (holidays, medical, insurance, bonus, maternity, etc)ETR 300medec*

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Preparation of Business Plan:The Organization PlanETR 300medec*a.General business descriptionb.Organizational chartc.Table of job designation and number of workersd.Job descriptione.Remuneration tablef.List of office furniture, fixtures and fittingsg.The administrative budget

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Office PlanningPremise - Buy or rent?Buy What is the cost?Rent Rental per month/depositCost of renovationList of office equipments & furnitureQuantity and cost per unitIdentify the source

ETR 300medec*

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Office Planning (cont.)Administrative OverheadsSalary of administrative personnelUtilities telephone, electricity & water, rental of equipmentOther ExpendituresOffice stationeriesBusiness registration feesMiscellaneous expendituresOffice Layout PlanETR 300medec*

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Administrative BudgetCost of premiseBuy/Build cost of buying/buildingRent monthly rentalsRenovation costTotal cost of furniture and equipmentsMonthly administrative overheadsOther expendituresRental & utilities depositsETR 300medec*

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