Business Lesson 7-8
The Grantt Chart Benifits
-It aids in the breakdown of tasks into specific elements. -It allows for the monitoring of projected timelines. -It identifies which tasks are dependent upon a prior task or element, and which are independent and can be completed at any time.
Established Business Executive Summary
-Mission Statement (what you're about) -Company Information (date when it was formed, founders, number of employees etc.) -Growth Highlights (examples of company growth can have graphs and charts) -Your Products/Services (describe products or services you provide) -Financial Information (if you are seeking financing, include info about current bank and investors) -Summarize Future Plans (where you would like to take your business)
Service or Product Line Section (Business plan)
-a description of your product/service -Details about your Product's life cycle -Intellectual property -Research and Development (R&D) activities
Appendix (business plan)
-can include items such as credit history, resumes, letters of reference, any other additional information that a lender may request
Financial Projections
-develop financial projections section after you've analyzed the market and set clear objectives Historical Financial Data -most creditors request data for the lat three to five years (depends on ur bus.) Prospective Financial Data -creditors want to see what your company will be able to do in the next 5 years (both include budgets, income statements, balance sheets, cash flow statements etc.)
tips to help choose the right business location (cont.)
-hidden costs -taxes (property taxes) -minimum wage (higher in different states etc.) -government economic incentives (gov loans etc.)
management
-might be referring to different aspects -managers - those people in strategic positions who make important decisions for the organizations (exe. officers, president etc.) -or referring to the activities and functions of an organization to achieve organizational goals Management is the process of planning, organizing, leading, and controlling people in the organization to effectively use resources to meet organizational goals.
Henri Fayol (France 1841)
-saw that a horse broke a leg and nobody had authority to buy a new one -started experimenting with dif. managment. struct. -published in 1916: General and Industrial Management -focused on how workers were managed and how they contributed to the organization
Frederick Winslow Taylor
-used sientific techniques brrowed from botanists chemists, such as analysis, observation, rationality and logic a worker should get "a fair day's pay for a fair day's work" - If the worker couldn't work to the target, then the person shouldn't be working at all management and labor should cooperate and work together to meet goals fist to suggest primary functions of managers should be planning and training. 1909, Taylor published The Principles of Scientific Management - productivity would increase if jobs were optimized and simplified (specialization too)
10 Steps to Starting a Business
1. Write a Business Plan 2. Get Business Assistance and Training 3. Choose a Business Location 4. Finance Your Business 5. Determine the Legal Structure of Your Business 6. Register a Business Name ("doing Business as") 7. Get a Tax Identification Number 8. Register for State and Local Taxes 9. Obtain Business Licenses and Permits 10. Understand Employer Responsibilities
Why Some Ventures Fail
About half of all new establishments survive five years or more and about one-third survive 10 years or more
an entrepreneur
An entrepreneur could be defined as someone who takes a risk by creating a new and innovative product or service for profitable purposes Entrepreneurship is doing, not just thinking Entrepreneur is not just a job, it is a mindset, and a way of being. (small business owners not necessarily entrepr.) The entrepreneur's challenge is to balance decisiveness with caution
management functions should include:
Applying and distributing organizational resources effectively Acquiring new resources when necessary Analyzing and adapting to the ever-changing environment in which the organization operates Complying with legal, ethical, and social responsibilities of the community Developing relationships with and among people to execute the strategies and plans
Fayol also proposed 14 principles (to guide management behavior)
Scalar chain: An unbroken chain of command extends from the top to the bottom of the organization. Unity of command: Employees receive orders from only one superior. Unity of direction: Activities that are similar should be the responsibility of one person. Division of work: Workers specialize in a few tasks to become more proficient.
Serial entrepreneurs
Serial entrepreneurs often take on many new ventures, one after another, over the course of their lifetimes. These entrepreneurs either create, invest in, or sell multiple new businesses. -may be focused on short-termed success then long-term (Oprah Winfrey)
Digital Taylorism
is based on maximizing efficiency by standardizing the tools and techniques for completing each task involved with a given job. -every task broken down -provides predictability and consistency while reducing errors
intellectual resources
knowledge and experience
lifestyle entrepreneurs
lifestyle entrepreneurs have long-term goals to build entrepreneurial empires with a primary focus on nurturing their primary enterprise as a way of living. turn the lifestyle they want into a viable and profitable business (traveling, working from home etc.)
An autocratic leader
makes decisions without significant employee involvement in the process. He works from an authoritarian perspective
NOTE
Experts can help with many decisions on financing, taxes, insurance, location analysis, or supplier relationships. Some bankers and insurance agents will give advice at no charge to encourage a relationship
Mary Parker Follett
"the mother of Modern management" developed many concepts that applied to business and management -A better understanding of lateral processes within organizational hierarchies: (grid instead of pyramid -The importance of informal processes within organizations: -Noncoercive power sharing, which she called integration, to describe how power operates in an effective organization: (group principle, how workers and managers have equal importance and make equal contributions) -Coining the term "win-win" to describe cooperation between managers and workers: She also talked about empowerment and facilitation rather than control. -Promoting conflict resolution in a group based on constructive consultation of equals rather than compromise, submission, or struggle: This is known as the constructive conflict concept. Developed the idea that "social cooperation is better than individual cooperation"
Henry Gantt (1861-1919)
(associate of taylor) two key contributions -The Gantt chart and the Task and Bonus System
The executive summary
(most important) where your company is, where you want to take it and why your business idea will be successful if you need financing, the exe. summary is first opportunity to grab potential investor's interest -highlights the strengths of your plan and is the last thing you should write The executive summary is the first part of your business plan many people will see, so each word should count.
Fayol's five duties of management
1. Foresight: Create a plan of action for the future. 2. Organization: Provide resources to implement the plan. 3. Command: Select and lead the best workers through clear instructions and orders . 4. Coordinate: Make sure the diverse efforts fit together through clear communication. 5. Control: Verify whether things are going according to plan and make corrections where needed. (evolved into four functions of management: planning, organizing, leading, and controlling)
Four Ways A Small Business and Entrepreneurs contribute to the economy
1. Job creation 2. Innovation 3. Opportunities for individuals to achieve financial success and independence 4. Support large business by providing component parts, services, and product distribution
6 main causes of Small Business Startup Failure
1. Lack of planning 2. Failure to Delegate 3. Unwillingness to Change 4. Forgetting That Cash Is King 5. Lack of Objective Targets 6. Failure to Ask the Right Questions
Important considerations
1. Motivation - incentive for starting a business ($) 2. Strategy - products or services business will provide? ideal customer? competition? 3. Realistic Vision - how much will it cost, do you need a loan, etc. how long will it take till profit? Some analysts advise adding 50 percent to final cost estimates and reducing sales projections.
8 steps to hiring process
1. Obtain an Employer Identification Number (EIN) 2. Set up Records for Withholding Taxes 3. Employee Eligibility Verification 4. Register with Your State's New-Hire Reporting Program 5. Obtain Workers' Compensation Insurance 6. Post Required Notices 7. File Your Taxes 8. Get Organized and Keep Yourself Informed
Control Process
1. Setting performance standards: 2. Measuring actual performance: 3. Comparing actual performance with standards or goals: 4. Analyzing deviations: 5. Taking corrective action:
The Small Business Administration (SBA)
A government agency that helps small business owners develop business plans and obtain financing and other support for their companies.
Long-term plan
A long-term plan is crucial to the ultimate success of the organization -4-5yrs in the future Or 2-3yrs for fast pace
Transformational Leadership
Changing the desires of the follower to match the desires of the leader
Edgar Schein: 4 Common Elements of Organizations
Common purpose Coordinated effort Division of labor Hierarchy of authority
4 dept structured
Functional Structure - further specialization, very productive but causes job dissatisfaction because of repetition Product Structure - for companies with multiple products , shorten development cycles. Difficult to scale and might end up with duplicates Customer Structure - perfect when the organizations product or service needs to be tailored to specific customers (also duplicates Geography Structure - if orgn. Spans multiple locations needs to be localized. involves grouping activities based on geography, important if tastes and brand responses differ across regions
6 Characteristics or Rules of Bureaucracy
Hierarchical Management Structure - Each level controls the levels below and is controlled by the level above. Authority and responsibilities are clearly defined for each position. Division of Labor - Tasks are clearly defined and employees become skilled by specializing in doing one thing. There is clear definition of authority and responsibility. Formal Selection Process - Employee selection and promotion are based on experience, competence, and technical qualification demonstrated by examinations, education, or training. There is no nepotism. Career Orientation - Management is separate from ownership, and managers are career employees. Protection from arbitrary dismissal is guaranteed. Formal Rules and Regulations - Rules and regulations are documented to ensure reliable and predictable behavior. Managers must depend on formal organizational rules in employee relations. Impersonality - Rules are applied uniformly to everyone. There is no preferential treatment or favoritism.
Four categories for Transformational Leadership
Idealized influence: The leader provides a model for the followers by acting according to his or her own standards - leader hopes to gain respect of the followers by acting as a role model Inspirational motivation: The leader presents his or her followers with a compelling vision. -optimistic, enthusiastic. gives values, meaning, mission and challenge (to inspire and do teamwork) Intellectual stimulation: The leader asks for creativity and innovation from followers. - encourages others to find innovative solutions Individual consideration: The leader provides mentorship to his or her followers and rewards them as they develop. - develops individual strengths, let them make decisions and provide support
Advantages of Small-Business Ownership
Independence, Financial gain, Control, Prestige, Equity, Opportunity
LESSON 7
LESSON 7
LESSON 8
LESSON 8
Management vs. Leadership
Management is doing things right; leadership is doing the right things.
Marketing and Sales (Business Plan)
Marketing is the process of creating customers, and customers are the lifeblood of your business. -define marketing strategy then define sales strategy
Pros and Cons of Organizational Control
Pros: communications, financial stability, increased productivity, help in meeting annual goals, legal compliance, improved morale, fraud error prevention Cons: comes at an expense (money) over reliance on controls lead to relaxation in supervision and allow manipulation of accounts and assets. Employees follow letter of rules not the intent
A vision statement
is a statement of an organization's overarching aspirations of what it hopes to achieve or to become -It should inspire people and motivate them to want to be part of and contribute to the organization
places to help you figure out "know what you don't know"
SBA, local economic development agencies, and chambers of commerce
The mission statement
The vision statement describes where the organization wants to be in the future; the mission statement describes what the organization needs to do now to achieve the vision -mission statement more specific The mission statement leads to strategic goals. Strategic goals are the broad goals the organization will try to achieve
Social entrepreneurs
Social entrepreneurs still work to create innovative products and services, but the number one goal is not for self-benefit but, rather, for the benefit of all. Jane Chen - created the Thermpod (sleeping bag device that saves low birth infants)
Market Analysis
The market analysis section of your business plan should illustrate your industry and market knowledge as well as any of your research findings and conclusions. -Industry Description and Outlook (life cycle stage, next projected growth rate) -Information about your Target Market (narrow it down to manageable size) -distinguishing characteristics -size of primary target market -How much market share can u gain? -Pricing and gross margin targets (define pricing structure) -Competitive analysis (which areas are being ignored by ur competitors) -Regulatory restrictions (gov/customer regulatory requirements affecting your business and how you'll comply
Organizational control
The purpose of organizational control is to ensure that a specific function is performed according to established standards
Alaissez-faire approach
is a very hands-off approach to leadership. Instead, employees make decisions on their own.
Job creation statistics
Through the first three quarters of 2014, small businesses added 1.4 million net new jobs
Disadvantages of Small-Business Ownership
Time commitment, Risk, Uncertainty, Financial Commitment
Employer Identification Number (EIN)
is also known as a Federal Tax Identification Number, and is used to identify a business entity.
The entrepreneur's challenge is to balance decisiveness with caution
a person capable of seizing an opportunity but also one who has done enough preparatory work to be well informed and not assume unnecessary risk
progressive rate system
a plan to reward workers who were willing to work harder for additional wages
The Gantt Chart
a toll that provides a visual (graphic) representation of what occurs over the course of a project focus of the chart is: The Sequential Performance of Tasks that comprise a project. -identifies key tasks -assigns time to complete a task -starting date for each element of a task Terminal elements - that must be completed as part of a larger task the related terminal elements together created what he called the summary element (aka the completed task)
nodirective itnerview method
allowed researches to be more informal and social to develop relationships with the workers mayo discovered there were several reasons why productivity increased despite the withdraw of benefits: -a feeling of group cohesion -the friendlier attitude of the researchers (supervisors) -the attention that being part of the study brought to the individuals reason why productivity increased was that the subjects were simply "having more fun" Mayo theorized workers were motivated more by social dynamics then by economic or environmental factors
Standing plans
are plans designed to be used again and again. Examples include policies, procedures, and regulations
Frank and Lillian Gilbreth
came up with the idea of filming workers to analyze their motions (called time and motion studies) - for analyzing most productive way to complete a said task also creating training videos
top-level managers (top managers)
chief executive officer (CEO), chief operations officer (COO), chief marketing officer (CMO), chief technology officer (CTO), and chief financial officer (CFO).
The Values Statement (code of ethics)
defines what the organization believes in and how people in the organization are expected to behave—with each other, with customers and suppliers, and with other stakeholders.
middle managers
department head, director and chief supervisor (links between the top managers and the first-line managers) Middle managers receive broad strategic plans from top managers and turn them into operational blueprints with specific objectives and programs for the first-line managers
An operational plan
describes the specific goals, objectives, and milestones set by an organization during a specific period Objectives are specific tasks undertaken to meet broader goals.
A contingency plan
describes what will happen in a possible—but not expected—situation (For emergency)
humanistic management
emphasis on interpersonal relationships looked to the individual worker and group dynamics rather the to authoritative managers for effective control
First-Line Managers
entry level of managements, the ones that are closest contact with the workers directly responsible for making sure that organizational objectives and plans are implemented efficiently focused on internal issues of organization, first to see problems with the operation of the business (untrained labor, poor quality materials, machinery breakdowns etc.)
Preparatory work
evaluating the market opportunity, developing the product or service, preparing a good business plan, figuring out how much capital is needed, and making arrangements to obtain that capital
SBA two standards of a "Small Buisness
five hundred (or fewer) employees $7.5 million (or less) in average annual receipts for many nonmanufacturing industries
Employee-centered styles of leadership (people centered or relationship centered)
focus less on objective actions or plans and more on building the relationships between the leader and the followers -leader helps them be more productive thru inspiring and helping
Task-centered styles of leadership
focus on giving instructions and directions to group members to reach achievement and accomplishment goals more efficiently and effectively -what needs to be done -employees seen as resources
four broad departmental structures
functional, product, customer, and geographic.
Short-term plans (operational plans)
generally allocate resources for a year or less. They may also be referred to as operational plans because they are concerned with daily activities and standard business operations
Company Description (what to include)
high level overview of the different elements of your business. Help readers understand quickly the goal of your business and unique proposition. -describe nature of your business (and marketplaces you're trying to satisfy) -explain how products/services meet those needs -list specific consumers, organizations or businesses that your company serves or will serve -explain competitive advantages your business will have (location, expert personnel, operations etc.)
Organization and Management (business plan)
include company's organizational structure details about ownership of company, profile of your management team, qualifications for board of directors description of each division or department and its function
classical school of management
increasing worker productivity by scientific analysis gilberth's and taylor both belonged to this -they differed on the importance of the worker -Taylor focused on profitability and productivity -The gilberths focused on worker welfare and motivation -They believed that by reducing the amount of motions associated with a particular task, they could increase the worker's well-being -eventually led to the science of ergonomics (scientific discipline concerned with understanding the interactions of humans with other elements of a system)
innovation statistics
innovations benefited our society by allowing to attain prosperity and a good quality of life Small, innovative firms are sixteen times more productive than large innovative firms in terms of patents per employee Small firms' green technology patents are cited 2.5 times as often as large firms small firms are more likely than larger firms to have green technology as a core part of their business
A SWOT analysis
is a method that examines the internal strengths and weaknesses of an organization as well as external opportunities and threats (social, political, economic, legal environmental) that would affect that organization. strengths, weaknesses, opportunities, and threats.
management of the organization (upper management)
people with responsibility and authority to determine the overall direction of the organization -aware of the conditions in the organizations environment and knowledge of the company's resources
Single-use plans
refer to plans that address a one-time project or event -project or budget
vertical management (top-down management)
refers to the various levels of management within an organization -disadvantage: limits information flow from the lower levels of the organization to the upper levels -vertical thinking: using traditional and recognized methods to solve particular problems
Transactional leadership theorie
s assume that the desires of the leader and the desires of the follower are not the same. -leader has to motivate follower otherwise follower will not do what the leader wants
The Hawthrone experiments (scientific management experiments)
series of studies took place in Western Electric Plant near Chicago during 1920s - 1930s original exp. - to isolate factors in the workplace that affected producitivity researchers offered better lighting, breaks, shortened work schedules, meals and savings and stock plans reguardless of twether the changed was positive or negative, the producitiy of the test subjects increased (lightning increased, productivity increased although productivity still increased until lighting was legit candlelight)
A democratic approach
strongly involves the employee team in the decisionmaking process.
Manager Skills
technical skills - skills that are described in a job bulletin conceptual skills - the ability to use "concepts" to solve problems human skills - communication skills etc. same skills mentioned above
scientific management
the application of scientific principles to increase efficiency in the workplace FOUR CORE PRINCIPLES: -Look at each job or task, scientifically, to determine the "one best way" to perform the job. This is a change from the previous "rule of thumb" method where workers devised their own ways to do the job. -Hire the right workers for each job and train them to work at maximum efficiency. -Monitor worker performance and provide instruction and training when needed. -Divide the work between management and labor so that management can plan and train, and workers can execute the task efficiently.
opportunity statistics
• About one-third of employer firms (33.6 percent) in the accommodation and food services sector were minority owned. • Among all employer firms in the educational services and the health care and social assistance sectors, 28.0 percent were owned by women. • About one-quarter (254,260, or 24.0 percent) of all women-owned employer firms were minority owned. More than half (137,321, or 54.0 percent) of these minority-women-owned employer firms were Asian owned.
Planning
the process of setting goals and defining the actions required to achieve the goals -begins with goals -derived from vision or mission -what it wants to achieve not what it can achieve -situation effects goals
material resources
the tangible, physical resources an organization uses (money and equipment)
summary element
the terminal elements all together (the completed task)
The Task and Bonus Plan
wanted to establish a standard (average) time for a peice of work or task, -if worker took more time, their pay was "docked" -if they took less time they were paid a bonus up to 20 percent more (progressive rate system)
Max Weber (born in 1864 in Germany)
was interested in industrial capitalism -an economic system where industry is privately controlled and operated for profit -visited the U.S. in 1904 to study the economy -Captilism in the U.S encouraged competition and innovation -contrasted US. with Germany and discovered: rational authority
Rational Authority
where the authority was based on competence and qualifications (would be more efficient than those based on who you knew) Weber called this type of rational organization a bureaucracy. Weber thought bureaucracy would result in the highest level of efficiency, rationality and worker satisfaction
tips to help choose the right business location
• Brand image: Is the location consistent with the image you want to maintain? • Competition: Are the businesses around you complementary or competing? • Local labor market: Does the area have potential employees? What will their commute be like? • Plan for future growth: If you anticipate further growth, look for a building that has extra space should you need it. • Proximity to suppliers: They need to be able to find you easily as well. • Safety: Consider the crime rate. Will employees feel safe alone in the building or walking to their vehicles? • Zoning regulations: These determine whether you can conduct your type of business in certain properties or locations. You can find out how property is zoned by contacting your local planning agency.
To be a Small Business must also meet the following requirements
• Is organized for profit • Has a place of business in the United States • Operates primarily within the United States or makes a significant contribution to the United States economy through payment of taxes or use of American products, materials, or labor • Is independently owned and operated • Is not dominant in its field on a national basis may be a sole proprietorship, partnership, corporation, or any other legal form
small business statz
• The 28 million small businesses in America account for 54 percent of all U.S. sales. • Small businesses provide 55 percent of all jobs and 66 percent of all net new jobs since the 1970s. • The 600,000+ franchised small businesses in the United States account for 40 percent of all retail sales and provide jobs for some 8 million people. • The small business sector in America occupies 30 percent to 50 percent of all commercial space—an estimated 20 billion to 34 billion square feet. • The number of small businesses in the United States has increased 49 percent since 1982. • Since 1990, as big business eliminated 4 million jobs, small businesses added 8 million new jobs.
traits of an entrepreneur
• Vision • Passion • Perseverance • Self-discipline • Problem-solving skills • Creativity • Empathy a true entrepreneur would never rely on a survey to determine how worthy or ready they are to become an entrepreneur
Funding Request (Business Plan)
• Your current funding requirement • Any future funding requirements during the next five years • How you intend to use the funds you receive: Is the funding request for capital expenditures? Working capital? Debt retirement? Acquisitions? Whatever it is, be sure to list it in this section. • Any strategic financial situational plans for the future, such as: a buyout, being acquired, debt repayment plan, or selling your business
