Small business management and Entrepreneurship

1. Small business management andEntrepreneurship David Stokes Nicholas Wilson Small Business Management and Entrepreneurship Fifth Edition

2. Lecture outline • Successful small business strategies • What is a strategy? • New venture strategy • Survival strategy • Growth strategy • A composite model

3. Strategy • Strategy can be described as either being a plan, pattern, perspective that brings together an organization’s major objectives, policies, and activities into a cohesive whole. • Objectives represent what is to be achieved • Policies are rules or guidelines with define limits • Activities are detailed actions necessary to achieve objectives

4. Deliberate strategy • Strategy may be formulated as a deliberate plan of stated, or unstated, intensions. Some entrepreneurs produce a business plan before startup, which sets out their intended course of action

5. Emergent strategy • Some strategies are not conceived in advance but emerge as a consistent pattern during the course of events. • Marketing approaches which are often on a reactive basis until a pattern emerges • Management strategies, especially those involving people, often emerge as unplanned reactions to factors previously unknown.

6. Realized strategy • Strategies which are usually a mixture of deliberate and emergent strategies.

7. New venture strategy • Entrepreneurs and small business founders face several problems when starting a new venture most important being the shortage of resources. This forces the founder to exploit a particular strategy which has been termed asset parsimony. The so called “parsimonious path to profit” can be categorized in the following ways: • Never buy new what can be bought second hand • Never buy what can be rented • Never rent what can be borrowed • Never borrow what can be begged • Never borrow what can be salvaged

8. Opportunity recognition • Competitive advantage or profitability

9. Survival strategy • Critical factors in closure of small businesses • Insufficient turnover • Poor management and supervision • Lack of proper accounting • Competition • Not enough capital • Bad debts • Excessive remuneration to the owners

10. We can also categorize the causes in terms of: • External influences • Internal factors

11. Management, marketing and money • Factors which are controllable by the owner-manager • Management – concerned with the effective and efficient use of resources • Marketing – represents relationship of the enterprise with the customers • Money – enables the whole system to work

12. Strategies beyond survival • The strategies will depend on the objectives of the enterprise. • Motives can point to one strategy which is opposed by money or management • Management considerations may indicate a strategy which is opposed by the motives of the owner • Marketing strategies may run counter to motives • Money influences may be diminished by personal motives.