Effective Management

Small Business Management 16e

Professional Management andthe Small BusinessPowerPoint Presentation prepared by Charlie Cook, The University of West Alabama 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Chapter19PART 5MANAGING GROWTH IN THE SMALL BUSINESS

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192 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.After studying this chapter, you should be able toDiscuss the entrepreneurs leadership role.Explain the distinctive features of small firm management.Identify the managerial tasks of entrepreneurs.Describe the problem of time pressure and suggest solutions.Explain the various types of outside management assistance.

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Small Business LeadershipWhat is Leadership?Involves pointing the way: creating and communicating the entrepreneurs vision of the firm.Varies in a business as it grows larger and more mature.Leadership Qualities of FoundersA tolerance for ambiguityA capacity for adaptation193 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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Small Business Leadership (contd)What Makes an Effective Leader?One who is focused intently on attaining the firms business goals.One who creates a significant personal relationship with employees based on loyalty and respect.One who directly influences employees understanding of how the firm operates (e.g., its ethics).One who makes the firm attractive to new employees.194 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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Small Business Leadership (contd)Leadership StylesVisionary leaders mobilize people toward a vision.Coaching leaders develop people, establishing a relationship and trust.Affiliative leaders create emotional bonds.Democratic leaders build consensus through participation.Pacesetting leaders set high standards and expect excellence.Commanding leaders demand immediate compliance.195 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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Small Business Leadership (contd)Leaders Shape the Culture of the OrganizationEmpowermentGiving employees authority to make decisions and take actions on their ownWork teamsGroups of self-managed employees with the freedom to function without close supervisionWorking environmentWorkers are affected by their surroundingGood HiringEmployees who fit the personality of the firm196 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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Distinctive Characteristics of Small Firm Management197 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Professional-Level ManagementManagerial WeaknessManagement of Small FirmsResource ConstraintsFirm Growth and Managerial Practices

Founders asManagers

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198 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.EXHIBIT 19.1Organizational Stages of Small Business Growth

Stages in Firm Growth and Management199 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.Growth StageEntrepreneurs WorkloadStage 1. One-Person OperationDoing all of the work. Making contact with customers.Stage 2. Player-CoachContinuing to do some of the basic work, although learning to hire and supervise.Stage 3. Intermediate SupervisionRising above hands-on management; working through intermediate managers.Stage 4. Formal OrganizationUsing plans and budgets; following policies and procedures.

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Managing Versus Doing1910STAGE 1STAGE 2STAGE 3STAGE 4

One-PersonOperationPlayer-CoachIntermediateSupervisionFormalOrganizationTime spent managing

Time spent doing

2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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Managerial Responsibilities of Entrepreneurs1911 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Creating an Organizational StructureControllingOperationsPlanning ActivitiesLeading and DelegatingEntrepreneurial Management

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Planning ActivitiesThe Benefits of Formal PlanningImproved productivityBetter focus on goal attainmentIncreased credibility with stakeholdersPlanning TimeTyranny of the urgentPlanning requires disciplinePlanning should not be postponedEmployee ParticipationEmployees are an excellent planning resource1912 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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Planning Activities: Types of Plans 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.1913Type of PlanPurposeLong-range plan(strategic plan)A firms overall plan for the futureShort-range planA plan that governs a firms operations for one year or lessBudgetA document that expresses future plans in monetary termsBusiness policiesBasic statements that provide guidance for managerial decision makingProceduresSpecific work methods to be followed in business activitiesStandard operating proceduresAn established method of conducting a business activity

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1914Creating an Organizational StructureThe Unplanned StructureStructure evolves as the firm evolves.Growth creates the need for structural change.Chain of CommandThe official, vertical channel of communication in an organizationA channel for two-way communicationSpan of ControlThe number of subordinates supervised by one manager 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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Creating Structure (contd)Line OrganizationA simple organization in which each person reports to one supervisorLine and Staff OrganizationAn organizational structure that includes staff specialists who assist managementLine activitiesActivities contributing directly to the primary objectives of the firmStaff activitiesActivities that support line activities1915 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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1916 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.EXHIBIT 19.2Line-and-Staff Organization

Factors Determining Optimum Span of Control 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.1917

Many SubordinatesSimple workVery experienced workersSuperior with much abilityFew SubordinatesComplex workInexperienced workersSuperior with limited abilityMore SubordinatesModerately difficult workModerately experienced workersSuperior with moderate ability

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Creating Structure (contd)Understanding Informal GroupsHave something in common.Have an informal leadership hierarchy.Are beneficial if group goals are aligned with organizational goals.1918


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Delegating AuthorityDelegation of AuthorityGranting to a subordinate the right to act or make decisionsBenefits of DelegationFrees up superior to perform more important tasksDevelops subordinates skillsImproves two-way communications1919


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Controlling Operations 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.1920

Measuring PerformanceEstablishing standardsPlanning and Goal SettingTaking Corrective Action

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1921 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.EXHIBIT 19.3Stages of the Control Process

CommunicatingStimulating Two-Way CommunicationPeriodic performance review sessions for feedback.Bulletin boards to keep employees informed.Blogs and wikis for internal communicationSuggestion boxes to solicit employees ideas.Staff meetings to discuss issues and problems.Informal meetings with employees to socialize and talk.1922


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NegotiatingNegotiationTwo-way communication used to resolve differences in needs, goals, or ideas.Win-lose negotiationsOne party must win and the other party must lose.Win-win negotiationsBoth parties find a solution that satisfies both parties basic interests.End result of negotiations promotes long-term continuing relationships.1923


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1924 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.EXHIBIT 19.4Presentation TipsDo your homework.Know your material spot on.Be interactive.Make vivid mental connections in the minds of listeners.Emphasize relevance.Be dynamic, but be yourself.Use PowerPoint with care.Dress appropriately.Avoid food and drink that make speaking difficult for you.Practice, practice, practice.Sources: Adapted from Naomi Rockler-Gladen, Fear of Public Speaking, January 12, 2007, http://collegeuniversity.suite101.com/article.cfm/fear_of_public_speaking, accessed March 15, 2007; Presentation Tips for Public Speaking, A Research Guide for Students, http://www.aresearchguide.com/3tips.html, accessed March 15, 2007; and Kimberly L. McCall, All That Jazz, Entrepreneur, Vol. 34, No. 1 (March 2006), p. 36.

Personal Time ManagementThe Problem of Time PressureMany owner-managers work 60-80 hours per week.Effect of overwork is inefficient work performance.Time Savers for Busy ManagersEffective use of time (time management)Analyze how time is normally spentEliminate practices that waste timeCarefully plan available timeUse a daily planner to prioritize activitiesDont avoid unpleasant or difficult tasksLimit conference and meeting times1925 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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Outside Management AssistanceThe Need for Outside AssistanceTo supplement entrepreneurs personal knowledge and experience.To provide opportunities to share ideas with peers.To reduce feelings of loneliness and working in isolation.To have access to outsiders detached, objective viewpoints, insights and ideas.To gain fresh knowledge of methods, approaches, and solutions beyond the experience of the entrepreneur.1926 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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Outside Management Assistance1927 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Business IncubatorsStudent Consulting TeamsService Corps of Retired Executives (SCORE)Small Business Development Centers (SBDCs)Management ConsultantsEntrepreneurial NetworksOther Business and Professional Services

Source of Outside Management Assistance

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1928 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.EXHIBIT 19.5Services Provided by Business Incubators to New FirmsBusinessIncubator

empowermentwork teamsprofessional managerlong-range plan(strategic plan)short-range planbudgetchain of commandline organizationline-and-staff organizationspan of controldelegation of authoritynegotiationService Corps of Retired Executives (SCORE)small business development centers (SBDCs)networking1929 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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Effective Management