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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Chapter 17

Professional Management Professional Management in the Growing Firmin the Growing Firm

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Learning Objectives: Chapter 171. Discuss the distinctive features of small firm management.

2. Identify the various kinds of plans and approaches to planning.

3. Discuss the entrepreneur’s leadership role.

4. Describe the nature and kinds of small business organization.

5. Discuss the ways in which control is exercised in a small firm.

6. Describe the problem of time pressure and suggest solutions.

7. Explain the various types of outside management assistance.

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Managerial Work and Organizational Growth

Stage Workload

1. One-Person Doing all the workOperation Making contacts

with customers

2. Player-Coach Still doing some basic work

Learning to hire andsupervise

3. Intermediate Rising above hands-onSupervision management

Working throughintermediate managers

4. Formal Using plans and budgetsOrganization Following policies and

procedures

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Managing vs. Doing

STAGE 1 STAGE 2 STAGE 3 STAGE 4One-PersonOperation

Player-Coach IntermediateSupervision

FormalOrganization

Time spent managing Time spent doing

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Age of Company When It Brought in Outside Managers

6 months or less7 months to 1 year13 months to 2 years25 months to 5 yearsMore than 5 years

8%7%16%40%28%

Time Period Percentage of Firms*

*Numbers do not add up to 100 because of rounding.Source: “Employee Package Deal,” Inc. 500 (Special Issue), Vol. 19, No. 15 (1997), p. 30.

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Management Functions

1. Planning

2. Leading/Motivating

3. Organizing

4. Controlling

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Varieties of Small Business Communication

1. Informal face-to-face conversations

2. Discussions of job-related matters

3. Staff meetings

4. Bulletin boards

5. Suggestion boxes

6. Talks to employees at meetings or dinners

7. Memos or letters

8. Performance review sessions

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Line Organization

President

Financial/Office Manager

ProductionManager

Sales Manager

Salespersons Plant Employees Office Employees

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Line-and-Staff Organization

President

Assistant tothe President

Human ResourceManager

Financial/Office Manager

ProductionManager

Sales Manager

Salespersons Plant Employees Office Employees

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Factors Determining Optimum Span of Control

Fewer SubordinatesComplex workInexperienced workersSuperior with limited ability

More SubordinatesModerately difficult workModerately experienced workersSuperior with moderate ability

Greater Number of SubordinatesSimple workVery experienced workersSuperior with much ability

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Stages of the Control Process

Preventive Control Concurrent Control Corrective Control

Input Stage Process Stage Output Stage

Examples:

Inspection of rawmaterials

Careful selection of employees

Examples:

Quality control of work in process

Check of adherenceto safety procedures

Examples:

Inspection of completed product

Comparison of actualexpense with budgetedexpense

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Hours per Week Worked by New Business Owners

50-59 hours23%

Fewer than 50 hours 23%

60-69 hours28%

70 79 hours 13%

No data 1%

80 hours and up 12%

Sources: Data developed and provided by the NFIB Foundation and sponsored by the American Express Travel Related Services Company, Inc.

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Business Incubators

Entrepreneurial Networks

Sources of Management Assistance

Student Consulting

Teams

SCORE

Management Consultants

OtherProfessionalsSmall Business

Development Centers

(SBDCs)

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Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Computer Services

Management Counsel

Services Provided by Business Incubators to New Firms

Business Incubator

Low-Cost Space

Access to Financial Resources

Practical Business Expertise

Credibility

Links to Accounting, Legal, and Other Professional Services

Photocopying, Receptionist, Word-Processing Services

Entrepreneurial Education