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Managing a Business
Contents
Finance .................................................................................................................................................... 2 1
Using Budgets ..................................................................................................................................... 2
Improving Cash Flow ........................................................................................................................... 4
Measuring and Increasing Profit ......................................................................................................... 5
People in Business................................................................................................................................... 7
Improving Organisational Structures .................................................................................................. 7
Measuring the Effectiveness of the Workforce ................................................................................ 10
Developing an Effective Workforce: Recruitment, Selection & Training .......................................... 11
Developing and Retaining an Effective Workforce: Motivating Employees ..................................... 13
Operations Management ...................................................................................................................... 15
Making Operational Decisions .......................................................................................................... 15
Developing Effective Operations: Quality ......................................................................................... 17
Developing Effective Operations: Customer Service ........................................................................…read more

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Managing a Business
Finance
2
Using Budgets
The Benefits & Drawbacks of Using Budgets
Benefits
Provide direction and co-ordination. They ensure spending is geared towards the aims of the
individual, and they can ensure a united approach within an organisation.
They motivate staff. The responsibility and recognition gained from meeting targets can be
linked to achievement targets.
They improve efficiency. By monitoring and evaluation budgets the business is able to
establish standards and investigate the causes of successes and failures.
They assess forecasting ability.…read more

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Managing a Business
Analysing Profits Budgets
Profits below budget are likely to be a cause of concern for most businesses. These can be caused by 3
excess expenditure, by revenue falling short of expectations, or by a combination of these factors.
This scenario may prompt managers to examine means of cutting expenditure as well as boosting
sales.
Delegated Budgets
Recently firms have given control of budgets to individuals and teams at all levels within the
business.…read more

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Managing a Business
Improving Cash Flow 4
Causes of Cash Flow Problems
Most cash flow problems are caused by lack of planning but there are other unforeseen factors,
which can contribute:
Overtrading ­ this occurs when a business expands rapidly without organising and setting
aside funds to finance the expansion.
Allowing too much credit ­ if a firms trade credit policy is too generous then cash inflows
are delayed and they cannot pay their own bills.…read more

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Managing a Business
Measuring and Increasing Profit 5
Calculation & Understanding of Net Profit Margin
Profit is an important objective for many businesses and it is one way of measuring the success of a
business. When judging a businesses profit is two factors should be taken into account for:
1. What level of sales was necessary to generate the profits?
2.…read more

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Managing a Business
Reduce the number of substandard products
If a business produces products which aren't of the right quality then it incurs additional costs. This is 6
because it has produced goods, which it cannot sell. These must be reworked or scrapped to make
them sellable. In either case, the costs rise.
Improve methods of production
Decisions to improve the efficiency of the production process can help to reduce the costs and
improve profitability.…read more

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Managing a Business
People in Business
7
Improving Organisational Structures
Key Elements of an Organisational Structure
An organisational structure is the way in which a business is arranged to carry out its activities. The
organisational structure sets out:
The routines by which communication passes through the business
Who has authority, power and responsibility within the organisation
The roles and titles of individuals within the organisation
The people who are responsible for individual employees.
Key Elements of an Organisational Structure
1.…read more

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Managing a Business
Advantages of Delegation 8
- Management time is freed up
- Employees are more motivated as they have more authority
- Flexibility
- Staff development
- Local knowledge (subordinates might have a better local knowledge of local conditions)
Disadvantages of Delegation
- Customers may prefer to deal with managers
- Quality of staff
- Different attitudes to management
- Confidentiality issues prevent delegation in some cases
5.…read more

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Managing a Business
Team Leaders
Team leaders are similar to supervisors but they imply that a business is run in a different way. Team 9
leaders make less use of authority than supervisors and are used in a role, which supports shop-floor
workers, and help junior employees to attain the businesses objectives.…read more

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