Sunday, 5 August 2012

Small Business Management

It is well-known that small and medium sized enterprises (SMEs) constitute the majority of all businesses in most countries around the world. Consequently, universities and Business Schools are starting to recognise the need for graduate courses based on small businesses and entrepreneurship. Academics and researchers have carried their investigations to the area of small business management, examining the sociological, psychological, managerial and economic dimensions. Whilst these findings are incredibly significant in terms of employment creation, new product development, and capabilities for networking, there are relatively few dedicated programmes at undergraduate or postgraduate levels in small business management.

The Need for Graduate Courses in Small Business Management

The popular conception that students are led to believe is that the highly paid jobs are only available in the larger firms. The old assumption that small and medium sized businesses are associated with the 'low end' of economic activity is out of date. Almost all the pointers for innovation, growth, employment, creativity suggest that the search for the gold mine should lead people to SMEs. Business Schools should now focus their attention on graduate courses which examine the dynamics of small businesses so that our future managers are educated leaders of these organisations.
If we are to learn about the major drivers of economic and business activity, Business Schools should consider a syllabus that reflects the true face of the wider economy and of society. Graduate courses in small business management are at the core of business management, enabling students to understand and evaluate the nature of these firms, their boundaries, technologies, skills and knowledge base. Graduate small business management courses also examine the growing international prescence of small businesses, the small and large firm network and their capacity for beating the larger organisation in the innovation and technology game.
Taken together with studies on entrepreneurship and new venture creation, programmes in small business management at graduate level should help to foster learning for change and value creation in society and prepare people for the world they really live in today.

Small Business Management in the Creative Industries

As we examine further the type and nature of SMEs in the market place, making new combinations of skills, technologies and finance to drive economic growth in the UK, India, China and many other countries around the world, we find the treasure trove of the 'creative industries'. These are the players in the information and communications technology industries, in film, media, broadcasting, professional, business and producer services, music, design, and related industries that represent some of the fastest growing industries and firms in the world.
They connect with each other globally, they play with convergent technologies that cut across manufacturing and services, and they move from homes to warehouses and factories in search of productive gain. In many cases they out-do their larger counterparts through the power of their creative skills. Their creativity is in the continual generation of new ideas and new knowledge with which to alter the way we live and work.
The study of their dynamics, their organisational and technological ebb and flow, the complex blend of skills needed to manage such organisations, the global sourcing of talent, products and services with which to run these firms, the environments in which they thrive, and the role of government in facilitating their growth, is at the heart of the MSc in Creative Industry Management.
The small, the creative, the strength of growing, and networked firms from different environments – these are the honey pots of information, action, social, human and financial capital for our knowledge creating economy. We need to commit more resources, more energy and time to their study for at least the next decade or so. These are changing times and studying a graduate courses in small business management is going to put students ahead of the game and shape the future of business management.


Article By:

Professor Jay Mitra
Head of School of Entrepreneurship and Business
University of Essex

Friday, 3 August 2012

Five Questions to Ask Before Starting a Business With Your Spouse

Starting a business is risky. Starting one with your spouse is outright nutty. You’re gambling your finances, your mental health, your retirement funds, your personal happiness — and the most important relationship of your adult life.
As the daughter of an entrepreneur, I’m aware of how easy it is to blur boundaries in the great work-life divide. But when I co-founded a business with my husband in late 2009, less than a year after tying the knot, I was sure I knew what I was getting into.
Sort of.
The reason my husband and I work together is the same reason we married: we’re different but complimentary partners, with a shared vision but opposite strengths. I’m a classic Type A with a yen for perfectly-balanced check registers; he’s a big picture thinker who takes stress in stride. Within weeks of dating, we were collaborating on art projects and talking about opening a gallery.
But the deepened loyalty and satisfaction we get from running a real business together — mostly from a home office, sitting within feet of each other — is tempered by the ever-present possibility of abject failure. Every part of our relationship is compounded by the fact that we live and work together: the pleasure and the pain.
So before you risk everything by combining two of life’s most unstable propositions — a happy marriage and a successful business — ask yourself these five questions. The answers may provide you with the insight you need to achieve both.
No. 1: Who owns the business, who’s the boss, and who does what job? From a technical standpoint, you may indeed be co-founders, co-owners and co-sharers of profit and loss responsibility. (Although data suggests husband-and-wife businesses are more successful when one spouse just “helps” and total equity is a moot point.) But from an emotional standpoint, if you work together well, it’s probably because you have different strengths. Play them up, not down. I worked for a co-founder couple who would angrily contradict each others’ instructions when our team was on a deadline (I was a middle manager). This is business suicide. Make a plan — get your job descriptions down on paper.
No. 2: Are you really prepared to work together? Successful businesses, generally speaking, don’t start with good intentions — they start with a great idea and a smart business plan. If it turns out your spouse or life partner is perfect for a key executive role that needs to be filled in your company, great. But review how you both respond to personal crises. If you have had major blowouts over important issues such as risk management and budgeting, it’s safe to assume these will become major issues in your business. And when they do, you won’t have a spouse to confide in privately about it.
No. 3: Can you live, day-to-day, with a shared burden that never really goes away? I mean never. You wake up, roll over, and there’s your partner. Intimacy spills over into work disputes. Boundaries need to be drawn. Tempers get stirred up. And at day’s end, you still go to bed together. Come again? Saying you’ll have date nights and “no business talk at dinner” is great. Following through is harder. Half the couples I know today don’t even share bank accounts or contribute equally to household finances, let alone invest all of their assets in a single business venture. Entrepreneurship is isolating with or without the romantic element.
No. 4: What financial risks are you willing to take? If you go into business full-time together, you could also go broke together. What about your kids, or your future kids? What about your nest egg or aging parents? From special tax concerns  to funding your Social Security to the possibility that either your marriage, the business, or both will fail, your entire financial future is at stake. Creating a plan can be uncomfortable, like talking about a prenup. Can you define each partner’s equity in terms of actual dollars? What will you do if one partner wants to quit? You’ll have to make these decisions in administrative ways (from payroll to stock certificates to insurance) anyway. While you’re at it, firm up an exit strategy.
No. 5: Which really comes first: relationship or business? Hint: the answer is not, “It would never come down to that.” It could, and it very well might. When the going gets tough — you’re facing a lawsuit, or considering bankruptcy — which relationship goes on the chopping block first? We decided recently that if we needed to shut our doors to regain our sanity and keep our relationship safe, we would. Other couples, particularly those with very separate roles in growing businesses, may choose otherwise, or find out that a business can continue when a marriage ends. If that business is your only source of income, you might not have a choice. Can you handle that possibility?
As for us, even though we’ve decided our marriage comes first, what that really means is we’re willing to shut down one business if we have to… And then, of course, start all over again.

How to Minimize the Impact of Divorce on Your Small Business

Divorce in itself is often devastating to the parties involved, but when one of those parties is a small business owner, the business can be affected as well.
Aside from financial concerns, anxiety and emotional turmoil usually associated with divorce can have a major impact on the business.  It can affect the person who is the party to the divorce, as well as other business partners and employees.
In connection with the distribution of assets in the divorce, the business will likely be valued. This will require a financial expert who will be scrutinizing the books and records of the company. Questions will be asked about business practices and expenses. Financial documents concerning the business must be produced, and there is a risk that confidential information may be disseminated.
There can also be a significant cost for the business valuation. Oftentimes two financial experts are engaged (one for each party).  Employee hours must be taken away from the work of the business and time must be spent gathering information for the valuation(s).
Business operations are often stalled given that if the business improves, the value of the business increases and additional monies will have to be paid to the spouse.  In the worst case scenario, the business may even have to be sold in order to pay the non-owner spouse his or her share of the business.
There are ways, however, to minimize the impact of a divorce on the small business:
No. 1: First and foremost – get legal counsel.  A good divorce attorney will have extensive experience in managing both the personal and business aspects of a divorce, and can provide counsel on how to reduce the impact on the business.
No. 2: A prenuptial agreement or a postnuptial agreement (entered into after marriage) can predetermine the distribution of assets in a divorce, and thus can protect the business.
No. 3: If there are multiple business owners, the business partnership agreement or shareholder agreement can address a methodology of buyout or valuation of interest if a divorce is filed against one of the business owners.  While this type of instrument may not bind the family court, it does show an intention to minimize business disruption in relation to the other owners which a court would likely respect.
No. 4: If the first two agreements don’t exist, the parties can agree to hire one joint financial expert to value the business which will help streamline the process and keep costs down.  To the extent the books and records of the business are well organized and readily available, the valuation will likely move more rapidly.
No. 5: The parties, counsel and any experts involved can enter into a confidentiality agreement to protect sensitive information and give assurance that trade secrets will not be disseminated.
No. 6: To avoid the sale of the business, oftentimes a settlement can be structured with payments to a spouse made over time so the business is preserved.
Involvement of the small business in a divorce is inevitable given that it is frequently the largest marital asset owned by the parties. However, by following these few tips, the business can be protected with minimal disruption.

Thursday, 26 July 2012

Small Business

Small business is the driver of Australia's economy, underpinning growth and innovation and providing jobs for millions of Australians. Unlike Labor, Tony Abbott and the Liberals stand for real action to keep costs down and protect small businesses from union bullying. We will always back small business to grow our economy and create jobs.

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