The amount of staff working for a small business must be planned very carefully in order to produce the best amount of your product for the cheapest price. It is important that a business owner is willing to hire new staff so that he allows his business to expand or even succeed to a certain extent. The owner must also be careful not to hire too many people or just people not fit for the job. Also the owner should not hesitate to fire someone if they are not fulfilling their end of their job contract.
These points are very relevant as an owner who does not have good staff working for him is less likely to succeed. The owner must plan his staffing carefully as a lot of money can be gained and lost because of it. Planning is also very relevant when the growth or expansion of a small business is concerned. Some people think that the growth or expansion of a company is the most important when the success of a company is being discussed. This is because growth enables the company to increase or maximize its profit.
There are problems which come along with growth, these problems are similar to those when starting up a business. Therefore growth is inter linked with research and development, as research must be done in order to determine whether the expansion of a small business is feasible. In order for the expansion to be feasible planning must take place. For example, if a company wants to expand into different cities then serious planning and research must be done so that the business knows that its product will sell in a new atmosphere. This again shows the importance of planning.
Innovation is a common quality of an entrepreneur. To innovate means to introduce new ideas. Creativity is similar to innovation but creativity is not itself enterprising. Creativity is having the idea and innovation is putting the new idea into practice, innovation is therefore enterprising. A perfect example of innovation in a business is that of the restaurant “Yo Sushi! ” This company sells Japanese food to its customers on a conveyor belt, which goes round in circles with different types of sushi on it. Also they deliver to people’s homes on three wheeled motorbikes which are multi-coloured.
These points show innovation as this company has had a new idea, which they have put into application. They have not been afraid to try out a new idea and their business has been successful due partly to innovative behaviour. The following is an example of a small business owner who has failed due to poor planning. Lets say a small business which manufactures knives and forks decided to buy an excessive amount of raw materials as the materials were at a reduced cost. With these materials the business was planning to expand and increase their profit by producing more cutlery.
After a few months the owner of the business realizes that buying the extra materials was a mistake as the company’s profit did not increase. The only factors that increased were the owners stress and his time spent working. This is a perfect example of how a small business fails because the owner did not plan ahead. It shows how the owner rushed into buying the raw materials without thinking about it with great care. The owner did not think about the extra staff that would be required in order to produce and transfer the vast amounts of cutlery.
The finance was not considered with enough care before the extra materials were purchased. Also the cost for the extra staff was not thought out well enough. The owner was also unable to sell all of the company’s goods at the rate which he expected. This shows poor planning and a lack of research and development being conducted, maybe due to lack of funds in the company. This is also a good example of how being risky is not enough, all ideas have to be thought out with great care before they are put into practice. Therefore I can conclude by saying that small businesses fail because their owners do not plan ahead.