Benefits, Costs, and Success Factors in Owning a Small Business Part 1: Opportunities and Risks of Getting Involved in S

Benefits, Costs, and Success Factors in Owning a Small Business

Part 1: Opportunities and Risks of Getting Involved in Small Business

Starting and running a small business comes with its fair share of benefits and drawbacks. The greatest advantage stems from that; it is empowering to the owners. This is because business owners have the full autonomy to make a decision that impacts their business, which is creative. Also, successful small businesses have the capacity to provide monetary incentives, such as revenues that may be higher than wages received from working in large organizations. Business owners have an opportunity to experience personal satisfaction in developing an entity that none was there before; a dream becomes a reality. The United States SBA, 2020, has indicated that small businesses also play an important role in creating employment and promoting communities.

However, this is just the opportunity part; there are costs of owning a small business as well. The major strategic threat is financial risk. Most small businesses demand a lot of cash to initiate, and the owners usually put down their own money. The rates of failure in small businesses are estimated to be about twenty percent of failure in the first year of their operation, while about fifty percent of failure within five years of commencement. This may well be a rather risky approach in terms of losing capital, and the opportunity to sustain it might well be a frightening proposition as well. Furthermore, work among small business owners is characterized by long and irregular working hours plus the stress of bearing overall responsibility for every activity in the business, including production, advertising, and accounting. It can cause stress and burnout since it remains a constant responsibility.

Thus, linking the implications of the efficient functioning of a business with managerial knowledge is essential for the successful performance of activities of a small business. It is a common understanding that best practices mean practices and procedures that have been identified as yielding the most positive results. Through this awareness, managers are well-placed to handle any adversity and huge chances likely to cross their way. For example, efficiency in stock management enhances cost cutting, or good marketing skills would enhance the cover of the products. Both operational excellence and managerial wisdom provide the firm's framework for sustainable development (Khan et al., 2021).

For the success of a small business, the following important factors should be considered. First of all, the share with a clear business development conception is required. A good plan maps out all the business strategies, its ideal market, competitors and financial prospects. Secondly, a marketing communication mix is necessary in order to target the possible customers and recognize branding. This includes market knowledge and the use of conventional and new media marketing methods. Thirdly, good people are important, meaning there should be a hegemonic team on both sides.

This is true since the recruitment of well-motivated, skilled employees who have the vision and passion of the business can do a lot to promote the success of the business (Baker & Nelson, 2021). Lastly, flexibility of operations enables business organizations to respond to market influences as well as customers' needs effectively. Therefore, being an owner of a small business has its advantages and disadvantages. Despite the opportunities for liberation, money and self-fulfillment, no one can ignore the threats and financial burdens.

Part 2: analysis of accurate perforating

Larry Cohen, the president of Accurate Perforating, is in trouble with the company's financial standing. Accurate has run out of the money needed to operate, which has led the bank to give them a stark choice: which is why it needs to sell the business or get funding from other sources. This situation is critical because as much as Accurate has been operating on slim margins in a bid to contain the observed fluctuations in the market, it has been making losses that would have sunk it had it not been for the cash infusion in the recent past (Chafkin, 2006).

In its business model, Accurate Perforating aims to manufacture and supply industries with a huge number of perforated metal sheets. The company deals with the sale of large volumes of metal that are sold to distributors of steel products so they can make and distribute finished products to manufacturers. While this model was effective previously, it mimics its over-emphasis on sales volumes rather than added value. These make it rather susceptible to fluctuations in price and mounting competition in the market, according to Chafkin (2006).

This means the company has to change its business model if it has to increase the profits it makes. From the evaluation of the value chain of Accurate Perforating, it can be seen that it could start offering tailor-made end products of metal in the finished goods sector to companies. This new approach would leverage the current manufacturing technologies and create products of higher value. The shift has concepts such as value proposition and customer relationship management, suggesting that this shift may well enhance customer loyalty as well as business profit margins by delivering greater value to particular customer groups (Osterwalder & Pigneur, 2010). For this change to happen, the company will be required to acquire new equipment and put its human resources into additional training.

For the new business model to really work, there are several skills that management must learn. They should learn to think tactically in a way that they will be able to determine what market shifts are happening as well as what customers want. Other management skills required are adequate financial management skills, as the company has to stay profitable during such a change. Last but not least, marketing and customer service knowledge is vital for developing and sustaining long-term relationships with both new and existing customers (2021).

However, due to these difficulties, Cohen needs to decide whether to retain or dismiss Aaron Kamins as CEO. Kamins has been committed to the company's success, but he does not possess any business education. It may be effective to engage him with some senior managers or ask someone who can be brought in from outside for the purpose of improving the operations of the business since he has a poor track record. This decision should endeavor to introduce new thinking into the business without compromising its ethos (Chafkin, 2006).

If Accurate Perforating is to support the expected growth, then there has to be a policy on human resources that insists on staff development. This program would assist in developing those variables within the workforce to adapt to the new business model, such as training in new technology and customer relations. Education and training, as a human resource capital enhancement strategy, creates satisfaction on the job and inspires staff loyalty during organizational transformation (Khan et al., 2021).

The lack of financial sustainability is immediately solved with the help of the proposed new business model. In becoming more customer-oriented in its production, Accurate Perforating can reduce competition, and when it establishes itself as a unique producer, this will draw more customers, resulting in higher profits. To note, this strategy is a valuable adjustment that will help the company in future development.

Thus, the new business model should be augmented with relations with technology suppliers to automate operations. Improving how it sells itself to new customers is also essential as part of market publicity strategies. Lastly, a feedback mechanism is useful when implemented with clients because it is instrumental in creating feedback and learning for organizational innovation (Osterwalder & Pigneur, 2010).

References

Baker, T., & Nelson, R. E. (2021). Creating Something from Nothing: Resource Construction through Entrepreneurial Bricolage. Administrative Science Quarterly, 50(3), 329-366.

Chafkin, M. (2006). Family Matters. Inc.

Khan, S. M., Jamali, D., & Nasser, Y. (2021). The Role of Managerial Knowledge in Implementing Operational Best Practices: An Empirical Study. Journal of Small Business Management, 59(2), 350-371.

Osterwalder, A., & Pigneur, Y. (2010). Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. Wiley.