Effective Operations and Controls for the Small Privately Held Business

Preface xi

Acknowledgment xvii

Chapter 1 Understanding the Small Business Environment 1

Understanding the Small Business 1

Small Business Management 4

Small Business Computerization 5

Operational Management Function 7

The Family Business 8

Basic Operating Formula 16

Why the Small Business is in Existence 16

Businesses the Small Business is Not In 17

Helpful Systems 21

Management Responsibility 21

Operating Areas to Be Addressed 22

Economy, Efficiency, and Effectiveness 29

The Initial Survey 31

Chapter 2 Strategic Concepts 35

Strategy Development 36

Strategies for Competitive Advantage 37

Other Strategies to Exploit 40

Business Models 42

Front-End Strategy Analysis 43

Overview of the Strategy Development Process 44

Some Basic Business Principles 49

Mental Models and Belief Systems 50

Situational Analysis: Planning Questions 52

Chapter 3 Planning and Budgeting: Identifying the Right Direction and Staying On the Path 57

Relationship between the Planning and Budgeting Process 58

Planning Process 62

Budgeting Defined 65

Developing and Monitoring the Budget 67

Nonmanufacturing Budgets 68

Conclusion 69

Chapter 4 Improving Customer Service 73

New-Customer Quest 75

Servicing Present Customers 76

Striving for Outstanding Customer Service 78

Golden Rule of Customer Service 88

Looking at Customer Service from a Fresh Perspective 98

Tips for Terrific Touchpoints 100

Tips for Avoiding Traps that Trip You Up 102

Tips for Watching Out for Traps 107

Making that Great Customer Service Last: Keep the Romance in the Relationship 107

Conclusion 108

Chapter 5 Cash Conversion 111

Cash Conversion Basics 112

Cash Conversion Objectives 119

Profitability versus Liquidity 120

Chapter 6 Sales Function 129

Purpose of the Sales Function 130

Sales Function in Business for Itself 132

Product Analysis 133

Sales and Product Controls 135

Sales Forecasts 138

Pricing Strategies 139

Methods of Sales 144

Methods of Compensation 145

Sales Information and Reporting Systems 147

Performing the Sales Function Analysis 148

Sales Function Desirable Practices 149

Conclusion 151

Chapter 7 Cost Considerations 153

Cost Classifications 154

Manufacturing versus Nonmanufacturing Costs 154

Activity-Based Costing Overview 157

Cost Elements 170

Cost Reduction Analysis: Traditional versus ABC 179

Customer Cost Concepts 183

Analysis of Cost Behavior 189

Conclusion 196

Chapter 8 Accounting Operations: Functional Considerations 199

Accouting Function 200

Function Analysis 201

Choosing What to Analyze 202

Financial Reporting 208

Operational Analysis Survey Form 208

Analysis of Functional Costs 212

Developing Recommendations 216

Conclusion 224

Chapter 9 Operational Reporting Considerations 227

Small Business’s Numbers 228

Financial and Operating Ratio Analysis 238

Key Operating Statistics 249

Conclusion 259

Chapter 10 Internal Controls for the Small Business 263

What is Business Risk? 264

Internal Controls as Best Practices 267

Small Business Stakeholders 268

Internal Control Concepts 269

Internal Control Objectives 273

Consideration of Fraud 274

Internal Control Considerations 278

How to Segregate Duties (at a Work or Activity-Unit Level) 285

Performance Measures 286

Internal Control Review: The 12-Step Program 289

Internal Controls for Operations 292

Effective Controls by Type of Business 298

Conclusion 310

Chapter 11 Information Technology Control Considerations 313

Overview of Computer Operations 315

Control Objectives for IT 316

IT Controls 319

Common Small Business IT Control Weaknesses 335

IT Control Examples 337

Developing a Web Site 345

Chapter 12 Organization Structure and the Role of Management 355

Organizing the Small Business 356

Why Organize? 359

Building the Small Business Organization Structure 365

Comparisons between Individuals 369

What is Management? 370

Management Functions 372

Management Skills 374

Why Managers Fail 375

Tools for Self-Appraisal 376

Conclusion 376

Afterword 383

Index 389