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1. Chapter 17 Professional Management in the Growing Firm In the Spotlight: Apricot Office Supplies www.apricotos.com • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-1

2. Learning Objectives: Chapter 17 1. Discuss the distinctive features of small firm management. 2. Identify the various kinds of plans and approaches to planning. 3. Discuss the entrepreneur’s leadership role. 4. Describe the nature and kinds of small business organization. 5. Discuss the ways in which control is exercised in a small firm. 6. Describe the problem of time pressure and suggest solutions. 7. Explain the various types of outside management assistance. • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-2

3. Managerial Work and Organizational Growth Stage Workload 1. One-Person Doing all the work Operation Making contacts with customers 2. Player-Coach Still doing some basic work Learning to hire and supervise 3. Intermediate Rising above hands-on Supervision management Working through intermediate managers 4. Formal Using plans and budgets Organization Following policies and procedures • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-3

4. Managing vs. Doing STAGE 1 STAGE 2 STAGE 3 STAGE 4 One-PersonOperation Player-Coach IntermediateSupervision FormalOrganization Time spent managing Time spent doing • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-4

5. Age of Company When It Brought in Outside Managers Time Period Percentage of Firms* 6 months or less 7 months to 1 year 13 months to 2 years 25 months to 5 years More than 5 years 8% 7% 16% 40% 28% *Numbers do not add up to 100 because of rounding. Source: “Employee Package Deal,” Inc. 500 (Special Issue), Vol. 19, No. 15 (1997), p. 30. • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-5

6. Management Functions 1. Planning 2. Leading/Motivating 3. Organizing 4. Controlling • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-6

7. Varieties of Small Business Communication 1. Informal face-to-face conversations 2. Discussions of job- related matters 3. Staff meetings 4. Bulletin boards 5. Suggestion boxes 6. Talks to employees at meetings or dinners 7. Memos or letters 8. Performance review sessions • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-7

8. Line Organization President Sales Manager Production Manager Financial/Office Manager Plant Employees Salespersons Office Employees • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-8

9. Line-and-Staff Organization President Assistant to the President Human Resource Manager Sales Manager Production Manager Financial/Office Manager Plant Employees Salespersons Office Employees • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-9

10. Factors Determining Optimum Span of Control Fewer Subordinates Complex work Inexperienced workers Superior with limited ability More Subordinates Moderately difficult work Moderately experienced workers Superior with moderate ability Greater Number of Subordinates Simple work Very experienced workers Superior with much ability • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-10

11. Stages of the Control Process Preventive Control Concurrent Control Corrective Control Input Stage Process Stage Output Stage Examples: Inspection of completed product Comparison of actual expense with budgeted expense Examples: Inspection of raw materials Careful selection of employees Examples: Quality control of work in process Check of adherence to safety procedures • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-11

12. Hours per Week Worked by New Business Owners Fewer than 50 hours 23% 50-59 hours 23% No data 1% 60-69 hours 28% 80 hours and up 12% 70 79 hours 13% Sources: Data developed and provided by the NFIB Foundation and sponsored by the American Express Travel Related Services Company, Inc. • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-12

13. Sources of Management Assistance Entrepreneurial Networks Business Incubators Student Consulting Teams SCORE OtherProfessionals Small Business Development Centers (SBDCs) Management Consultants • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-13

14. Services Provided by Business Incubators to New Firms Low-Cost Space Credibility Management Counsel Links to Accounting, Legal, and Other Professional Services Business Incubator Access to Financial Resources Entrepreneurial Education Photocopying, Receptionist, Word-Processing Services Computer Services Practical Business Expertise • Small Business Management, 11th edition • Longenecker, Moore, and Petty • 2000 • South-Western College Publishing 17-14