SHD 3412

ETR 300

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Small Business Management

SESSION OBJECTIVES
At the end of the session, students should be
able to:
Differentiate between small and medium-

sized business and its characteristics

Understand the importance of
management functions in small and
medium-sized business
Prepare the organization plan for their
proposed business/project
ETR 300

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Definition of SME
SME is defined as a business that
employs not more than 150 full
time workers and generates
annual sales not exceeding RM25
million
- SMIDEC ETR 300

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Definition of Small-Sized Business

Small-sized business is defined

as a business that employs not
more than 50 full-time workers
and generates annual sales not
exceeding RM10 million.
- SMIDEC -

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Definition of Medium-Sized Business

A medium-sized business is defined as a
business that employs more than 50 but less
than 150 full- time workers and generates
annual sales between RM10 to RM25 million.

- SMIDEC -

ETR 300

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Characteristics of a Small Business

1. Owner-manager the business is usually owned

and managed by the same person. Management
spending more time on operations and less time on
planning.

2. Limited resources depends on ability of

owner(s) to generate resources for the business
thus, often limited.

3. Flexible/Vulnerable to changes easily affected

to changes in the environment. Can also be an
advantage because it is more flexible to adapt to
changes if not subjected to high additional capital.

ETR 300

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Characteristics of a Small Business

ETR 300

Type of business is often labor intensive rather

than capital intensive
Organisational structure of the business is often
flat and informal no clear demarcation of
tasks

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Definition of a Business Organization

A business organization comprises of

people or human beings who carry out
specific tasks or activities in a
coordinated manner for the purpose of
achieving objectives of the organization.

ETR 300

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Business
Inputs
Management
Functions
Organizational
Objectives

ETR 300

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Management Functions
Planning
Organizing
Directing/Leading
Controlling

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Organizational Inputs
Money or capital
Personnel or labor
Technology or plant, machinery
and equipment
Raw materials or inventory
Information

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Planning

ETR 300

Planning involves all activities of

formulating company policies and
procedures for the purpose of
achieving the stated goals in an
effective & efficient manner.
Long term plan focuses on strategic
plan of the company.
Short term plan focuses more on
operational issues.

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Vision, Mission & Objective

Vision

It is the long-term goal of the organizationvalue statement, what the org aspires to
be.

Mission

It is a statement of purpose why the

organization
came into being (reasons
for existence), identity of business, what it
does, with long term target.

Objective

It is the short-term goal of the organization.

Support achievement of vision & mission.
More specific with a definitive time frame.

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Objective The SMART Concept

A good objective should be based on the
SMART concept:

ETR 300

Specific

Measurable

Achievable

Realistic

Time-frame
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Organizing

Organizing involves activities of

dividing and coordinating the
tasks and responsibilities into
departments, sections or units

It also involves establishing

managerial authority

ETR 300

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Directing / Leading

ETR 300

Directing is a process whereby specific

instructions are given to the subordinates to
execute the tasks assigned to them
Leading the act of getting the job done
through other people.
Important issues unity of command,
clarity of instructions & span of control

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Leading involves:
Assiging jobs & responsibilities
Motivating teams/subordinates/workers
Providing feedback
Receiving feedback

Leading requires good interpersonal &

communication skills

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Controlling
- involves all activities of measuring and
monitoring the actual to the planned
performance and taking corrective actions to
rectify the discrepancies if needed.
- monitor progress & take corrective actions
whenever deviation is found.
- making sure achievement of set objectives
- an ongoing function.

ETR 300

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Organizational Structure

Each organization has to be structured

according to the purpose and function of the
specific organization
The structure should explain the following:

The hierarchy
Division of task & responsibility
Span of control

ETR 300

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Organizational Chart
It is a schematic representation of the
organizational structure
It shows:
The hierarchy
Span of control
Intra-relationship
Division of jobs and responsibilities

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Types of Organizational Structure

Structure based on Functions
Example: Finance, Marketing or Operations
Departments.
Divisional
Structure based on products
Sructure based on regions or geographical
location
Structure based on clients or customer
Others
Structure based on shifts
Structure based on number of workers

ETR 300

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Designing Organisational
Structure
Set organisational goal
Identify & summarize all required tasks.
Group / garther according to unit
Assign leader for each unit (with
responsiblities & authority).
5. Arrange to show chain of command.
6. Prepare controlling mechanism.
1.
2.
3.
4.

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Personnel Planning
Strategies to ensure:

orgaisation has adequate workers

orgaisation has qualified workers

workers remain in the organisation

workers can contribute to attainment

goals.

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Personnel / Manpower Planning

1.

Perform job analysis

2.

Develop job description

What task to perform and in what order?

How critical or difficult is the task?
How many workers are needed?
Job designation?
Task and responsibilities of each job

3.

designation

Develop job specification

Minimum qualification needed to effectively

perform the job

ETR 300

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Manpower Planning
Recruitment Procedures & Remuneration
Schedule
Specify

the recruitment procedures

Hiring
Selection
Retention

Identify

sources of personnel
Determine the remuneration scheme (basic salary,
EPF, SOCSO, allowances, commission, etc)
Fringe benefits (holidays, medical, insurance,
bonus, maternity, etc)
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Preparation of Business Plan:

The Organization Plan

a. General business description

b. Organizational chart
c. Table of job designation and number
of workers
d. Job description
e. Remuneration table
f. List of office furniture, fixtures and
fittings
g. The administrative budget

ETR 300

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Office Planning
Premise - Buy or rent?
Buy What is the cost?
Rent Rental per month/deposit
Cost of renovation
List of office equipments & furniture
Quantity and cost per unit
Identify the source
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Office Planning (cont.)

Administrative Overheads
Salary of administrative personnel
Utilities telephone, electricity & water, rental of

equipment

Other Expenditures
Office stationeries
Business registration fees
Miscellaneous expenditures

Office Layout Plan

ETR 300

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Administrative Budget
Cost

of premise

Buy/Build

cost of buying/building
Rent monthly rentals
Renovation

cost
Total cost of furniture and equipments
Monthly administrative overheads
Other expenditures
Rental & utilities deposits

ETR 300

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