Small Businesses - an Opportunity for Administrative Managers

INCREASINGLY frustrated with the bureaucratic constraints of working for a large corporation, my cousin Paul decided to set up his own small business. He had many years experience as a graphic designer, working for a range of different commercial organisations, but in more recent times, he was involved in the design of electronic gaming machines. Convincing his brother-in-law, John, a computer programmer, to join him in this venture, a company was formed primarily focusing on producing interactive web games. What happened?Four years on, while sales have steadily increased, the dreams of a thriving international enterprise with Ferraris parked in the Directors' allocated spots, have now been dispelled by the harsh realities of running a small business. It is, however, somewhat impressive that my cousin's business has been operating for four years, especially when according to Business Link, 50% of businesses cease trading within their first three years (www.businesslink. gov.uk). In common with a lot of small businesses, operational aspects have dominated Paul and John's time, more often than not working weekends and evenings to ensure a design brief is completed on schedule. Consequently, little time has been devoted to managing the financial and administrative elements of the business.Problems of Small Business ManagementProblems abound, with ineffective systems and financial issues, all largely caused by the owners being too shackled by the day-to-day operations.A business plan had been produced at the time of incorporation, but this was more to humour the reguirements of the bank, rather than be used as a working tool to guide the organisation over the forthcoming trading periods. As a result, little thought was attributed to planning operational activities. In particular, a sevenyear lease agreement was entered into for a suite of offices, of which only one-quarter of the space is currently being utilised. However, considering there are only the two directors working, the offices are a shambles. Boxes of computer software are randomly scattered, piles of paperwork are precariously balanced in wire trays and a 'graveyard' of discarded office items and equipment clutters one room.It is not just the lack of an effective filing and paperwork administration system that contributes to problems, but the lack of on-going project management skills. Once a design order is received, Paul and John establish working priorities and allocate appropriate tasks between them. However, without unique project numbers or codes being allocated to jobs, or formal progress meetings and a final project review, there is a reliance on informal verbal interaction to support the ongoing design activities. This has led to occasions where a project has been completed and the client not invoiced.Budgets and Finance...what are these for?Moreover, a total disregard for financial planning, such as budgeting, has resulted in financial problems. Consequently, Paul works reactively on financial arrangements, such as the lease contracts on the company cars, and consequently ends up paying more. As Paul explains, "We just don't have the time to work out the best deals, and so we move from one short term deal to another, rather than working out a long term solution."To add to the problem, an ineffective credit control system results in customers indulging in longer to settle bills, thereby increasing the overdraft and making finance more expensive. This, however, is exasperated by a seeming reluctance to write up the primary books of accounts, instead relying on detailing invoices issued and received in a spreadsheet, only upon receipt of the quarterly VAT return. …