Chapter 18 Revised

7/27/2019 Chapter 18 Revised

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PowerPoint Presentation by Charlie Cook

The University of West Alabama

Copyright 2006 Thomson Business & Professional Publishing.

All rights reserved.

Part 5 Managing Growth in the

Small Business

Professional

Management in theEntrepreneurial

Firm


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Copyright 2006 Thomson Business & Professional Publishing. All rights reserved. 183

Entrepreneurial Leadership

What is Leadership?Involves pointing the way: creating and

communicating the entrepreneurs vision of the firm

Varies in a business as it grows larger and more

mature

Leadership Qualities of Founders

A tolerance for ambiguity

A capacity for adaptation


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Entrepreneurial Leadership (contd.)

What Makes an Effective Leader?One who is focused intently on attaining the firms

business goals

One who creates a significant personal relationship

with employees based on loyalty and respect

One who directly influences employees

understanding of how the firm operates (e.g., its

ethics)

One who makes the firm attractive to new employees


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Entrepreneurial Leadership

Leadership StylesCoerc ive leadersdemand immediate compliance.

Author i tat ive leadersmobilize people toward a

vision.

A ffi l iat ive leaderscreate emotional bonds.

Democ rat ic leadersbuild consensus.

Pacesett ing leadersset high standards and expect

excellence.

Coachin g leadersdevelop people.


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Entrepreneurial Leadership (contd.)

Leadership That Builds EnthusiasmEmpowerment

Giving employees authority to make decisions or take actionson their own

Work teams Groups of self-managed employees with the freedom tofunction without close supervision

Benefits

Workers are more satisfied with their working environment

Productivity and profitability are enhanced


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Copyright 2006 Thomson Business & Professional Publishing. All rights reserved. 1810Exhibit 18.1

Organizational Stages of Small Business Growth


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Managing Versus Doing

STAGE 1 STAGE 2 STAGE 3 STAGE 4One-Person

OperationPlayer-Coach Intermediate

SupervisionFormal

Organization

Time spent managing Time spent doing



The Nature of Managerial Work

Controlling

Planning Leading

Organizing

Managerial

Work



Planning Activities

The Benefits of Formal PlanningImproved productivity

Better focus on goal attainment

Increased credibility with stakeholders

Planning TimeTyranny of the urgent

Planning requires discipline

Planning should not be postponed Employee Participation

Employees are an excellent planning resource



Planning Activities: Types of Plans

Type of Plan Purpose

Long-range plan(strategic plan)

A firms overall plan for the future

Short-range plan A plan that governs a firms operations for one

year or lessBudget A document that expresses future plans in

monetary terms

Business policies Basic statements that provide guidance formanagerial decision making

Procedures Specific work methods to be followed inbusiness activities

Standard operatingprocedures

An established method of conducting abusiness activity


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Creating an Organizational Structure

The Unplanned StructureStructure evolves as the firm evolves

Growth creates the need for structural change

Chain of Command

The official, vertical channel of communication in an

organization

A channel for two-way communication

Span of Control

The number of subordinates supervised by one

manager


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Line-and-Staff Organization


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Factors Determining Optimum Span of Control

Greater Number of SubordinatesSimple work

Very experienced workers

Superior with much ability

Fewer SubordinatesComplex work

Inexperienced workers

Superior with limited ability

More SubordinatesModerately difficult work

Moderately experienced workers

Superior with moderate ability


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Delegating Authority

Delegation of AuthorityGranting to a subordinate the right to act or make

decisions

Benefits of delegation

Frees up superior to perform more important tasks Develops subordinates skills

Improves two-way communications


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Measuring

Performance

Exercising Control

Establishing

Standards

Planning and

Goal Setting

Taking

Corrective

Action


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Negotiating

NegotiationTwo-way communication used to resolve differences

in needs, goals, or ideas

Win-lose negotiations

One party must win and the other party must loseWin-win negotiations

Both parties find a solution that satisfies both parties basicinterests

End result of negotiations promotes

long-term continuing relationships


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Personal Time Management

The Problem of Time PressureMany owner-managers work 60-80 hours per week

Effect of overwork is inefficient work performance

Time Savers for Busy Managers

Effective use of time (time management)

Analyze how time is normally spent.

Eliminate practices that waste time.

Carefully plan available time.

Use a daily planner to prioritize activities. Dont avoid unpleasant or difficult tasks.

Limit conference and meeting times.


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Services Provided

by Business

Incubatorsto New Firms


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Reasons Small Firm Managers Shun Outside Advice

1. I can solve the problem myself.

2. I dont want anyone throwing up roadblocks to my plans.

3. Professional advisors should be used only as a last resort.

4. An outsider could never understand my business.

5. High-powered experts wouldnt be interested in my business.

6. An advisor will raise a lot of issues I dont have time to bother

with right now.

7. I dont want to share any information with an outsider.

8. Professional advisors cost too much.

9. Our long-time attorney (or accountant or banker) is a friend and

knows us best. We dont need anyone else.

10. Im unsure of how relationships with professional advisors work.

Source: Craig E. Aronoff and John L. Ward, Why So Few Business Owners Get and

Accept Good Advice, Small Business Forum, Vol. 14, No. 2 (Fall 1996), pp. 2637.

Documents

Chapter 18 Revised