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Source: Small Business
Management
Small businesses
often fail because owners are unaware of the many elements that can prevent the business
from growing and being successful. Often, small businesses are organized around the
manager's specific area of expertise, such as marketing, accounting or production. This
specialized expertise often prevents the business owner from recognizing problems that may
arise in other parts of the business.
This management audit will provide the small business entrepreneur with the essentials for
conducting a comprehensive search for existing or potential problems. The audit was
designed with small businesses in mind and addresses their unique problems and
opportunities.
DESIGNING THE Management AUDIT
The authors have combined case evidence, logical procedures, expert advice and
systematic thinking to create a management audit for small businesses. This instrument is
not exhaustive, i.e., the business owner/manager still must rely on personal judgment and
past experience. However, it does provide a systematic framework to ensure that critical
areas have been addressed before action is taken. The audit is a tool, not a replacement
for good management skill. Audits and handbooks cannot do the consultant's job; however,
effectively designed instruments, such as this audit, can save
time for the
seasoned as well as the novice small business manager.
The authors studied actual case reports to find out what management practices were
being used by small business, and used that information to create this audit.
HOW TO USE THIS AUDIT
In order to gain maximum effectiveness from this
Management audit, the small business manager
should answer all questions in the audit, with an affirmative answer indicating no problem
and a negative answer indicating the presence of a problem in a specific area.
After completing the audit, the manager can review the analysis of each section of the
audit that follows to determine what action is most appropriate. The audit analysis
provides an overview of how the various elements of the audit are related. The audit
covers seven critical business functions: basic planning, general bookkeeping and
accounting practices, financial planning and loan proposals, sales and marketing,
advertising and promotion, personnel and production.
In the healthy and financially sound small business, these seven functional areas are
in balance. In many cases, one cannot work on all seven areas at once. The manager must
decide which area to concentrate on based on past practices and the needs of the business.
Regular use of this audit instrument can help make the small business manager more
efficient.
Outline of the audit: Basic planning
Personnel
Production
Sales and marketing
Advertising and promotion
General bookkeeping and accounting
Financial planning and loan proposals
CONCLUSION
The authors have attempted to present a methodology for enhancing the success rate of
growing small businesses. This methodology helps the small business manager to critically
assess the strengths and weaknesses of all facets of the business. By using the management
audit instrument and the audit analysis on a regular basis, the small business manager
will be better able to see pitfalls in sufficient time to react appropriately, thus
ensuring a greater possibility of business survival and prosperity.
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