TO BE “EMPLOYED” OR “NOT TO BE EMPLOYED”, THAT IS THE QUESTION

 

By “to be employed”, what ismeant is working in an organisation owned by another person. By “not to beemployed”, what is meant is working in an entity you own yourself; your ownbusiness. I assume it is a business.

What is being looked at here is an age-old question many young and even older people ask themselves. It looks an easy question to answer: “Work in my own business, of course.” Yes, indeed, but then, what is the reason not everyone is heading to their own organisation? So, the question becomes an easy one to decide on but not an easy one to act on.

Many people have been caught in the dilemma of difficulty choosing between keeping a job in another person’s organisation and embarking on their own ventures. The reason, rather, the reasons, are generally easy to see. In this article, a comparison is made between the two.

Let us look at the different aspects of working in an organisation one does not own and working in an organisation they do own. We do it under different themes. The lists of advantages and disadvantages are not exhaustive.

Main positive considerations going for “not being employed”

We look at just three:

-          Freedom. When the organisation is not yours, you have to be ready to adhere to the expectations of the owner or owners. These often include arriving at work and leaving at the time prescribed by the owner, not yourself; working by the stated rules. Besides, you would not like to hear the nastiest words of any workplace: if this does not happen, John, you’re fired!

-           

If you need freedom, start your own organisation. Here, you could set your own rules. For example, you could arrive at the office a little later than the others, if you can still effectively supervise them. Simply remember that there is no total freedom in any organisation. If you have to meet deadlines, for example, you have to sacrifice some freedom even in your very own business. However, you do indeed have a lot more leeway in your own institution.

 

-          Profits. This is probably the biggest motivation for one not being “not being employed”. When you are “employed”, as in working in an organisation you do not own, the profits belong to the owner of the business, and they pay you a bit from those profits.

If you are “not employed” (own the organisation), the profits are all yours.  They ultimately belong to you. Not only that. You decide how to use them.

-          Wealth building. It is often faster to become financially prosperous when you run a business. Few have become rich in a relatively short time depending on the income they get working in an enterprise they do not own. This is connected strongly to the preceding point concerning profits. The profits are yours and you can invest them in a business with great net earnings potential.

Challenges  

As you can see, it can be very rewarding not “to be employed”. In this sense, what is meant, of course, is being one’s own employer. But why is everyone not owning their own business, then? This is what we look at now. Even here, though, only three factors are examined.

-          You are on your own. If you run your own business and depend entirely on that for your own survival, you are essentially on your own. Working in another person’s institution almost always guarantees you a salary at the end of the month. The employer may also be paying your health insurance, and may have accommodated you, as is the case in socialistic economies.

 

If you own the organisation, you have to work the sweat to make the money. If you work lazily, you may not have anything at the end of the month. You will be in free fall. The possibility of starving is more real.

 

Fortunately, it is not a hopeless situation. you can minimise the possibility of adverse financial moments by ensuring you choose a business that deals in a product or service with good and steady demand. By “good”, I mean that you need to be able to sell profitable amounts all the time. By “steady”, I mean there must not be parts of the year when demand is low and parts when demand is good.

 

A product like motor vehicle tyres is likely to have stable demand throughout the year. On the other hand, umbrellas generally have healthy demand only at certain times of the year.

 

-          Capital limitations. A common factor preventing people from owning their own enterprises is the difficulty of raising the finances, for example, required to start business.

 

One way to avoid the capital problem is selecting a business with relatively low initial investment requirements. A business requiring a factory is normally a big financial undertaking. On the other hand, a stationary retail shop is unlikely to place so much pressure on finances. Any amount of stationary can be stocked initially, and the quantity can increase as the business makes more money. As regards the shop, a small trading area could be rented at the start, and when the business expands, one could look for bigger space.

  

One, alternatively, can look for sponsors specialising in helping people with financial limitations who want to start businesses. Some give grants. Grants are not to be paid back. They are not loans.

 

-          Lack of business training. Basic business education can serve as a source of confidence and spur one into starting an enterprise. Insufficient business knowledge can have the effect of holding a person back. If you find yourself in this situation, it should not be a real challenge in today’s age of digitally available information on the internet. There are many resources online that provide basic business knowledge. So I guess this is hardly a problem now.

 

Conclusions

If you have been wondering whether or not to quit your present job and simply run and be sustained by your own enterprise, the brief coverage of the anticlines and synclines above could give you an idea what some of the main issues to look at are. It is indeed a simple overview, but, hopefully, it is adequate as a starting point in an often important decision-making situation.

 

SIMPLE RULES FOR MAKING YOUR BUSINESS MORE PROFITABLE

SIMPLE RULES FOR MAKING YOUR BUSINESS PROFITABLE

A business must make profit to be meaningful to the owner or owners and other stakeholders, and to continue to survive.

Advice on making an enterprise profitable could be given under two main headings:

  1.    Keeping Costs Minimal.

-         Drop products that always make losses.

-         Do not increase your staff unless it cannot be avoided. Remember, it is easier to avoid employing than to send employees home (declaring them redundant).

-         Introduce a performance-based salary rise system if you do not already have it.

-         Get better deals from suppliers, buyers and intermediaries (supporters of the business environment such as insurance companies, brokers, consultants and bankers).

-         Use home space instead of renting dedicated offices. If you have to go the lease way, ensure there is no space in the offices or yard that you do not immediately need. The property owner takes every square inch into consideration when fixing how much you have to pay.

-         Deal in products that allow a bigger profit margin, or sell fast.  

-         Improve efficiency. That is, producing more with less, or more with the same amount of investment.  

-         Look around you some more, and see if there are other unnecessary costs your business is bearing: limit office decorations to what just makes it a pleasant place to operate in; can the business support a vehicle with the engine sizes you have in your fleet?

  2.    Increasing Sales.

-         Improve your offer. This is sometimes a short term cost but long-term gain. Areas of improvement are diverse and depend on the product type. In the case of a bathing soap, for example, spheres of attention could include shape, scent and size.   

-         Widen product range. This gives you more sources of profit.

-         Capture new customers. Yes, it does mean more sources of purchases – another way of saying more profit.

  3.   Increasing Price. 

Perhaps the most direct and obvious avenue of making a business more gainful is increasing product price. It has, however, to take into account issues like competitor pricing and ability of the market to pay.

Conclusion

There are also steps of a more strategic nature that businesses, mainly large ones, do, to make their operations more lucrative. Among these are acquiring of powerful suppliers or customers who can easily drive up costs by dictating terms. This gives the acquirer more control over prices at which they buy inputs and the prices at which they sell their finished products, as well as on other contract elements.

                                                                                      Rupert Chimfwembe
                                                                                                     18 May 2018

SMALL BUSINESS MANAGEMENT

YOUR SMALL BUSINESS WAS BORN TO GROW BIG

Few can say that when they started their small enterprise, they had no dreams of seeing it grow - and continue growing. The question is, has that expansion come? If it has not, there still should be no loss of hope. These easy-to-understand passages below are intended to give useful guidelines (without leaving the reader with a throbbing head) on making a small business grow.

THERE MUST BE A MISSION

A statement of mission shows what the business does and intends to. It is advisable to have the mission in writing so that it does not blur with time.  A good statement of mission will include not only the product or products dealt in but also its winning, distinguishing approach to business.

GROWTH TARGETS MUST BE SET

This topic is about expanding a business, isn’t it? Indeed. It is about turning that mini-enterprise into a Wal-Mart, Tesco or Microsoft.  Well, then, there must be no losing sight of that. The business must have an expansion plan.

Specific figures of growth (such as ‘five percent’) must be set. They need to be realistic, too.

Key areas of improvement normally include:
-         Sales volume.
-         Profit level.
-         Widening of product range or geographical coverage.

Without a growth plan, the business may not steadily expand, due to lack of clear direction.

PROFIT MUST BE WORKED OUT

At regular time periods, profit made has to be calculated. However, this cannot be possible if accurate records are not kept. So, all financial transactions need to have written evidence or documentation, like receipts and invoices.

Profit is found by deducting all expenses from the total revenue.

Simple formula:

Profit = Total revenue minus Total expenses

HOW ARE PROFITS TO BE USED?

Probably the safest way to expand a business is using profits. Banks have to be paid back with interest, and will not simply forget about the loan when one defaults: they will get whatever they can lay their hands on – business or personal property – depending on the legal status of the enterprise, of course.

A portion of the profit made must form additional investment. If the range of stocks has to be increased, it is important to avoid investing in products that may never be bought. It is like throwing money down the drain, because they may have to be sold at less than what was paid for them. And that is, at best.

Perhaps the best approach is keeping a record of all products that customers ask about that they do not find in the business. Frequent questions about products that are not being offered are a message that the merchandise or service is likely to sell! So, upon finding that there is profit, one must open that little note book and see which of the products that were sought by customers and never found can be added to the existing range.

Not all profits have to be re-invested. The business needs ready cash to meet that unexpected requirement; like an energy bill that, somehow, was misplaced and therefore never settled. The energy company does not have to disconnect supply just when, for example, the beverage refrigerator has just been replenished on an extra-hot summer day.

Worse still, the property owner does not have to serve the business an eviction notice on grounds that the accidentally-unpaid bill cannot be settled at once even after it has been brought to the proprietor’s attention - owing to all cash being tied up in stocks.

Ready cash is not just about getting the enterprise out of dangerous situations: it is also about taking advantage of profit opportunities that suddenly become available like manna from heaven.


WHAT IF THE BUSINESS MAKES LOSSES?

It is important to respond quickly to losses because they threaten the very existence of the business. A word of caution: changing the type of business should not be the first consideration because it can be a lot more involving than other responses. For example, it might demand acquiring new product knowledge and special management skills.

Here are a few ready areas to look at to address the problem of losses:

Costs
Questions to ask include:
·        Are there cheaper sources of the same product or raw materials?
·        Are there cheaper ways of transporting the product?
·        Can a new business place be found within the area that carries lower rent?
·        Is it possible to do this kind of business at home?

Business location  
The siting of the business can also have cost implications. For example, if the suppliers and buyers are too far away, the effect is that of raising the price of the product owing to higher transport costs. Even if costs did not matter, the inconvenience may be too much for customers, who may switch to substitute products they can quickly access.

Promotion
It would be advisable to find out if there are affordable ways of advertising, for example. A small business may have to look at local, naturally more affordable, news media in the targeted geographical markets. Another way to explore is the possibility of using appropriate digital technologies like the internet to advertise or simply communicate with the potential customers in focus, if they are clearly known and their addresses are readily available.

Product
It is advisable to compare the quality of the good or service with that of the competitors and the actual needs of the buyers themselves. If, for instance, the competitors’ are much better, it could deny the business some customers. A possible solution is switching to a supplier that has comparable or better quality for about the same price, if the business does not make the product itself.

Any person involved in giving a service must be highly professional and the environment in which it is done has to be good. A restaurant, for example, demands a lot of courtesy on the part of everyone coming in direct contact with customers, and the place must be attractive and hygienically maintained. These factors play a major part in attracting or keeping away prospective clients.

This section basically seeks to improve what is called the marketing mix1.

MANAGING COSTS: THE GENERAL RULE

Doing a break-even analysis2 is about the best starting point of managing costs.  For a really small business, however, it may be too involving an operation. However, there is a two-point rule that can be useful:

·        Ensuring payments (costs) are as low and few as can be kept without causing damage to the business.
·        Optimizing the sales volume.

CUSTOMER SATISFACTION IS THE KEY

Growth must never be pursued at the expense of customer satisfaction. All business efforts must be centered on addressing the requirements of the buyers and users. As a matter of fact, beating any competitor has to be about satisfying the customer better than them.

For a small business, cost-effective ways of collecting information from customers can be as simple as chatting with them on various issues such as what they seek to accomplish by buying what they purchase and  what changes to the products or services they would be happy to see.

THE ENVIRONMENT NEEDS MONITORING

The business environment is always changing; at times for better, at times for worse. Awareness of what is happening in the environment often gives capacity and time to respond appropriately. One must always look around, asking questions like:

-         Are there business grants or loan schemes on relaxed terms that can be taken advantage of to make the business bigger?

-         Are there new housing units under construction in the area? (These are a symbol of increased demand in the future, which the firm must prepare to capture as much of as possible).

-         Are there new competitors who could hinder or slow down expansion by taking away customers?

-         Have competitors lately been giving complimentary products or services that could lead to this business selling less?

-         Are there indications that customers will in the future buy less of the products this business deals in? If so, what will the new preferences, if any, likely be?

-         Are there any planned laws that could affect the performance of the business in some way?

Continued existence and growth of a business often depends a lot on the ability of an enterprise to smoothly ride the wave of any new change in the environment. Radio, television, newspapers, suppliers, buyers and industry publications are all possible sources of information about changes taking place around the business.

EMPLOYEES HAVE TO BE CAREFULLY SELECTED

A business needs honest, careful and hardworking employees to progress.  When it becomes necessary to recruit (a book-keeper or sales assistant, for instance), it has to be someone with a traceable history. It is likely to work out better if the person employed is one the business owner has known personally for some time or one recommended by a trusted family member or friend.

WHAT ARE THE LEGAL OBLIGATIONS OF THE BUSINESS?

The business must operate within the legal framework that is provided in its environment. It is most advisable to find out about the different registration types, for example, such as limited and non-limited status, and their implications, or if any tax is to be paid.



SECURING THE BUSINES IS IMPORTANT…

How can the business grow if, one unfortunate day, all the stocks are unexpectedly lost in a fire or due to theft? This should help underline the importance of obtaining insurance. It may be just a small business, but it contains a big dream that must be protected. So, effort should be made to find out if there are insurance companies providing just the right size of package.

… AND SO IS SELF-IMPROVEMENT

The bigger a business grows, the greater the challenges. So, while here there has been no delving into more sophisticated management approaches like break-even analysis and branding, the fact is sooner or later, they become a necessity. The business should never become too complex for the skills the proprietor has. If it did, the chances are it would stop growing and possibly collapse.

In light of the above, it is necessary that the management capacity of the proprietor be continually upgraded. Skills can be improved in a number of ways including reading business articles in newspapers, books, magazines and other written publications; listening to business programs on radio and watching similar presentations on television; and enrolling on formal study.

CONCLUSION

Books on managing and growing small businesses commonly include preparation of a business plan3. It has been the philosophy of this article to include as many of the key areas of a business plan as thought necessary in the management of a mini enterprise, without sacrificing simplicity.

The future of the business is likely to depend as much on adherence to the simple rules above as on sheer determination to succeed even in the face of adversity, (which is bound to come from time to time).


Notes:

1.     Marketing mix: The set of basically four variables, namely product, price, place and promotion used to perform marketing functions.
2.     Break-even analysis: A way to show the short-term relationship among quantity sold, cost, revenue and profit. The break-even point is where the total revenue and total costs lines intersect. At that point, a business makes neither a loss nor a profit.
3.     Business plan: A statement of future business activities that includes examination of the current situation and forecast of revenues and expenses.