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Cash Flow Problems
Modern enterprises risk facing cash flow issues at different stages of their development. Such a situation is frequent in the contemporary environment, especially for small businesses. A single coffee shop represents such an enterprise category, meaning that the likelihood of cash flow problems is to be considered. First of all, such a business may experience a lack of cash reserve for emergencies. Coffee shops are highly dependent on a stable supply of resources, such as coffee beans, sugar, cream, and syrups. Accordingly, it is required to purchase them in a continuous manner in order to ensure the uninterrupted functioning of the enterprise. Under these circumstances, it becomes difficult to form a cash safety net that would become necessary if unplanned expenditures arise. Thorough budget analysis, discipline, and planning will allow the management to create at least a small reserve that will help the enterprise through its financial issues.
Second, an increase in overhead expenses may also entail cash flow problems for a coffee shop. More specifically, rent payments present the highest risks in this regard. It is normal for an enterprise to seek the best value in terms of location. It should be well-visited, convenient, attractive at a reasonable price. Nevertheless, some owner may overrate their projected revenues, determining the acceptable rent by the highest income threshold.
As a result, increased overhead expenses apply additional pressure on the enterprise. Evidently, such a situation should be prevented, as resolving this crisis might require the coffee shop to relocate. Finally, in small businesses, employee theft is a rather common occurrence. This matter is highly delicate, and its resolution requires either enhanced control that may disturb workers or the establishment of positive, trusting relationships with them.
Organizational Design
The flaws in organizational design pose serious long-term risks for young enterprises. Small organizations are especially susceptible to the delayed impact of improper organization and imprecise distribution of duties. In this situation, the involvement of each member of the leadership is rather sporadic, responding more to immediate necessities than long-term requirements. As a result, once the enterprise grows and becomes more important, these organizational flaws are revealed, entailing a crisis of leadership. Evidently, as the new project is launched, its founders are eager to proceed to actual operations. They dedicate a lot of time and effort to the creation of the enterprise, and their involvement can often be conditioned by convenience rather than purpose. As in many other cases, the prevention of the crisis of management is better than cure.
Prior to the actual launch of a business, it is necessary to outline the primary areas of responsibility. In other words, each manager needs to understand their duties and span of control since day one. For example, if one of the founders is to be responsible for financial matters, he or she should concentrate on them exclusively without interfering with other affairs. This way, each aspect of the enterprise will remain consistent.
On the other hand, the reality of the discussed situation rarely presents a chance to reimaging prior decisions. In most cases, the crisis of leadership emerges when an enterprise has already gained considerable pace and complexity of the organization.
Under these circumstances, it may be useful to benefit from external expertise. A seasoned manager who was not involved with the foundation of the enterprise can provide valid, fresh insight into the current issues. Having obtained an objective evaluation, the founding entrepreneurs will be able to make the necessary adjustments. It is vital to optimize the distribution of duties, aligning the policies and rules in accordance with the uniform perspective. In the end, external expertise may become the best solution by counteracting the inevitable biases of the founders in regards to their enterprise.
Do you need this or any other assignment done for you from scratch?
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