Page 173 - Introduction to Business

CHAPTER 4 Small Business and Entrepreneurship 147

will require the franchise to grow internally with quality products that make us a
leader in the eyes of our customers and externally through key acquisitions and
partnerships that add synergistic products and markets.”

reality What is the local business franchise in your area that you most fre-
CH ECK quently visit? Why do you choose to go there as a customer?

Small Business Management Decisions

LEARNING OBJECTIVE 6
Evaluate key small business management decisions, including hiring employees, ethics issues, family
business benefits and costs, going public versus staying private, and controlling internal and external
business risks.

Hiring Employees

All firms seek to hire the best employees. However, there are differences between
the personnel needs of small business and those of large business. Small firms offer
employees a chance to gain experience and to move into responsible positions at a
faster pace of advancement than large firms. Each employee in a small business is
relatively more important to the business and more expensive to train than in a
large business. In a small business, the president and chief executive officer may
well offer employees hands-on training sessions. This type of training would be
unlikely in a large firm! Another difference is that small firms have higher failure
rates than large firms. For this reason, small firms must be particularly careful in
recruiting employees who can do the job and maintain quality expectations of
customers.
Some employees are attracted to small business job opportunities not only by
the chance to move up faster but also by the flexibility of working hours, recogni-
tion of their individual efforts, and possible monetary rewards. Salary structures
can be readily adapted to employee productivity using either changes in wages,
commissions on sales, or stock options in the firm. Also, some employees aspire to
reach managerial positions that might be more difficult to reach in a large firm.
They might someday want to run their own small business or eventually take over
a franchise of the existing firm.
There are many sources of potential job applicants. High schools, trade schools,
colleges, and universities are major sources of young workers. State and local
employment offices offer referrals of individuals seeking employment with specific
job descriptions. There are also private employment offices and executive search
firms that can be used, especially if professional managers are needed. Small firms
can advertise that they have job opportunities available in local newspaper want
ads, on Internet websites specializing in posting job applicants’ resumes, and by
word of mouth in their community.
Screening job candidates involves sifting through application forms in an
attempt to find applicants that fit the job profile. Once a set of final candidates is
identified, personal interviews are required to evaluate interpersonal skills, atti-
tudes, and personality. It is important to carefully consider the diversity of the
employee ranks. Today, more women and minorities are needed in the workplace
than in the past to better meet the diverse customer base that most firms confront
in the marketplace.
It is important to offer employees quality training to ensure that they are pre-
pared to function competently in their jobs. New employees are less experienced in

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