Main elements of training and development required in small business enterprise performance
A substantial number of researchers in the field of business and economics denote the essence of understanding and diversifying activities in the contemporary business environment as one of the means of ensuring that the performance of any given business remains at par with the expectations of entrepreneurs (Haug, Pedersen & Arlbjørn, 2011).
The beginning of the 21st century saw the need to diversify and expand the business environment through opening of the business environment for small and medium entrepreneurs. Training and development is an essential factor in business performance and development (Mau, 2011). However, training and development has remained to be one of the most challenging attributes of management in most businesses, a factor that impedes business performance.
The three main areas of training and development in small businesses include human capital development, devise and effective development of business strategies, and focus on aspects of marketing the small enterprise (Haug, Pedersen & Arlbjørn, 2011). Development of business strategy in small businesses revolves around the knowledge and comprehension of factors of business differentiation that can be derived from operation of medium and large enterprises.
Human resource development is another important factor. This is necessitated by competition and changes that prevail in the job market; for instance, the need to adopt and enforce new skills and technologies. Customer acquisition and sustenance is also a crucial factor. Small businesses acquire their customers by virtue of venturing into areas that have not been fully exploited by other enterprises in the market (Mau, 2011).
Challenges of managing performance in small businesses
Small business managers face an array of challenges in managing performance. The challenges come from complexities that are inherent in the contemporary business environment. The mere presence and operation of large business enterprises in the market is in itself a big challenge for small business performance (Haug, Pedersen & Arlbjørn, 2011).
A lot of efforts and research has been directed at identifying the challenges when it comes to training and development in small business enterprises. This emanates from the fact that small businesses have become key pillars of most local economies as they highly boost the performance of national economies.
Some of the key training and development areas that have been identified in small and medium business development include: the need for adopting and embracing information technology in enterprise development, dealing with the problem of economies of scale, and the need to enhance the skills of the workforce (Stringfellow & Shaw, 2009). Greater attention has to be given to these critical areas of management for any small business to position its operations in the market.
Information technology remains to be one of the critical elements as far as improvement of managerial capacity of business firms is concerned. While the capacity for technology adoption in large business corporations is easily enforced due to the presence of finance and infrastructural capacity to enforce the changes, small businesses entrepreneurs are still constrained in this area.
While technology is considered to be critical in cutting down costs and increasing the rate of efficiency and effectiveness in business management, installation and management of information and technology systems is quite expensive.
This results in the failure of small firms to meet the costs (Haug, Pedersen & Arlbjørn, 2011). Small businesses can hardly develop or meet the infrastructural capacity for information technology adoption since they operate with little capital. Deployment of information technology in business enhancement requires the embrace of training and upgrading of IT knowledge and skills among the employees in small businesses.
Skill is an important human resource factor that is required in streamlining the discharge of tasks in organization. Small businesses are faced with the challenge of acquiring employees who have the desired skills and competence for business enhancement. A number of reasons have been attributed to the failure by small business entrepreneurs to acquire the desired skills from the job market. They include the lack of funds to remunerate employees who are highly skilled.
Consequently, such employees often end up in the established business firms where their needs and expectations can be met. The other thing is that employees who gain skills and become competent in small business segments have remained to be targets of large companies that entice such employees through the hefty packages that they can sustain. Such packages cannot be sustained by small businesses resulting, in the loss of employees to large firms (Mau, 2011).
Small firms face the problem of economies of scale in business development. This comes from the scale of business that can be sustained by such businesses. More often than not, small firms end up spending more when it comes to production and distribution of products and services because of the ability to produce a certain amount of goods and services.
The issue of economies of scale comes out openly in the competition that prevails in the market between large business corporations and small businesses. Large firms have the advantage of producing and distributing products and offering services on a large scale. This helps the firms to offset costs. Therefore, products from large firms come with low prices and other offers that are more appealing to customers compared to the products and services that are offered by small enterprises (Stringfellow & Shaw, 2009).
Effects of determining the gaps in small enterprises
As mentioned earlier, the gaps that prevail in the management of small businesses come from competitive pressures from large firms and failure of small businesses to embrace practices that can aid in bridging the gaps that come from limits in the capacity of operation of the enterprises.
It is important for small business managers to develop managerial instruments that can help them in identification of the nature of gaps that prevail in management of small businesses. One of the gaps in management of small businesses comes from the problem of sustaining skills in small enterprises. This results in the drain of skills from these organizations by medium and large enterprises (Stringfellow & Shaw, 2009).
Identification of problems of retaining skilled and experienced employees results in upgrading of the performance management system, as well as upgrading of the human resource development environment in order to develop employees who can match employees who leave these organizations.
The other gap in management of small businesses comes from failure to maintain a certain pool of customers due to operation of other firms in the market; that is, competition for customers from other enterprises. Customer retention in small enterprises is an aspect of management that begins with the nature of business strategies that are deployed by the firms, thus gaps in customer retention can be bridged through revision of enterprise development strategies (Stringfellow & Shaw, 2009).
Competitive training strategy for positioning a small business in the market
Positioning of small business enterprises in the market is an issue that requires implementation of a number of competitive strategies by entrepreneurs. One of the competitive strategies that can help small business enterprises thrive in the market is development and enforcement of a creative agenda for competition. This is a process that is incorporated in the establishment of the enterprise from the initial stages.
Location is a critical aspect of positioning a small business in the market (Mau, 2011). One way through which a small business can thrive in the market is through identification of regions that are not exploited or fully reached by large business corporations. The choice of location ought to be patterned with the choice of new business ventures that have not been exploited by medium and large business enterprises. This entails creativity and rationalization of the business environment by an entrepreneur.
This is one way through which the competitive pressure that emanates from operation of large business enterprises can be minimized. A small business entrepreneur has to study the business environment and identify areas of business that are not congested or fully explored by other entrepreneurs before starting an enterprise. This gives the business an opportunity to attain a position in a given line of business within the larger business environment (Stringfellow & Shaw, 2009).
The second important thing is the establishment of customer capital by the business. More often than not, small businesses establish their operations through identification of a series of business activities that favour a certain category of customers. Customer identification forms part of the differentiation of a given small business from other small businesses, as well as the operation of medium and large firms.
Small business entrepreneurs find business space through identification of gaps that are left by virtue of operation of medium and large business corporations in the market. Small businesses derive their business grounds from filling the gaps through providing services that are left uncovered by large companies. A small business can begin by exploring the gaps left by large business corporations and later expand into other business areas that emerge in the course of such an investment (Stringfellow & Shaw, 2009).
Human capital development in small business enhancement is quite challenging because of the aspect of minimal capital to operate such a business. Mau (2011) observed that one of the modalities of developing an efficient human capital base for small businesses is through deployment of employees with basic skills and enhancing training to raise the capacity of employees to deliver on their tasks.
The rationale behind this observation is that small businesses often lose out in the job market when it comes to competition for human capital in the open job environment. The standards of remuneration that can be sustained by small business owners are far much below the standards of remuneration that are embraced by large business corporations.
Therefore, establishment of a certain standard of deploying and training employees can result in minimization of competition for human capital in the market, resulting in improvement of performance of small businesses. Small businesses can also embrace the aspect of outsourcing for skills on the basis of hiring certain services that they cannot deploy and sustain (Stringfellow & Shaw, 2009).
References
Haug, A., Pedersen, S. G., & Arlbjørn, J. S. (2011). IT readiness in small and medium-sized enterprises. Industrial Management & Data Systems, 111(4), 490-508.
Mau, S. (2011). Small business success key to state’s employment growth. South Carolina Business, 32(6), 36-39
Stringfellow, L., & Shaw, E. (2009). Conceptualising entrepreneurial capital for a study of performance in small professional service firms. International Journal of Entrepreneurial Behaviour & Research, 15(2), 137-161.