Case Four: Managing A Small Business

CASE FOUR: MANAGING A SMALL BUSINESS

By Mike McLoughlin,
Youth With A Mission, Marketplace Mission
Visit the Scruples Small Business Forum at www.scruples.net for more information.

DJ & Marlene were excited about the start up of their new poultry business. DJ had decided to start with a small number of hatchlings and raise them in a temporary location at his uncle’s place. He would sell dressed chickens to church members, as that was the most profitable market under their present situation. He had a visit with his friend Mark who had finished his accounting program and together they worked out a plan for repaying the loan that DJ had received from his uncle. DJ was very glad to have Mark's help, as he knew that he was not strong in the area of handling money.

Meanwhile, the government regulators had decided to ban all imported broiler chickens from neighbouring countries due to an outbreak of disease. This increased the price that live birds were fetching on the wholesale market. Mr. Muleko, DJ's former employer, decided that now was the time to expand his broiler chicken operation. He tore down his old pens and built new larger ones. His objective was to double his production from 500 birds a week to 1000 birds a week. Initially, it was difficult to secure additional orders for the chickens; however, Mr. Muleko knew how to beat the competition. He offered a commission to the purchasing managers of the different grocery outlets. It was 15 percent on the gross monthly sales of the birds to their store. The commission was paid in cash when the manager placed the order. With this arrangement, Mr. Muleko was able to secure additional orders for his chickens.

He felt very satisfied with his profitable business and suggested to Mrs. Muleko that now was the time to think about retirement. "Let us take life easy, let us eat, drink and be happy" he said. He staged a big party for all his friends and family to celebrate the success of his business. After the party he was not feeling well so he retired early to bed. In the night, Mr. Muleko had a massive heart attack and died in his sleep.

Mrs. Muleko was devastated. She was suddenly widowed and since they did not have any children she was very concerned about how she was going to survive. She did not know anything about running the broiler chicken business. She was worried that her husband’s relatives would come and take it away from her. She had always been fond of DJ when he worked for Mr. Muleko and was very sorry when he was fired. So she approached DJ to hire him to run the business. DJ and Marlene prayed about it and felt like God had directed them to own their own business so he declined. Mrs. Muleko was not deterred she offered to make him a partner with her in the business. Again DJ replied that he felt God was directing him to be partners only with Christian people and, as Mrs. Muleko was not a Christian he had to decline. So, Mrs. Muleko finally offered to rent the chicken pens to him at a reasonable rate and he could run his own business from there.

This seemed like a good arrangement. DJ & Marlene needed a more permanent location with a better facility and Mrs. Muleko needed a steady source of income to provide for her needs. So DJ agreed to move his business to the late Mr. Muleko's facilities.

Case Problem:

1. Develop a Business Start Up plan for DJ & Marlene that would help them to manage the larger business situation that they had inherited.

Why? ___________________________________________________________________

What? ___________________________________________________________________

When? ___________________________________________________________________

Who? ___________________________________________________________________

Where? __________________________________________________________________

How? __________________________________________________________________

2. Is he going to continue to pay a cash commission to the purchasing agents? Why? Why not? What could happen? What can he do about it?

3. Develop an Organizational Chart for the business. Who is going to do what?

CASE FOUR SOLUTION
1.Develop a Business Start Up Plan for DJ & Marlene
Why? To expand the Business; To provide quality.
To witness in the Marketplace.
What? Run a wholesale Chicken business.
When? Down size operation to monthly supply.
Who? DJ, Marlene, Mark; Mrs. Muleko, Stores...
Where? Economic: Protected Market (Watch out!);
Phys: Late Mr. Muleko's Chicken Pens; Mar: Wholesale.
How? Finance from Friends and Family to start.
Bank needs security.
2. How should chickens be marketed?
No cash bribes! Offer an honest incentive.
Emphasize quality and reliability.
Discount for volume purchase.
3. Develop Organizational Chart.
Mark	DJ	Marlene
Managers: Production, Sales, Accounting.
Foremen:
Workers: Production; Sales; Bookkeeper; Driver
Others: Security; Quality Control; Clerks; Receptionist.
Really only need a small number of workers.

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