N5 Entrepreneurship 1. Introduction


Planning without control is of little value to the business. Controlling involves checking to determine whether or not your business is progressing towards its goals, and if not, whether it is taking the required corrective action. If not, then your plans might stay exactly what they are, namely plans. It is important for everyone in the business to understand, and to be involved in the planning and controlling process.


Controlling your business’s operations and keeping them on schedule means that the entrepreneur must identify the areas that give a good indication of how well a business is doing. (Key performance indicators). The source of these indicators is the operating data from the company’s normal business activity, accounting books, production process (units produced, number installed per day, etc.), sales figures, absenteeism register, inventory lists and other operating records. This includes all sources of data that the manager can use for controlling activities. For example, the following feedback may help you from a control perspective, to determine whether your business’s client service is satisfactory: • customer complaints • orders returned • on-time delivery • correctness of the order


As conditions change, the entrepreneur must make corrections in performances, policies, strategies and objectives to get performance back on track. The small business has no need for a sophisticated, expensive control system. The system should be so practical that it becomes a natural part of the management process.


Control sources Accounting books Inventory list books Absenteeism register Sale figures Production schedule


1.1 The nature of control


In order for control to work in a business, certain conditions have to be provided. First, criteria for success – “ruler” – must be established in order to have something to measure your performance with or against. This requires planning in the form of measurable production goals, quality guidelines, sales targets, last year’s results, etc. Secondly, information must be available for making comparisons. This step requires good record keeping. Finally, corrective action must be possible. This calls for provisions for incorporating changes where they are needed.


• You need goals to measure your actual results against • Information must be available to make the comparison • Corrective action must be possible if there is a problem


PAUSE FOR THOUGHT


Planning provides the criteria (ruler) against which actual performance is measured. The measurement of performance is control.


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