November 2022 2nd issue: Eight traps that SMEs are likely to fall into
Various companies are doing business in the world. Society is changing moment by moment, and corporate managers must manage their businesses while responding appropriately to those changes. The owners of many small and medium-sized enterprises are also trying to maintain and develop their businesses while responding to changes in society.
Business success or failure depends on the company. Some companies are steadily increasing sales and growing, while others are doing their best to maintain the status quo. Among them, there are not a few companies that are in decline and management is in danger.
By the way, what is the difference between a growing company, a status quo company, and a declining company? What is the difference between successful and unsuccessful managers?
If you look closely, you can see that the management's course of action is greatly different depending on the management's way of thinking and actions. Here, we observed the managers of small and medium-sized enterprises that Tamatsu Labo had contact with. Then, I summarized the wrong behaviors or thinking biases that small and medium business owners tend to fall into when they fail as eight traps that small and medium enterprises tend to fall into.
It's a red flag if management is falling into this line of thinking. If you're a small business owner, be very careful not to fall into this kind of thinking and make sure you don't screw up your business.
The important thing is to manage the business in a way that allows it to survive in the market competition, and for that reason, to correctly understand social changes, and to respond appropriately to those changes and take measures. By all means, be very careful not to fall into the wrong thinking bias.
"1. A trap that makes you stop admitting failure"
The advantage of small and medium-sized enterprises is that they are agile. The advantage of a small organization is that it can quickly respond to social changes and move quickly. Even if you fail in some business, it is important to quickly withdraw or correct the course and recover before the damage becomes deep. In particular, small and medium-sized enterprises can be fatally injured if they suffer a serious business failure, so it is better to quickly correct the course or withdraw when they fail.
However, it is dangerous for the company if the management does not admit failure. If you continue to slurp a business in the red or a project that has no prospects, the management may come to a dead end at once.
Sure, there are times when you don't want to admit failure. In particular, if you fail in areas related to the manager's stubbornness and pride, it may be unavoidable that the manager will not want to admit defeat. However, if you continue to do the same thing without acknowledging your failure, it may be irreversible.
It is often necessary for managers to “admit failure”. Especially in an age of rapid change, if something fails, management must admit it as quickly as possible and correct the course. The strength of SMEs is that they can turn around quickly and make quick course corrections, so we must not lose that strength.
"2. The trap of leaving dissatisfaction within the company"
It is various dissatisfaction hidden in the company that the manager of a company must fear. People get frustrated in many ways. Accumulation of customer, employee, and supplier dissatisfaction can lead to various problems.
For example, if employee dissatisfaction is neglected, the following tend to occur.
(1) excellent employees quit, (2) betrayal and slanderous exchanges occur, (3) employees pull each other down, (4) personal information and customer information is leaked, (5) job changes and rival companies start up, etc. Betrayal occurs, (6) slander is slandered on the Internet, and in some cases lawsuits are filed, (7) employee slacking is rampant, and (8) the number of employees who secretly work side jobs during working hours increases.
Problems like this force small business owners to increase scrutiny of their employees and spend time dealing with individual issues. This not only makes it impossible for managers to concentrate on their original work, but also makes it easier for them to accumulate dissatisfaction within the company.
Dealing with the problems that arise individually, that is, doing what is called "whack-a-mole," is not a fundamental solution. Managers must find the source of "internal dissatisfaction" that is hidden behind the problems that arise, and must eliminate them from the very beginning.
“Internal dissatisfaction” can arise for a variety of reasons. For example, the following are factors that accumulate dissatisfaction within the company.
(1) power harassment from superiors, (2) unfair work burden, (3) complaints about wages, (4) unsatisfactory personnel evaluations, (5) jealousy and distrust of other employees, (6) lack of human resource development and individual goals, or (7) stress due to inefficiency in sales activities and internal office work; (8) manager's lack of understanding of employees' feelings
Managers must first find out the dissatisfaction hidden in the company by grasping the atmosphere of the company, listening to employees, or observing their behavior. Then, if necessary, it is important to carefully think about how to resolve the dissatisfaction while consulting with the employees. In addition, it is also an important job for managers to take measures to prevent “in-house dissatisfaction” from accumulating in the first place.
"3. The trap of choosing a successor that collapses the company"
Business succession is a very important issue for SMEs. It is no exaggeration to say that how to smoothly hand over the company to the successor is an issue that affects the survival of the company. Unfortunately, not a few small and medium-sized enterprises have been hit hard by taking this "business succession" lightly. In some cases, the company may choose a successor who actually collapses the company.
What is successor selection that collapses the company?
For example, let's say that the president's son or a relative's child is made the new president. What if that person is in their thirties and has an unreliable atmosphere and words without weight? The in-house veterans who have served the former president until now will be dissatisfied.
"I'm worried about the company with such an unreliable new president."
Thinking like this, the hard-working veterans may leave the company first. Simply having a young and unreliable new president can wreak havoc on an organization.
Besides, young presidents often tend to be arrogant without being aware of their own abilities. While he has poor management skills, he may embezzle the company's money and make a big hole.
It is not a good way to make the successor just a title president. In a company where the young president has no authority and the former president actually makes all the decisions, employees will not know which side to turn their heads to and the company organization will be confused. If young presidents are seen as mere puppets of the previous president, they will lose respect and become isolated within the company. In addition, the situation can lead to the young president holding a grudge and hating the former president, which can lead to infighting and division within the company.
When managing a small business, it is important not to make mistakes in "business succession". In order not to make a mistake, it is important to learn about "business succession" as a manager, carefully nurture a successor, and appoint him after he is recognized as suitable for the position of president. In fact, when a successor takes office as president, I would like to be careful not to cause dissatisfaction among veteran employees or chaos in the company organization.
"4. The trap of jumping on an easy proposal"
In small and medium-sized enterprises, one-man presidents often make decisions in a dictatorial manner. In such a small organization, quick decision-making is expected, but on the other hand, there is a danger of jumping to easy proposals due to prejudice and prejudice.
There are many small and medium-sized companies that, when flattered by a well-spoken salesperson, puts the president in a good mood and jumps at the salesperson's easy proposal. There are cases in which a company suffers a great loss because it jumps at the salesman's mouth and jumps on an easy proposal.
Small and medium business owners must be wary of salespeople who are good-spoken people who make them feel good. It is also important to take the time to reflect on yourself to see if you have made the wrong decision due to prejudices such as prejudices and likes and dislikes.
Also, if you have a strong feeling that the company belongs to you, you tend to think that it is right for you to make decisions on your own. But autocratic decision-making makes it easy to make big mistakes. Even in a small company, it is important to set rules for the decision-making process, such as holding a meeting or passing a request for approval when making a big decision.
"5. Trap that stops responding to change"
The world changes. we change too. In order to survive and grow in a changing social environment, companies must respond to these changes and, in some cases, must manage in anticipation of expected changes. SMEs inherently have the advantage of being able to make quicker turnarounds and make quicker course corrections than large companies. However, if managers rely too much on past experiences and have fixed ideas, they may not respond to change. If managers stop responding to change, companies are more likely to fall into financial crisis.
The lack of response to change is due to the fixed thinking of management. It is the experience and habits of many years that have regulated the thoughts and actions of managers.
The external environment changes. Business practices that were once taken for granted may become illegal as laws and regulations become more stringent. As competition intensifies, in the past it was easy to get orders just by going to the sales department, but now we can't get orders unless we do something that makes us more attractive than other companies. Changes in people's behavior can make old ways of doing business ineffective.
The internal environment also changes. Both managers and employees get older each year. As employees gradually age, their thinking becomes more fixed and their movements become sluggish. Without bringing in new people, the company will not rejuvenate. Also, unless we continue to learn new ideas, the company will not be able to keep up with the new era.
"6. The trap of starting a new business half-heartedly"
Many business owners want to diversify their operations. It is a big issue for companies to increase sales and profits by launching new products and launching new businesses, and by extension, stabilizing management. However, it is risky for a company to start a new business halfway.
Small and medium-sized enterprises often tend to start new businesses half-heartedly. If you start a new business half-heartedly, the company may suffer serious damage.
For example, the main business may be neglected due to the excessive use of management resources for new businesses. New businesses tend to be in the red in the beginning. However, it is dangerous if the newly launched business continues to run in the red.
If the motivation of the new business project team declines and the employees who work in the main business accumulate dissatisfaction, the company itself may collapse.
If you're going to start a new business, don't be half-hearted. You should always set a goal for when you will make a profit and make a concrete plan to achieve the goal. Also, if the business does not get on track, it is important to quickly correct the trajectory and, in some cases, decide to withdraw at an early stage. In order to make a quick decision to withdraw when the situation is unfavorable, it is a good idea to determine the withdrawal criteria in advance before entering a new business.
"7. Trap that attracts complaints"
How do SMEs deal with customer complaints, supplier and internal dissatisfaction?
Perhaps you are only responding to those who complain and neglecting those who do not complain.
If we deal only with those who complain, those who complain will benefit, and those who do not will lose. In fact, such a way of dealing with "only dealing with those who have complained" is the same as rewarding those who complain and punishing those who do not.
This means that the company is attracting those who complain and alienating those who do not. In this way, the company will attract people who complain and people who do not complain will stay away.
If you say, "It's better to complain if you're dating this company," even people who normally don't complain will become people who complain to that company. As a result, complaints will increase.
Small businesses often make mistakes in how they handle complaints. Incorrect handling of complaints will result in more complaints, attracting those who complain, and alienating those who do not.
"8. A trap where past experiences become assumptions"
Past experiences are valuable lessons. However, if past experience becomes an assumption, it will become a material for making mistakes in management decisions.
"I have good intuition", "This is how sales are done", "If you do as I say, there will be no problem"
It may be a red flag if management starts to make such statements.
What has been successful up to now has often been a coincidence, and it is dangerous to rely solely on one's own intuition.
There are various methods and theories in sales. Sales methods differ depending on the region, age, product or service. Even people who have been working as a salesman for many years have a way of doing business that they don't know. Also, as the times change, the way of doing business in the past will no longer work. If you decide that "sales should be done this way", your sales activities will become fixed, and it will gradually become unsuccessful.
If the management says, "If you do as I say, there will be no problem," the employees will have no choice but to do as they say. This causes employees to stop thinking, and the company will only operate within the scope of management's experience or beliefs.
Summary
The above "eight traps that small and medium-sized enterprises are likely to fall into" are especially common in companies facing management crises. Falling into more than one trap puts the company itself in jeopardy. Small business owners in particular should be vigilant and avoid falling into these eight traps.
※Eight traps that small and medium-sized enterprises are likely to fall into and countermeasures (PDF file)
*Return to Topics
