Common errors that sink businessesAccording to management experts, a few common, but seemingly minor fallacies often lead to a corporation’s downfall.
The first mistake many managers make is misconstruing visions and goals. A misunderstanding regarding a company’s mission can lead to factionalism, A clear plan allows a company to realize its goals. An unclear plan will likely lead to internal squabbling, with each side barking out an erroneous corporate dogma.
Even companies in the same industry might have vastly different plans aimed at achieving disparate goals. A company looking to increase sales by 10 percent might consider a plan to consolidate customer service or become more competitive on pricing. A company in the same industry that is in need of a complete turnaround would choose a more comprehensive plan, possibly including a merger or acquisition.
Another common mistake managers make is treating sales and marketing like interchangeable parts. They are connected, but thinking that they are one in the same can be ruinous. A firm’s sales department has one goal: to sell products, preferably, at the biggest margin possible.
The marketing people, on the other hand, try to look at the equation from the customer’s perspective. They try to give a consumer enough good reasons to buy a product that he has already decided that he wants it before a sales person even knocks on his door.
A local cafe might circulate promotional leaflets to attract more customers. Handing out the leaflets and making a short pitch to potential customers is a sales activity. Expanding the menu after determining that customers might want more than just cappuccino, reworking the cafe’s interior and creating a leaflet that highlights those changes are marketing.
True, marketers and salesmen are similar, but they each have specific skills that contribute to a company’s success. Think of a marketer as a starting pitcher on a baseball team. His success depends on talent, consistency and knowing his opponent. A salesman is more like a closing pitcher. He relies on power and cunning, and must be able to bounce back quickly from defeat.
A mistake inexperienced managers frequently make is underestimating the draining effect that runaway costs have on their business.
While boosting sales is obviously important, it usually happens only by opening new markets or stealing customers from competitors; both are easier said than done.
Cutting expenses is relatively easier, and can have longer-lasting benefits. By making clear that unnecessary expenses will not be tolerated, a manager can create a culture of thrifty discipline within the organization. Subordinates will think twice about being frivolous with the company credit card, and the company’s bottom line will benefit.
Another bit of flawed corporate logic is believing that people alone make or break a company. This is true to a point, but making your employees the cornerstone of your plan is like planning to fail. Successful companies are centered on sound systems ― for managing cash, research and development, recruiting and everything else that constitutes running a business.
When a company becomes too dependent on a few individuals, the system breaks down. Should one of the key people leave the company, the corporate pillars will surely start to shake. More than a few businesses have come crashing down because their managers allowed personal fiefdoms to develop right under their noses.
Not relying too much on a small core group is also important for ensuring flexibility. One common misconception among corporate managers is that their firms do not have to be adaptable. Concentrating on digging one well, and one well only, can end with a management team peeking out from their hole in the ground one day to find that the industry has changed ― and they are left out.
Most of the companies that have weathered the ups and downs of the economy over the years have done so by sticking with the fundamentals. They likely all had clear plans to achieve attainable goals, effectively developed sales and marketing networks, kept a tight rein on expenses, developed good core systems that could outlast the people who built them and were adaptable enough to grow within the fluctuating business environment.
by Cho Min-young
More in Features
Kakao TV launches this month, takes on Netflix
[TURNING 20] In a sea of hate, change flourishes
Criticism of sex ed books for kids raises more questions than answers
When it comes to sex ed, this Danish author says just talk about it
The traveling grandma who's 'alive and kicking it'