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This is a third part of the series, first part is HERE and second part is HERE.

Issue 3: Executive Management
You may have already derived this issue from the previous two (Issue 1: Human Resourced, Issue 2: Sales and Marketing). This, however, covers more than just inability to trust own employees. The issue with executive management is that they both are unable – and unwilling – to admit that they don’t really know how to run this specific business. Once they get over their own oversized egos, they will start seeing the light at the end of the tunnel the issues they themselves create and, hopefully, will do something about it. They have big plans of opening same kind of salon (with the same business model) in more expensive neighborhoods. Of course, it won’t work: more affluent people are used to certain level of service and once they won’t see it – they will never come back. Again, it’s not that the owners are making the mistake of having only low prices their competitive advantage and their value proposition, it’s the inability to have a basic understanding of how markets work.

Another issue with management is that they are cheap – in a bad sense of that word. There’s nothing wrong with being conscious about your spending. However, there’s a pretty thick line. Unwillingness to afford paper towels for clients being covered in creme at every procedure, or provide bare minimum to cover sanitary needs, or cheaping out on cover for hundred thousand dollar worth of equipment is not smart spending. Any requests by employees fall on owners’ deaf years, however.

To add injury to the insult, management tend to blame employees for low income. The rationale goes as there are money being spent on advertising, but the outcome is very low, not many appointment are booked and not much of income is generated. Obviously, employees that are motivated in such manner do little – if anything – to help the business grow in a right direction.

They say at least 50% of start up businesses are failing within the first year and 90% – within two years. Here’s another one bites the dust.

If you are a small business owner and you are not watching “Kell On Earth” on Bravo TV – you definitely should. It’s a show about one of the well known PR people in fashion industry – Kelly Cutrone and her PR company, People’s Revolution. Of course, it’s just a show, done for and by one of the toughest PR people in the industry, so don’t believe everything you see there. But last few episodes are quite a good example of what NOT to do if you have any plans on keeping people who work with you today around longer than until tomorrow. Or if you have any kind of long term strategy at all.

One of the highlights of last three episodes are that assistants to Kelly, Robyn and Emily (business partners at People’s Revolution) burning out and quitting or being on the verge of it.  The quitting intrigue has made well over 70% of each episode’s trailer. Point is – all three partners (at least on the show) are overloading people with responsibilities and attitude. They just burn through assistants. Now, “Kell on Earth” is, effectively, a show, so they can show whatever they want to show there. However, being a small business owner and having at least a couple of company development ahead of you – you should probably act different.

First of all – people do burn out. Once they did and you throw them out for being useless – you need to hire new people and train them. That takes away from your time when you could be making money. Don’t train newcomers and they will have a higher chance to mess up stuff. It’s a vicious circle.

Second – unless all your clients are your personal connections the word will get out and people will be concerned of doing business with you. Meaning – how can I trust you with my business if you don’t value your own people. Besides, there’s a chance that my order (or whatever I want from you) will land on that time when you got rid of old people but haven’t got any new ones yet. Which means now I, as your client, will have a higher chance to get my stuff messed up by you.

Third – unless you can hire people a dime a dozen, people are your greatest asset. They make things happen, they spin the wheels, they push the buttons, they man the phones. One person can do more damage to the company than an exploded bomb ever can. Likewise, one properly answered phone call just may elevate your company to a totally new level.

The show is just a show – nothing more, nothing less. Your company is, on the other hand, something that feeds you, your family and, most likely, a bunch of other people. As I have said before – the people are the ones who make things happen at your company. Or, in other words, people are the ones who make your company happen. Keep that in mind.