Small Business Issues – Part III

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.