THE DANGER OF RUNNING A BIG BUSINESS LIKE A SHOP

One of the forces that hinder business growth in our clime is emotional attachment. Businesses that have outgrown shop are still ran in a shop. Some businesses have outgrown the way they are managed, but because the owners are not ready to take the decisive steps that will lead to exponential growth, diminishing returns set in.

Several years ago, a large plant burned down to the ground; four months after it has started production. Safety experts still debate the lessons of the fire.

But the main cause of the fire was not unsafe construction; it was management’s inability to adjust its attitude to the realities of a large enterprise.

The enterprise had been founded by the man who was still managing it at the time of the fire. He started as a mechanic in the back of the of his father’s small shop.

At first he employed two or three men. Twenty-five years later, at the time of the fire, he employed nine thousand. But he was still running a small shop, even though he, by the time of the fire, supplied a vital part to most of the mechanical industries in his country.

When the company had first started the plans for the new plant, several of the Board members urged that four or five plants be built rather than one. They pointed out that to put all production into one plant might create trouble in the case of accident, bombing or fire.

They also pointed out that the customers were distributed all over the country so that freight considerations alone would argue for a multi-plant pattern.

The chief executive turned a deaf ear to these suggestions. His argument was that he had to guarantee quality to his suppliers and therefore had to be personally responsible for production. The real reason was simply that he was emotionally unable to let go of any part of the responsibility.

That the fire spread so rapidly was owing to the absence of any fire retarding walls. The president had vetoed any such wall in the architect’s drawing as to be able to view the entire plant from a gallery behind his office.

When the fire started the foreman tried to reach the president. He was out to lunch. There was no other management; the president was still his own plant manager, indeed his own department superintendent.

As a result nobody coordinated the fire-fighting efforts, nobody even tried to remove the most important machines, files, or blueprints when it became clear that the plant could not be saved.

Not only did the plant burn to the ground, but the business was destroyed. For there was no one, except the president, who could negotiate with customers, suppliers, and machine builders or could subcontract the production while the plant was being rebuilt. The company had to be liquidated.

And yet, as one Board member remarked, the company and its stockholders did better than if they had waited until the old man died. “For” as he said, “we at least had the insurance money to distribute; if we had waited until the old man’s death, we would have had not even this but would have been just as unable to continue the business.”

I have always maintained that management is the heartbeat of every organization. You may have fantastic products, good production company in a good location and still struggle if you fail to set up a good management structure.

The president of that company watched the company he labored to build to burn to the ground because he failed to set up a proper management structure.

There are great number of business owners that run their company like that. They are the chairman, chief executive officer, accountant, warehouse manager, marketing manager, salesman etc. That’s why many businesses go to the grave with the owners.

If you do not want to have the same experience the president had, kindly join me at the Business and Career Conference coming up on the 29th September, 2018, at Innovation Center, Lekki Phase One, Lagos.

The conference is open for just 30 persons who truly want to change the face of their businesses. There is will be two seasons and the time is 10AM. The topics are Universal Laws of Business Success and Ninety Degree Management. Admission is N25,000. You can pay through King’s Uncommon Wisdom Limited. 0141855113. GTBank. For more information, call Godwin on 07032681154 or check the handbill below. Keep soaring!

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