Management

Management: A Badly Managed Business Is No Good!

There is a phrase that is commonly repeated in business circles: “To pour money into the problem is to run out of money, and even to increase the problem. The money should be put into the solutions”.

Unfortunately, this situation is not always obvious. In another adage by John Rockefeller “The best business in the world is well-run oil. The second best business in the world is poorly managed oil”. To this well-known phrase, we have a graft of unknown origin “The third best business in the world is Petrobras.”

Risking everything

These phrases seem contradictory in their concept, but that is not true. What is true is that there are businesses that are so profitable, or companies so large, that the effects of this phenomenon are not seen, or are hardly quantifiable. However, for an SME, this situation is rarely true.

A poorly run company, even marginally, has hardly recoverable costs. And when we talk about the assets of the small and medium entrepreneurs, which are often small and usually scarce, this means that the entrepreneur is risking everything he has, even the survival of the family in some cases.

In a way, insisting on a business that is badly run is a bit like curing a hangover with more booze, or coping with stress by eating, rather than solving the causes of stress – all halfway to a heart attack. The company uses its resources to maintain and feed a problem, which uses up the resources at an ever-increasing rate. The entrepreneur runs out of resources, and the structure that perpetuates the error is still there, demanding to be fed.

Additional money is always needed

The reality here is simple: If it is badly managed, then someone is paying for it. Often, in large companies, they solve the problem by making their employees work well beyond working hours. And yet, such a solution is not true and does not solve the situation. Additional money is always needed, and the final product always ends up projecting lower quality, with increased risks of losing market share.

But this scenario has a more, silent, camouflaged side. This occurs when mistakes are not big enough to endanger the business, but which drain the resources that are needed to accumulate to face a difficulty, or to reinvest. Businesses have difficulty operating and producing what they should. Those who work are usually subject to increased stress and aggression.

The company can’t innovate, nor have the flexibility to adapt to new situations. And the moment there is a situation of greater impact, that is when all the accumulated inefficiency makes itself felt. There is no money to invest in sales and marketing, to endure a longer period of crisis, or sometimes even to close down the business while protecting as much as possible of the assets of the employees, managers, and partners.

The scandal

And in the case of the example given, Petrobras, such a situation could not be more illustrative. The amount of money lost and embezzled would be enough to save countless lives in the health system or to develop the country with increased economic activity. And, directly, it would not have provoked the scandal and the judicial and political processes that followed the discovery of the corruption schemes associated with this company, and that, at the limit, fueled the fire that led to the “impeachment” of President Dilma Rousseff.

In a more normal company, mismanagement takes the form of poor cash management (with skyrocketing financial and development costs), and poor personnel management, often with cronyism taking precedence over skill-based hiring or promotion.

A lack of management knowledge can lead to bad decisions. And in general, what happens is that the company doesn’t function well, there is friction, and the business never grows, not least because you never have the money to hire competent people.

Getting Help

We hope, dear reader, that you don’t have any of these problems. But if this is the case, we invite you to contact us so that we can help you. Because a well-managed company is 10 times better and more productive than an averagely managed company. And a superbly managed company is 10 times more productive than a well-managed company.

This scale is an enabler of success. From us, you will find competent solutions to deliver, company development to build, and a solution tailored to your needs.