Marketing & Salesategy
Finance & Indicators
Human Capital
Operations
Strategy
Opera
Marke
eting & Sales Operations Financ
...
1
Copyright 2014 by
Hector D. Debernardo y Margarita M. E. Hurtado Hernandez.
All rights reserved.
No part of this book ma...
Senior management consultant and independent board member.
Mentor to executives and family business successors. Writer and...
Graduate studies professor and advisor in the areas of Operations
Management and Project Management, at Universidad Paname...
Margarita Hurtado Hernandez
margarita@puenteempresarial.com
www.puenteempresarial.com
Academician oriented towards the app...
As an academician, she has participated in undergraduate and graduate
programsatuniversitiesinColombia,Spain,ArgentinaandM...
To those who are always with us,
even though we are not near them
Top 60 mistakes made by SMB and how to avoid them
Table of Contents
1 Not planning the company's future.
2 Not understanding the natural variability of the business
and of ...
MARKETING & SALES
15 Lack of clarity about who the customers are.
16 Lack of clarity about who the competitors are.
17 Lac...
FINANCE & INDICATORS
53
54
55
57
58
59
61
62
63
pag.
31 Not planning or executing plans.
32 Underestimating the importance...
46 Not having the right person at every position.
47 The entrepreneur and the director.
48 Allow oneself to be guided by f...
Why did WE write this book?
If you, dear reader, are an entrepreneur, you have our admiration. It is
not easy being one. I...
Thestatementsintheprecedingparagraphsaregoodnewsindeed,even
though they can sometimes be interpreted as negative facts. Th...
Why should YOU read this book?
In a small city in a country which economy is mostly agricultural, there
were three electro...
That is how a partnership between these four people was born. Let's call
itIngevision.
When the national government decide...
As every time a win-win solution is found, all parties involved exceeded
their initial expectations. Ingevision achieved a...
Human Resources, which main purpose is to ensure that the
companyhastherightpersonateveryposition.
The approach of this bo...
“The only human being that does not make
mistakes is the one who does nothing”
Anonimous
“With so many mistakes to be made...
Upcoming SlideShare
Loading in...5
×

Top 60 mistakes made by Small and Medium Businesses and how to avoid them

625

Published on

You can get the e-book, either in English or Spanish, visiting http://www.puenteempresarial.com/2010/06/06/libros-y-articulos-en-venta.

This book introduced what the authors claim are the top 60 mistakes made by Small and Medium Businesses and methods to avoid them.

Hector D. Debernardo is a senior management consultant and independent board member. Mentor to executives and family business successors. Writer and lecturer. He has collaborated with more than 100 manufacturing, commercial and service companies in Mexico, Argentina and Spain. Expert in the areas of operations and project management, strategy design and commercial planning, innovation, change management and family businesses.

Margarita Hurtado Hernández is an academician oriented towards the application of knowledge in order to obtain positive results in organizations through business training and the higher education of young professionals. Agro-Industrial Engineer (Universidad de la Sabana, Colombia), Ph.D. in Industrial Engineering (Universidad de Navarra, Spain) and graduated from the Executive Management Program (IPADE, Mexico) and the Developing Women Leaders in University Administration Program (UCLA, USA). Current Director of the Industrial Engineering Bachelor and Professor of the Operation Management Department at Universidad Panamericana (Mexico). Leader of research projects on how to improve the performance of an organization through the system approach.

Published in: Education
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
625
On Slideshare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
17
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "Top 60 mistakes made by Small and Medium Businesses and how to avoid them"

  1. 1. Marketing & Salesategy Finance & Indicators Human Capital Operations Strategy Opera Marke eting & Sales Operations Financ nce & Indicators Human Capital Marketing & Salesategy Finance & Indicators Human Capital Operations Strategy Opera Marke eting & Sales Operations Financ nce & Indicators Human Capital Marketing & Salesategy Finance & Indicators Human Capital Operations Strategy Opera Marke eting & Sales Operations Financ nce & Indicators Human Capital Marketing & Salesategy Finance & Indicators Human Capital Operations Strategy Opera Marke HECTOR D. DEBERNARDO MARGARITA HURTADO HERNANDEZ Top 60 mistakesmade by Small and Medium Businessesand to avoid them how To get the e-book, either in English or Spanish, e-mail us to info@puenteempresarial.com
  2. 2. 1 Copyright 2014 by Hector D. Debernardo y Margarita M. E. Hurtado Hernandez. All rights reserved. No part of this book may be reproduced and transmitted in any form and by any means without the written permission of the publisher, except in the case of brief quotations used in book reviews and critical articles. Published in Mexico by Hector D. Debernardo. Empresa 113-5, Insurgentes Mixcoac, 03920 Mexico DF, Mexico. hector@puenteempresarial.com. First edition. March 2014. ISBN: 978-607-00-7773-9 Original title in Spanish: “Las PYMES. Principales causas de fracaso y cómo combatirlas”, by Hector D. Debernardo and Margarita M. E. Hurtado Hernández, Ediciones Fiscales ISEF, 2008. Translated by Cecilia Martinez Lavin Castañeda. Cover and layout design by Ana Cecilia Flores Calderón. Intellectual property advisor: Jorge Molet Burguete. Top 60 mistakes made by SMB and how to avoid them
  3. 3. Senior management consultant and independent board member. Mentor to executives and family business successors. Writer and lecturer. Hehascollaboratedwithmorethan100manufacturing,commercialand servicecompaniesinMexico,ArgentinaandSpain. Expert in the areas of operations and project management, strategy design and commercial planning, innovation, change management and familybusinesses. Author of the books "El Puente. Mejore los resultados de su empresa aplicando el pensamiento sistémico" and "Top 60 mistakes made by Small and Medium Businesses and how to avoid them". Guest author of the book "Contabilidad y gestión" by Ph.D. Enrique Herrscher. He presented articles at international congresses on practical applications tobusinessesofthesystemapproach. Founder and CEO of www.puenteempresarial.com, which was conceived as a means for the fast publishing of contents and tools for executivesandbusinessowners. Hector D. Debernardo hector@puenteempresarial.com www.puenteempresarial.com 2 Top 60 mistakes made by SMB and how to avoid them
  4. 4. Graduate studies professor and advisor in the areas of Operations Management and Project Management, at Universidad Panamericana (Mexico). Collaborator at Instituto Panamericano de Alta Direccion de Empresa-IPADE(Mexico). He occupied several executive positions at the Centro Panamericano de Investigacion e Inovación, which was owned by Universidad Panamericana and IPADE, and was responsible for the Goldratt Institute'sactivitiesinArgentina. Former associate professor at Universidad Tecnologica Nacional (Argentina) and at Universidad de Navarra (Spain). Gave workshops for excecutives at Universidad Austral (Argentina), Universidad de La Sabana(Colombia)andEscueladeNegociosIDEA(Argentina). He has a degree in Nuclear Engineering (Instituto Balseiro, Argentina), a Ph.D in Industrial Engineering (Universidad de Navarra, Spain), graduated from the Innovation and Technology Senior Management Program (IPADE, Mexico) and from the Independent Board Members DevelopmentProgram(UniversidadAnahuac,Mexico).Heisanexpertin allTheoryofConstraintsdisciplines(GoldrattInstitute,USA). Member of the Theory of Constraints International Certification Organization (TOCICO) and of the Universidad de Navarra's Alumni Association(AlumniNavarrensis). 3 Top 60 mistakes made by SMB and how to avoid them
  5. 5. Margarita Hurtado Hernandez margarita@puenteempresarial.com www.puenteempresarial.com Academician oriented towards the application of knowledge in order to obtainpositiveresultsinorganizationsthroughbusinesstrainingandthe highereducationofyoungprofessionals. Agro-Industrial Engineer (Universidad de la Sabana, Colombia), Ph.D. in Industrial Engineering (Universidad de Navarra, Spain) and graduated from the Executive Management Program (IPADE, Mexico) and the Developing Women Leaders in University Administration Program (UCLA,USA). Current Director of the Industrial Engineering Bachelor and Professor of the Operation Management Department at Universidad Panamericana (Mexico). Leader of research projects on how to improve the performanceofanorganizationthroughthesystemapproach. In collaboration with Ph.D. Hector D. Debernardo, she founded www.puenteempresarial.com as a means for the fast publishing of contentsandtoolsforexecutivesandbusinessowners. As a consultant, she has participated in improvement projects for companiesinColombia,Spain,ArgentinaandMexico. 4 Top 60 mistakes made by SMB and how to avoid them
  6. 6. As an academician, she has participated in undergraduate and graduate programsatuniversitiesinColombia,Spain,ArgentinaandMexico. Co-author of the books "El Puente. Mejore los resultados de su empresa aplicando el pensamiento sistémico" and "Top 60 mistakes made by Small and Medium Businesses and how to avoid them". Technical content reviewer of the Spanish translation of the book "Supply Chain Management", by S. Chopra, P. Meindl. She presented and published articles on the practical applications of the system thinking at national andinternationalcongressesandmagazines. Faculty Advisor of the Institute of Industrial Engineers (IIE) at Universidad Panamericana - Mexico City Chapter. Member of the evaluation committee for articles presented at the System Dynamics Society's annual congress, sponsored, among others, by the MassachusettsInstituteofTechnology(M.I.T.). 5 Top 60 mistakes made by SMB and how to avoid them
  7. 7. To those who are always with us, even though we are not near them Top 60 mistakes made by SMB and how to avoid them
  8. 8. Table of Contents 1 Not planning the company's future. 2 Not understanding the natural variability of the business and of the environment. 3 Serve markets with a high probability of crashing simultaneously. 4 Segmenting resources. 5 Not having clear what are the elements that determine the company's ability to make money. 6 Not having clarity about the company's priorities. 7 Engaging in businesses that demand large amounts of capital before generating revenues. 8 Believing that continuous improvement consists in doing the same things with less resources. 9 Mix up growth with development. 10 Limited innovation. 11 Believing that any new technology can help the company. 12 Not taking advantage of the favorable effects of globalization. 13 Not taking advantage from strategic alliances. 14 Not taking advantage of subcontracting. STRATEGY Why did WE write this book? Why should YOU read this book? 7 CHAPTER 1 19 22 24 24 28 25 27 28 29 33 34 31 30 35 pag. 13 11 Top 60 mistakes made by SMB and how to avoid them
  9. 9. MARKETING & SALES 15 Lack of clarity about who the customers are. 16 Lack of clarity about who the competitors are. 17 Lack of clarity as to why does the market buy what our competitors and our company supply. 18 Not listening to customers, potential customers or non- buyers. 19 Supporting the market offer only on the sale price. 20 Having an erroneous idea of market segmentation. 21 No brand ownership. 22 Establishing prices based on costs. 23 Carrying out an unsuitable promotion for the target market. 24 Accepting collection terms longer than the ones the business can manage. 25 Using an unsuitable sales process. 26 Not being familiar with the skills, knowledge and attitude that salespeople must have. 27 Underestimating the duration of the sales process. 28 Underestimating the repurchase cycle. 29 Selling to customers more than what they need in the short term. 30 Depending on a very small customer portfolio. 8 CHAPTER 2 pag. 37 38 38 43 39 40 42 43 44 45 46 47 48 49 51 49 Top 60 mistakes made by SMB and how to avoid them
  10. 10. FINANCE & INDICATORS 53 54 55 57 58 59 61 62 63 pag. 31 Not planning or executing plans. 32 Underestimating the importance of quality. 33 Not honoring the commitments acquired with customers. 34 Assuming that reality will be the same as forecasts. 35 Having a wrong inventory profile. 36 Believing that the company is losing money whenever any resource is inactive. 37 Buying more than needed in the short run. 38 Depending on a single supplier. 39 Having an unsuitable post-sale service. OPERATIONS 40 Not measuring or following up on results. 41 Always give more importance to more expensive resources. 42 Erroneous calculation of the required working capital. 43 Mixing up profit with liquidity. 44 Using an unsuitable method to determine product profitability. 45 Add value beforehand. 9 CHAPTER 3 CHAPTER 3 65 65 66 68 69 70 Top 60 mistakes made by SMB and how to avoid them
  11. 11. 46 Not having the right person at every position. 47 The entrepreneur and the director. 48 Allow oneself to be guided by feelings instead of results. 49 Mixing up property, operation and family. 50 Performing tasks that should be carried out by collaborators. 51 Not creating a motivating environment. 52 Having unsuitable people training and retention processes. 53 Measure collaborators' performance using the wrong indicators. 54 Not giving feedback to collaborators. 55 Not being honest with collaborators and hide conflicts. 56 Believing that the solution to problems is out of reach. 57 Allowing other people's negative influence. 58 Letting fears paralyze. 59 Not taking advantage of other people's experience. 60 Not being honest. The triumph of a new “SPECIES”. AN AFTERTHOUGHT HUMAN RESOURCES 10 CHAPTER 5 pag. 73 74 77 79 81 82 84 85 86 86 87 88 89 91 92 90 Top 60 mistakes made by SMB and how to avoid them
  12. 12. Why did WE write this book? If you, dear reader, are an entrepreneur, you have our admiration. It is not easy being one. It is necessary to have a proper understanding of the environment and of the customers' needs, to know your competitors, to ensureareliableoperation,totakecareofthefinances,andtoobservea numberofgovernmentregulations. Companies, either very small or very large ones, are systems comprised of material resources, information and people that interact among themselves in order to achieve goals. They are complex, given the amount of elements and connections between them and with the environment. On the other hand, progress in the areas of telecommunications and transportation contributes to a greater integration of the world. In consequence, the difficulty to understand it and to decide how to performwithinit,increasesconstantly. Finally, China and India are following the path along which Japan and SouthKorea,amongothers,passedthroughdecadesago. What should be done in this context? Is it possible that small and medium businesses (SMB) can survive? Can they continue being the country'sgreatestjobcreators? In our job with SMB, we have found that most times, their failure is due to internal and not external causes. The increase in the environment's complexity and foreign competition contribute to the amplification of the negative consequences of the mistakes made, but they are not the underlyingproblem. 11 Top 60 mistakes made by SMB and how to avoid them
  13. 13. Thestatementsintheprecedingparagraphsaregoodnewsindeed,even though they can sometimes be interpreted as negative facts. They are telling us that in most cases, success or failure depends on the company itself,and not on factorsbeyond itscontrol.Itispossible,then,to survive andgrowintheinternationalcontextenvisagedforthiscentury. Although many of the concepts that will be presented in this book have proven to be very effective for companies of every size, the main goal of this book is to contribute to ensure the survival, development and growthofSMB. Our current way of thinking and acting is the result of the exchange of ideas and experiences shared with friends, entrepreneurs and distinguished authors. Angel Baguer Alcala, with whom we worked during the years we were living in Spain, and Eliyahu Goldratt, with whom we have interacted several times, have had a significant influence onus. Dear reader, we would be delighted to receive your comments on how didthisbookhelpedyouimprovetheperformanceofyourbusiness! Mexico City, December 2007. Margarita Hurtado Hernandez Hector D. Debernardo margarita@puenteempresarial.com hector@puenteempresarial.com 12 Top 60 mistakes made by SMB and how to avoid them
  14. 14. Why should YOU read this book? In a small city in a country which economy is mostly agricultural, there were three electronic engineers who were college classmates and who shared the dream of developing and selling hardware. Their revenues only allowed them to live modestly. They were having trouble finding a waytosucceed. At that time, a single company provided telephone services to the entire country. Its quality was very poor: communication was frequently lost while speaking, it was difficult to get a home line and most public telephonedevicesdidnotworkproperly. Oneday,oneofthetelephonecompany'semployees,Dan,wasstayingin a hotel and had an idea. He imagined a device capable of showing the user the duration and cost of the call while speaking and, at the same time, was able to indicate the receptionist how much to charge for such a call. Since he knew nothing about electronics, he began searching for someone who was able to design such product, and that was when he metthethreeyoungengineers. The first meeting was not very productive. They were tired of investing timeinprojectsthatproducednorevenues.Theydoubtedtheideacould be a commercial success and decided that this time they would not take the risk. They asked Dan for the money equivalent to several months of their revenues as their fee to design the device. He did not have enough cash, but he did have two things: his car, which market value was approximately the amount requested by the engineers, and the convictionthathisideawouldbeagreatbusiness. A couple of weeks later, Dan came back, on foot, and gave them the money. He had sold the only asset he possessed in order to make his idea come true. The message was convincing. The engineers were impressed. 13 Top 60 mistakes made by SMB and how to avoid them
  15. 15. That is how a partnership between these four people was born. Let's call itIngevision. When the national government decided to privatize telecommunica- tions, it demanded the winning companies to significantly improve the public telephone service. Ingevision took advantage of this situation in ordertoobtainaprofitablegrowthforseveralyears. Howdidtheyachievesuchasuccess? The technology developed by Ingevisión for hotels was also useful to manage groups of telephone booths. They created a simple business model: The owner of a commercial area made all of the necessary investment in order to turn it into a public telephone center, best knownastelephoneboothortelecentre. One of the telecommunications companies provided the telephonelines. Ingevision sold to the owner of the commercial area all the electronicequipmentnecessarytomanagecalls. Itwasarealwin-winsolution: Telephone companies were able to meet national government's requirementswithaverylowinvestment. The owner of the commercial area obtained a significant percentage of the retail price of each call, at a time when rates werehigh. By manufacturing and selling the devices and equipment to operate each commercial area, Ingevision obtained excellent profitability. 14 Top 60 mistakes made by SMB and how to avoid them
  16. 16. As every time a win-win solution is found, all parties involved exceeded their initial expectations. Ingevision achieved a market value that only one of its partners could have imagined several years ago, when he sold hiscar. This story illustrates one of the ways in which a SMB starts. It is referred to as proactive start up and it is comprised of three key elements: vision, know-howandopportunity. The other way to start up a business is the one we refer to as reactive start up, in which circumstances provoke the creation of the company. It happens, for example, when a person or a group has specialized know- how which starts being highly demanded by a growing market sector. It may also occur when someone who was employed for most part of his life is laid off and, as a result of the pressing economic situation he was experiencing, and after several failed attempts to find a job, decides to startabusiness. Regardless of the way in which they are created, all SMB experience similar problems. In the next pages, we will analyze the ones that, in our opinion, are their main causes of failure and we will suggest ways to avoid them in order to significantly increase the likelihood of survival, growthanddevelopment. In order to facilitate the reader's permanent consultation, we have grouped such causes according to the five functions that are common to everyorganization: Strategy, which main purpose is to establish the company's direction. Marketing & Sales, which main purpose is to create a bigger and betterdemand. Operations,whichmainpurposeistosatisfycurrentdemand. Finance and Indicators, which main purpose is to support and monitorthevaluegeneratingareas. 15 Top 60 mistakes made by SMB and how to avoid them
  17. 17. Human Resources, which main purpose is to ensure that the companyhastherightpersonateveryposition. The approach of this book is from the market to inside the organization. The proposed methods are closely related among themselves and their purposeistosolveproblemssimultaneouslyandnotinanisolatedway. We are human beings and it is natural that we make mistakes, even though we do not like it or do it unintentionally. Maybe the biggest difference between a big company and a SMB is the lower ability to recover from the negative consequences of bad choices. This is why it is importanttolearnfrommistakesmadebyothers. 5 functions common to every organization Strategy Marketing & Sales Operations Finance & Indicators Human Resources 16 Top 60 mistakes made by SMB and how to avoid them
  18. 18. “The only human being that does not make mistakes is the one who does nothing” Anonimous “With so many mistakes to be made, why do we always repeat the same ones?” Anonimous Top 60 mistakes made by SMB and how to avoid them To get the e-book, either in English or Spanish, e-mail us to info@puenteempresarial.com

×