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Managing a Business

I recently read a Harvard Business Review[1] article entitled “Management Strategies for Small Companies” by Herbert N. Woodward published in the January-February issue of the Harvard Business Review. The author draws experience from his operation of a small manufacturing business. He examines specific patterns of management conduct that lead to eventual failure if not resolved. The authors note that the principal cause is weak management. However, the authors also note that the same weaknesses can exist in a sizable business as well.

The Article presents explores three principal areas of weakness, all management centered, and each listed below:

  • Assuming growth in sales cures all problems driven by a belief in “fixed overhead” thereby assuming additional revenue always provides marginal income.

  • Lack of meaningful product-cost analysis

  • Too much concentration on the income statement and little on the balance sheet leading to poor cash management.

I recommend all business owners obtain a copy of the article, it is excellent reading. It can be found on the Harvard Business School Publishing website. Also, I will be publishing a more fuller summary of the article on my website in the next few days.

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