Small is Beautiful
Posted: Thursday, December 31, 2009
by Nabeel Al Wazzan
Marketing & Sales Consultants
The world economy is sliding down into deep levels never happened since many decades. With this situation, major firms; especially holding companies are facing a dilemma of economic recession and fulfilling internal and external commitment. The severe market situation is not rewarding at the time being, however past due sales which should have been collected during the fourth quarter of 2008 have now been postponed until nobody knows when. Bad collection reflected negatively on the income of 90% of the world businesses, never talking here about banks and companies assets-value etc
Cutting down on the business expenses is a double-sided blade; however it would bring us down back to the solid foundation where we may launch up again with better velocity backed by the new woven-mesh, I mean the new shuffling of administrative and operational costs into a more cost-efficient and productive business.
I am not interfering with some decisions which have been taken to grow up the business and expanding wide in the market. However I want to make a point out of what I think is best for a Business during this economic hurricane. It is no more a matter of Ego, and self-Center thinking as much as it is a matter of business continuity and keeping our heads over shoulders for the coming difficult period. A) On the Similarity level: If that holding company is operating many similar companies which do the same job and split the market within; then it is better to cut those companies short and keep the best two or three, with the best staff chosen from all those similar companies to service the remaining ones.
B) On the logistics level: A Holding company that operates many smaller companies underneath, should take into consideration the rent charges paid for those companies' offices. Less than that total would rent a small building in an industrial or Free zone which will host all the Companies together under one roof. This action will also reduce the number of Receptionists, telephone operators, office boys and cleaning staff.
C) On the Holding Company level: The Holding management office will become the general directory of the new building, then there is no need for too many executives who charge the holding much money which for less; those companies under the holding will run smooth if directly controlled by the Holding management assisted by supervisors for each of the companies.
D) On Accounting and Finance level: imagine a Holding business controlling 15 or 20 subsidiaries, and there is only one accountant at each subsidiary. You will get a brigade of accountants getting salaries for 20%-50% efficiency per day. While grouping the best out of those into a team of 5 or 6 with a financial director within one place will help in focusing, speeding up processes and saving almost 33% of wasted salaries. Never mentioning messengers, secretaries, technicians, designers and sales staff at each company which will also become less.
On the Market level this "Small is Beautiful" should not affect the market shares, because all leads will be divided among the remaining companies who should follow up with more attention and focus. The revenues will become profitable for the holding and for the sales team as well. The clients should not feel the difference because many of the good sales staff who controls the major leads should stay with the new structure.
"Small is Beautiful" painful but rewarding and self defending. I highly recommend this formula for Holding Companies that find they are facing a struggle against financial and structural collapse.
On the other hand "Small is Beautiful" requires many other actions to be taken during the execution of cutting-short, mentioning some of those titles below are;
- Re-structuring policies and procedures
- Re-structuring the administrative shape of the Holding
- Using the "short is Beautiful" slogan for a media campaign in favor of the holding company and the new decisions.
- Leading the market in that direction to become an ideal for other major holding companies, never forgetting to post all the successes of that experience on-line and in other media.
- Documenting the process of "Small is Beautiful" then release it in a book or E-book to generate money in a later stage.
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