PDA

View Full Version : What were they thinking?



cbscreative
05-04-2009, 04:54 PM
One of the things I was reading over the weekend was about how business decisions are so often based on emotion. That is just as true for large companies as it is for small. We sometimes get the idea that big companies have it all together and don't make rash decisions, or don't put off important things they know they should do. Of course we really know better, we just have that perception sometimes.

With this in mind, there are probably a zillion directions we could go on this thread, but the one thing I would quickly point out is how great it is to be a small biz owner. My wife works for a large corporation and I sometimes shake my head at decisions, policies, and corporate culture.

Look at the mess that some very large corporations are in now. The irony is not everyone is surprised (I'm not). Predicting the outcome is usually no more difficult than looking at historical patterns. On the bright side, we have yet more examples not to follow.

If there is yet another lesson in this, it is that small business really is the backbone of the economy. What lessons are you taking from all this to apply to your business?

huggytree
05-04-2009, 06:18 PM
Everyone is swayed by emotion.

I use this every day with my business.

i make my customers into friends...we talk & joke around.

I stick with a printer who does a nice job in the end, but is just horrible in the service dept...id give them a 0 for service....i stick with them because were friends and ive gotten business from them....being friends makes it difficult to say goodbye

he's using emotion on me....just like i do with my customers....everyone wants to work with their friends...some of my customers sound excited when they call because they have work for me and get to hang out on the jobsite with me. sometimes i feel the same!

vangogh
05-04-2009, 07:05 PM
Steve I think most decisions everywhere are based on emotion. We like to think we're being logical, but more often than not it's emotion that sways us.

I'm not sure I'm taking any specific lessons from what's going on right now for my small business. I'm glad I'm not a big corporation or working for one though. But I'm still doing things the same way I always have.

One thing with large corporations, especially those that are publicly traded, they have to look to the bottom line more than anything. Much of what's happening now is because some industries took advantage of the climate to make incredible amounts of money that wasn't necessarily based on reality. of course reality creeps in and then we realize how empty these companies really are in terms of valuation.

Not all companies are like that though. Some understand you have to weather the storm and build real value. Others will always be in it for the quick gain. Not much different than the rest of us. Some small businesses are in it for the long haul and others are looking for the quick buck.

nealrm
05-05-2009, 01:48 PM
VG, don't be too hard on big business and too soft of small business. In general, I would say that small business make more mistakes than thier bigger cousins. However, when a small business makes a big mistake it is normally forced to close. The memory of the mistake dies with the company. In addition, we don't hear about all the mistakes of small businesses. It would take 100's of small business failing to make the same news story as a single automotive plant closing.

As for big business watching the bottom line more than a small business. That would be hard. I don't know many small businesses that have aren't concerned if a venture makes money or not. Most of the time they are very concerned about thier return on investment. They just don't have the funds to invest on no-gain items.

The biggest advantage small businesses have over big business is thier ability to adapt. If necessary, I can change my business structure and focus today. Bigger businesses require much, much more time and planning.

vangogh
05-05-2009, 02:26 PM
Neal I wasn't trying to be harder on big business than small business. My bad if it came across that way.

I do agree that small business is concerned with the bottom line. All business has to be. But I think small business owners are more likely to set something as a higher priority than the bottom line. For example in my own case my quality of living is more important to me. I would absolutely turn down a client if I thought that client would require me to do things I don't want to do, even if that client would mean a lot more money for my business.

I don't think large companies have that same flexibility, though I do think they'll turn down things that don't fit with the company philosophy at times. But large public companies are much more beholden to shareholders and stock prices and ultimately the bottom line than a small business would be.

Completely agree though that small businesses make mistakes and we often don't hear about them. Of course a small business that is forced to go out of business can easily reopen under a new name.

cbscreative
05-06-2009, 06:35 PM
The biggest advantage small businesses have over big business is thier ability to adapt. If necessary, I can change my business structure and focus today. Bigger businesses require much, much more time and planning.

I left that out of my original post to keep it shorter, but I very much agree. Even if it's not the "biggest" advantage, it is very high on the list.

I like the analogy of a speed boat compared to a cruise ship. Sure, the cruise ship can go further and weather big storms out on the open sea, but a speed boat can go places the cruise ship can't. It is faster. It is agile and can quickly steer around obstacles. A cruise ship can't even avoid an iceberg unless they see it well enough in advance.

Chimpie
05-06-2009, 06:46 PM
A problem I have noticed is that emotions cause change, but with big businesses or corporations change takes time. A consensus has to be made that there is a problem or a need for a change. A further study has to be done on the effect of the change. The change has to be tested. It then needs to be tweaked, finalized, ran through legal, put in writing, and distributed.

So something has happened, causing an emotion, a decision has been made, but it has taken months for the change to take place, well after the emotion has gone away.

With small businesses, a decision can be made by emotion, but if it was the wrong decision it can usually be quickly changed back or corrected.