Small and micro businesses comprise very big part of the world economy. Even in US more than 50% of population works in Small Companies. In smaller countries this percent is even bigger. In Lithuania companies with 250 or less employees comprise 99% of the companies.
Impact of SME in EU*
*- Source: 9thEuropean Conference On Corporate Governance
- 98% out of 21 million enterprises
- 1 person 57%
- Micro 34%
- Small 7,7%
- Medium 1%
- SME are 58% in GDP
- Micro 29%
- Small 21%
- Medium 17%
- Large 33%
Typical small company is owned and managed by the same person, who is good specialist in some area of craftsmanship (like plumber, software developer, etc.) but does not have any management training. In the business best-seller book E-Myth, published in 1986, Michael Gerber identified 3 roles for any small business owner: Technician, Manager, Entrepreneur. Most of the owners really lack Managerial skill. M. Gerber proposed (although using different wording), that owner the constraint for growth and stability of the small company. As well, he noted, that typically owners operate in hectic multi-tasking environment. M. Gerber’s solution is improving owners’ managerial skills, defining and standardizing company structure and processes. After success of the book, business couching organisation E-Myth was created in order to provide small business with managerial knowledge. I had a chance to try their services, and I think, that TOC can become a major part for small business owners’ management skills.
But standard TOC solutions (although simple) are too complicated for small businesses. Those companies due to their small size (and owner’s lack of formal management education) quite often does not have typical UDEs, as we are used to deal in TOC. E.g. cost accounting does not exist, as they do just basic accounting for taxes, local efficiencies – not very common, as owner is involved in daily operations and most of the times focus on getting the orders out of the door. Most of the times owner is the only salesman in the company and key expert.
So, the main dilemma is – should we try insist on implementing TOC logistical solutions by the book or can some TOC light version be developed, with fewer injections and faster implementation? How can we accommodate the fact, that key constraint is the owner-manager of the company?
Nerius Jasinavicius Founder and managing partner of "TOC sprendimai”. More than 15 years of TOC exposure, over 30 implementations, more than 100 companies trained.