The Efficient Management Philosophy

One of the great challenges of management is adjusting to the growth of a firm. The adjustment is not confined to the owner/manager. Adjustments must be made by all members of the firm. Clearly, though, the first and most fundamental step is for the owner/manager of the firm to recognize that as the firm grows, he or she must change the way in which management of the firm is handled.

For most practitioners who began as a one-person shop, this is a difficult task. When operating a one-person shop, the owner does it all, from clerical to analytical. When the first employee is added, there is still little need for formal management techniques, as there may be time to discuss most everything. But, as more and more employees are added, there is an inefficiency of scale that sets in, interfering with work productivity, increasing time demands on the owner/manager, and potentially limiting profitability. Often referred to as a revenue ceiling, this is the point in growth where the limitations of management so hinder the efficient operations of the practice that continued revenue growth becomes virtually impossible without major changes.

Similar in scope to the law of diminishing returns or the law of increasing opportunity costs (originating with eighteenth- and early-nineteenth-century economists such as Thomas Malthus and David Ricardo), increases in gross revenue could be outpaced by exponential increases in the cost of doing business. ...

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