Evening star., 1948-08-16
Trade Doctor Says
Inefficient Firms
Face Severe Tests
By Elmont Woite
Associated Press Finoneiol Writer

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SAN FRANCISCO. Aug. is. -
Many a dope who thinks he's q
genius is still making good money
in business-but he's overdue for q
crash.
That's what Elliot Underhill says
He's a business doctor-the man you
call in to survey your business and
tell you why 1t is limping instead OF
galloping. Mr.. Underhill, big, broad
and Drowned, is a supervisor for
one Of Americas biggest business
engineering firms.
Already he can see two big
changes in the business scene.
TN the first place, certain per-
centage of failures is normal In
business" he explains. But during
and just after the war, people just
couldn't miss. Failures were fal
below normal. So now we have
that accumulation Of potential fail.
ures on our hands. A few may
lhave learned enough to survive ir
normal times, but most of them will
probably go down. The boom has
just delayed their bankruptcies"
The second big change, he says
is that I'VE are back In a buyers
market again, In most lines O
business" Zone of the exceptions
Automobiles.)
Sales Forces Lacking.
"For most businessmen, the tim,
Is already gone when all they hat
to do to get customers was to oper
the door. Now, all at once, they
find they need sales forces anc
sales techniques. Some war-buil
businesses literally never had any"
Harold j. McElhinny,a colleagu,
of Mr.. Underhill's says this prob
lem is a real headache, too; for i
takes two full years to build q goot
sales organization. Selling cost!
dropped 80 per cent during tn
war; he says, because no one has
to hunt for customers. So som,
operators began to think they ar,
geniuses; instead Of building o.
keeping sales forces, they just pilet
up profits. Now they need sale
organizations-and it'll take twt
years to get them"
Not all of the accumulation O
potential failures" still in business
are inefficient or stupid, Mr.. Un
derhill points out. Some are jus
beyond their depth.
I'VE have case after case Of tn,
small but successful businessman
whose firm was suddenly, vastly ex
panded by the war boom. All a
once he finds he has a bear by tn,
tail and can't let go. He's got t,
maintain a volume four or fiv,
times more than he ever dreamet
of-and multitudes of troubles pill,
up"
Need Able Assistants,
Men like this, Mr.. Underhill adds
used to yell across the desk: "Joe
did you do this-and-that?" Blu
now he has 10 Joes, or q hundred
He can't yell across the desk an
more; yet he hasn't learned II
delegate authority. He just can
bring himself to hire good meI
and let them take the load OF hi
shoulders.
why, I've actually seen client
who were doing a 100000 an
nual mercantile business typinl
their own letters, and answering
personally every trivial question
that popped up."
Mr. McElhinny adds anothe
problem of the present: Lots O
firms nowadays find suddenly tina
their working capital has gone clea
down to zero. Some have all thei
funds tied up in goods on hand
some have been riding, until now
OF credit, and credit is gettin,
tighter"
Niggardly salaries are anothe
trouble, Mr.. Underhill remarks
"The problem is a sort OF small
business kind OF thinking, tina
won't let the boss pay the salarie
he must pay to get the executive
he needs.
"The boss will pay $4O0 a month
for a sales manager to keep up /,
million n-dollar volume-and for $50
he could get a man who'd built
that volume to $4,000, ,00O."
Mr.. Underhill says there are
lot Of truly smart operators In bus
mess today, however, who avoi,
most of the common pitfalls. Owe
/ in Oakland. across the bav a ma,