---
title: "Eight Awkward Models That Trouble Small Trading Companies"
description: "Many small trading companies, due to their bosses' strong leadership style, tend to bypass managers and give orders directly to all levels, weakening the influence of middle management. This turns the original 'pyramid' into a 'dumbbell', with weak middle and strong ends."
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published: "2014-06-02"
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# Eight Awkward Models That Trouble Small Trading Companies

> Many small trading companies, due to their bosses' strong leadership style, tend to bypass managers and give orders directly to all levels, weakening the influence of middle management. This turns the original 'pyramid' into a 'dumbbell', with weak middle and strong ends.

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(Note: The small trading companies referred to in this article are county-level liquor distributors, hereinafter referred to as trading companies.)
**Summary:** Many trading companies, due to their bosses' strong leadership style, tend to bypass managers and give orders directly to all levels, weakening the influence of middle management. This turns the original 'pyramid' into a 'dumbbell', with weak middle and strong ends.
**Awkward Situation 1: Passive Marketing Model**
Due to fierce competition in liquor marketing, liquor distributors after the first tier generally adopt a credit-sales marketing model. The trading company first spends money to purchase products from the manufacturer, then distributes the products on credit to various channel customers. In other words, before a brand becomes strong, credit-sales marketing is an unavoidable hurdle for distributors. Because of credit sales, the distributor's initiative is completely controlled by channel terminals. Additionally, since the credit sales process is carried out by salespeople, they also gain extra control over some resources, bringing various difficulties and unexpected troubles to operations and management.
The phenomena of difficult management and execution caused by the marketing model are common among trading companies. On one hand, trading companies spend money and energy treating customers as gods. On the other hand, they are constrained by salespeople's resentment, arrogance, and dominance. Therefore, trading companies are extremely passive whether facing a difficult customer or dealing with an employee who has made a serious mistake. This passivity is deeply felt only by managers; others find it hard to understand beneath the company's glossy exterior.
**Awkward Situation 2: Arbitrary Management Model**
Trading companies generally adopt family-style management, whether sole proprietorship or partnership, especially in the early stages when almost the whole family is mobilized and relatives participate. Even if the company hires professional managers, the boss is unwilling to let go of the enterprise he founded, and the manager is just a senior clerk.
A healthy enterprise management should be a 'pyramid' with the legal person at the top. From the bottom to the top, there are several levels, and adjacent lower levels directly execute the instructions of the upper level; levels far apart should not directly convey instructions. However, many trading companies are not like this. Due to the boss's strong leadership style, they habitually bypass managers and give orders directly to all levels, weakening the influence of middle management. This turns the original 'pyramid' into a 'dumbbell', with weak middle and strong ends. At this point, if the boss is energetic and fully devoted to operations, it is not unreasonable. But if the boss wants to delegate but not empower, such an enterprise will definitely develop slowly, be inefficient, and even take two steps back for every step forward.
**Awkward Situation 3: Unstable Compensation**
Story 1: After retiring from a government position, Mr. Zhang was hired by his sister to manage her liquor company. He took office with great enthusiasm, but soon lamented: 'I have decades of work experience and am a national cadre, yet my salary is only over 2,000 yuan, while the salespeople here earn five to six thousand a month.' So, among his bold reforms, one was to cut salaries.
Story 2: Retired teacher Lao Wang was invited by his son to work as an accountant at his beer company. During the summer peak of beer sales, salespeople's wages reached over 5,000, and Lao Wang had the same lament as Ms. Zhang. So, from the day Lao Wang became the accountant, he began to delay wage payments.
Story 3: Young Xiao Yu became the boss with his father's funding. Privately, he often told managers: 'Employees' high income is a satire on our task setting.' Thus, in Xiao Yu's company, changing decisions overnight is common. Unstable compensation causes employees to lack a sense of security and belonging, leading to an unstable workforce. Additionally, due to the limited management capabilities of trading companies, many employees find ways to exploit company loopholes and intercept policies for personal gain. In fact, those who stay long-term are mostly mediocre performers with average abilities.
**Awkward Situation 4: Incompetent Employment Model**
Most bosses of trading companies started as small vendors and accumulated initial capital through one or two decades of personal effort. Their money is hard-earned, so they are conservative in selecting and employing people. One characteristic is that everything is for cost saving, hiring the 'best' talent at the lowest wages.
Company S has been established for three years with 8 employees, including 2 each in their 60s, 50s, 40s, and 30s. Among them, 2 are housewives and 6 are retirees from enterprises. They mainly come to the company to earn some extra pocket money. Over three years, Company S has not only developed slowly but also faced many problems: the finance department, operated by one person, has numerous loopholes; the warehouse manager changed several times, resulting in a cumulative loss of hundreds of thousands of yuan in goods; market orders were severely underreported, and nearly 200,000 yuan in payments could not be traced. Due to the single compensation structure, employees are present but not productive, and the whole company is stagnant and lifeless.
**Awkward Situation 5: Habitual Operations**
Story 1: Manager Hu is both a shareholder and manages the company. He sells to consumers at varying prices, especially to regular customers, often below the introduction price. However, he requires salespeople to supply channel customers at the introduction price. Because Hu is arbitrary in pricing, consumers sometimes enjoy more favorable prices than channel customers.
Story 2: Company B's product prices are divided into three levels from high to low: retail price, basic introduction price, and second-tier price. General channel customers enjoy the basic introduction price, while regional distributors enjoy the second-tier price. These two prices are handled solely by salespeople with almost no effective supervision. Salespeople hold both prices and operate freely, making management difficult and loopholes larger. It is common for Company B's salespeople to 'sell high but report low' in sales.
Due to managers' habitual operations and lack of overall awareness, they do not systematically consider plans in formulation or implementation, always acting arbitrarily. This not only damages the product image but also causes immeasurable losses to the company's interests.
**Awkward Situation 6: Fixed Mindset**
The Shanxi merchants, who dominated business across Europe and Asia for 500 years, implemented the separation of ownership and management as early as 300 years ago. At that time, the shopkeeper was equivalent to today's professional manager. Shareholders pooled funds and did not participate in the management of the firm; instead, the shopkeeper and clerks, as trustees of the owners, actually controlled the process and results of economic activities and were responsible to the owners.
In contrast, most current trading companies are still filled with family members, and few bosses can respect professional managers like Qiao Zhiyong of Huatong Tianxia respected Yan Weifan. Bosses expect managers to handle both business and delivery, to strategize and also be willing to 'block bullets' for the company's interests. At the same time, they do not provide the salary and respect that match the position. They hire but do not trust, trust but do not delegate, delegate but do not respect. It is precisely this fixed mindset that determines trading companies cannot recruit outstanding talents for their own use.
**Awkward Situation 7: Difficult Capital Operation**
Capital difficulty is one of the problems troubling trading companies. Whenever it is time to pay the manufacturer to secure policies, trading companies have to scramble to borrow money, even resorting to high-interest loans. When a large batch of goods arrives, they do not market them diligently, and over time, inventory expands indefinitely. Astronomical receivables, piled-up warehouses, and lagging marketing are like three mountains pressing down on trading companies, making them breathless. A comprehensive analysis shows three reasons for the capital pressure on trading companies:
1. Limited marketing capabilities, lacking the ability to convert goods into cash. Many trading companies obtain policies from manufacturers but are unwilling to turn policies into marketing to quickly convert goods into cash. Instead, they treat policies as profit, hoard goods in warehouses, and sell slowly to enjoy ultra-high gross margins.
2. Poor brand influence and market control, lacking the ability to collect debts. Collecting debts means returning goods, and collecting debts means clearing customers.
3. Poor enterprise survival and development status, lacking the attractiveness to absorb social investment.
**Awkward Situation 8: Deficient Incentive Mechanism**
The most effective and direct way to stimulate team morale is to introduce competition and establish incentives, set goals, formulate rewards, conduct graded assessments, and fulfill promises. These principles are simple and effective. Unfortunately, many trading companies manage employee income with a single method of base salary plus commission.
In summary, the above may not objectively summarize the success or failure of trading companies, but from a certain perspective, it reflects the operational difficulties, growth challenges, and development hardships of trading companies. To paraphrase Tolstoy: 'Happy families are all alike; every unhappy family is unhappy in its own way.' Similarly, successful companies are similar, while failed companies each have their own reasons.
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