Case Scenario: Is Bigger Always Better
When you told your friends and family that you were starting your own business, they were thrilled. When you told them that it would be a food truck, well, they were less than thrilled. All they could imagine was a truck filled with cold sandwiches and watered-down coffee parked next to a construction site. But you used your culinary training to come up with fresh, delicious, and healthy dishes that appealed to almost everyone. And instead of construction sites, you parked your truck next to busy office buildings and downtown intersections. In almost no time at all, there were hundreds of people lined up at your truck, waiting for one of your latest creations.
Ever since you opened, the business has been pretty small-just one truck, you manning the kitchen in the back, and your best friend taking orders and working the cash register. But all of that could soon change. A few weeks ago, a camera crew and producers from Food Network came by your truck to do, a profile on the hottest dining trends in the country. They called your truck "adventurous," "cutting-edge," and a definite "must-eat." A little while after that, you were profiled on TV news and magazines, and you've lost track of the number of food bloggers who have stopped for a taste. And the attention hasn't come just from the media. Investors are calling left and right with offers to help you expand your business. They want to help you buy more trucks, hire more people, and increase your productivity so that you can sell food in more cities across the country. Some have even called you with offers of opening up a chain of restaurants.
This seems like a dream come true, taking a small business and growing it into a nationwide chain. However, your best friend has a warning. He says that growing so fast isn't always the best way to go. He tells you about Jim Picariello, who had a small business making all-natural ice pops. Picariello began making the pops himself, at home, but in just two years, he expanded into a 15-employee company with a 3,000-square-foot facility. But when the recession hit, all of his funding dried up, he couldn't afford to make payments on his manufacturing equipment, and he eventually had to lay off all of his employees and declare bankruptcy. Then he tells you about Toyota. For decades, the company had a sterling reputation for making quality vehicles. But when it made rapid expansion, its overall priority, which was the quality of its cars, suffered, and it was forced to recall 11 million vehicles. "Definitely not where you want to be," your best friend concludes.
So what should you do? You don't want to turn down an opportunity to expand your business and make more money. But you also don't want to lose what you have by growing too fast.
Source:
Laura Petrecca "Fast growth for your small business isn't always good," USA Today, 13 Sept 2010, 1B-6B.
Questions:
Q1. As the owner and manager of this small business, what pace of growth do you think is ideal-slow or rapid? Why?
Q2. What steps could you take to make sure that the quality of your products and the customer service your employees offer do not suffer with the expansion of your business?