Bigger isn’t always better

As part of my ongoing Diploma, I have to write several assignments based on the company I work for.

This is pretty good in that it means my studying ultimately has some practical benefit. But the reading literature isn’t making it easy.

Leaving aside the fact I’m not a marketer (and that Essential doesn’t even have a marketing department), the textbooks all carry the implicit assumption that the reader is working in a large consumer-facing organisation. Which is silly.

Obviously a lot of marketing theory surrounding processes becomes redundant in small companies, but that doesn’t mean they should be ignored.

According to government statistics recently published, “Small and medium-sized enterprises (SMEs) together accounted for 99.9 per cent of all enterprises, 59.4 per cent of private sector employment and 50.1 per cent of private sector turnover.”

Another constant theme in the literature is that companies should strive for “bigness”. Growth is the engine of the economy, and thus organisations should aim to grow.

Fine, but growth doesn’t have to be in unit sales. If there is an excess demand, basic economics states that the price should be increased. Growth can be maintained through higher profitability.

And for the service industry, bigger isn’t always better. Quality should be prioritised over quantity. A company is built on the vision of the founder(s) – the larger the company gets, the harder it is to maintain that vision and the more reliant the company becomes on work delegated to colleagues. Careful training and recruitment (“Always hire someone smarter than you”) are one thing, but they don’t compensate for that experience or existing relationship.

A restaurant is a good example of this. I enjoyed reading this article about the Great Lake Pizza shop. The founders insists on making each pizza by hand, and are unwilling to compromise. In their words:

Ms. Esparza: [Expansion] would change our values. That is the American way — to expand without really thinking.

Mr. Lessins: We really enjoy the work that we’re doing and we don’t want to cheapen it. Consciously or unconsciously — probably both — we’re trying to create a manageable way to earn a living and still maintain our sanity. We value time as much, if not more so, than money.

I believe Franco Manca, in Brixton, operates on a similar principle.

It might seem painful, but putting a notice outside of the restaurant saying it is fully booked can often be the best thing it can do. It must be busy for a reason, and so people are prepared to queue, and even pay a premium for it. A restaurant relies on its good reviews, and for this it needs to have satisfied patrons.

Being small isn’t a hurdle, or a restriction. In many ways, it is a benefit.

sk

Image credit: http://www.flickr.com/photos/emeryjl/2676435494/

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2 Responses

  1. and open another (small) pizza joint in another part of town…
    good thinking.

  2. Indeed. So many small businesses fail from over expansion and expanding too quickly thus denting cashflow.

    I used to write for small business people, it’s a fascinating area of business given just how huge a part of the nations jobs and output they actually play.

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