Growing a business is often a surefire way of killing a business.
For the past ten years, I’ve frequented a handful of restaurants while on vacation. They’re not destinations by force of geography. They’re destinations by referral and trial and error. Meaning: I was never forced to eat here because it’s close to where I’m staying (the options are bountiful). I was never forced to eat here because of any dietary restrictions. I am willing to travel for a good/quality meal. There are two places I loved (yes, past tense) that are not fancy. They’re not fast food. They’re not fine dining. They are quality, fairly new and family dining.
The wheels came off.
Where did it all go south? Both restaurants have become extremely popular. Both restaurants have expanded from a few local locations to many more across the state and beyond. Both restaurants fortunate and cursed to be located in an area that has experienced both a population and tourism boom in the past decade. This has caused an influx of people, a massive increase in traffic (both foot traffic and cars) and a demand for workers (seasonal and year-round).
How would you manage this growth?
The business brain says that you expand and operationalize. You put in place a process and program to ensure that each restaurant can follow and stay focused on the core values (the core of Michael Gerber’s brilliant book, The E-Myth Revisited). Both places had great food, delivered to the table quickly at a fair price. So, the business brain pushes for a process where the team can replicate the kitchen staff’s skill, the food can be ordered and delivered at scale and the prices can be consistent because you can scale with your vendors (buy more from them, and the cost should drop).
The human brain has other plans.
The cost of staff has suddenly sky-rocketed. The staff is grumpier because the area is so busy – without relief. The cost of staff forces the business owners to try to do more with the same size (growing staff is often perceived as cutting into margins). The growth of the business tricks the owner into thinking that it’s because of their quality (and not the influx of people to the area). The staff demands more money, because it’s more work, and there is more demand for workers like this (so these employees have more options of employment). The landlords can demand higher rent. The suppliers can increase their costs, without improving on the quality. We all know how this often ends. The margins shrink, the owners cut corners/try to maintain and the product suffers.
The speed of the restaurant declines. The friendliness of the staff is replaced with ambivalence. The quality of the food declines. There’s an overall sense of, “this isn’t what it used to be.”
What business are you in?
What business are we in? The true test of mettle is not when things are working and humming along. The true test of mettle is not when a product or service has yet to establish its market presence. For me, the true test of mettle is not growth once there is market presence, but healthy growth when the outside factors start kicking in (the controllable and uncontrollable ones).
- What does your business do when they are too many customers in your area?
- What does your business do when the rent goes up?
- What does your business do when the staff has more options to find work?
- What does your business do when the cost of labor rises?
- What does your business do when the price from your suppliers (or who you buy it from) changes?
- What does your business do when many competitors enter a hot market?
- What does your business do when success comes (but may simply be happening because of where you’re located, and not because of what you’re doing)?
- What does your business do when your customers realize that those little changes, cumulatively makes everything different?
The answer is simple (and complex): The answer is your brand.
How you react. How you change. How your business thrives. That will all be predicated on your brand… and it’s strength. The brand is the muscle and the muscle memory of the business. It is, ultimately, what people are buying. It is the lighthouse and how you conduct yourself when the market forces are at play (the controllable and uncontrollable ones)… and they are always at play.
Growth is a critical factor for most businesses. But growth without the brand being able to maintain its integrity might just spell disaster.