Scale Small Business – A Struggle

Penny Blossoms as a lesson in scale for small business
In an episode of CBS’ “Big Bang Theory”, the ditzy blonde Nebraskan neighbor, Penny, started a small business out of her apartment. When her nerdy comrades discover what she’s doing, they set out on a mission to scale her small business and streamline the manufacturing and ordering process.  However, Leonard allows an option on the website for One Day Rush delivery without an order limitation.  This puts the group into a situation where they must fulfill an order of one thousand hand-made hair barrettes in 24 hours.

Whimsical folly and fantasy aside, there is an element of reality to this episode that may strike pretty close to home for small business owners.  At its core, this particular plot-line is a remarkably good example of the struggle to scale small business, and everything that can go wrong in the process.  In this article, we’ll use this exaggerated situation to describe some very specific, and very real, difficulties that small businesses face trying to increase their sales, keep up with demand, maintain their reputation, and grow their business.

If it weren’t for you meddling kids!

The first, and most important, part of this goofy situation is something that many small business owners have faced.  One would hope that our family and friends wish for our success in the endeavors upon which we set out.  That goodwill, however, can translate into something that does more to hinder that success than to promote it. 

In the beginning of the episode, a wayward delivery person drops a package at the wrong apartment.  This prompts Sheldon to deliver the package to his neighbor with his signature triple knock on her door.  His curiosity gets the best of him, and he comes to find out not just what’s in the package, but why she ordered it.  Of course, now, armed with that knowledge, the do-good quartet now has the mission to ensure that Penny’s business isn’t merely successful, but is as successful as can be.

What we witness is good friends who want to be a part of their friends success.  As the plot progresses, we see Penny’s bewilderment as the guys begin talking about roles, leadership, division of ownership, formalized corporate structure, and on and on.  There are whiteboards, plans, and arguments over optimization and responsibility.  There are plenty of us who understand Penny’s perspective.  We had an idea and we were executing our idea in our own way.  Somehow, we’ve now found ourselves in a position that seems very far away from where we expected.

Learning about scale in small business from Penny

Are our friends and family correct?  Is the problem with our own expectations?  The truth tends to be more nuanced than the answers to these questions.  So many small business owners do not start their business with a larger goal than to be able to support themselves and their family.  If supporting their family is part of our goal, why then wouldn’t we want them to help contribute to that success?  In short, we should want the help of our friends and family.  In the case of this episode of “The Big Bang Theory”, the problem we see is a lack of ownership and leadership by Penny.

Being a small business owner, even in the very smallest of businesses, means being a leader.  Leadership qualities are of the utmost importance, and taking ownership sometimes means walking a fine line between knowing when to take the help or advice and when not to do so.  A key ability to growing a business is the ability to delegate.  The dictionary defines the verb “Delegate” as entrust (a task or responsibility) to another person, typically one who is less senior than oneself. The concept of delegation implies a clear definition of a task or responsibility.  Additionally, it specifically states that it’s typical for the other person to be less senior than the delegator, which implies leadership.  It is the responsibility of the owner not just to delegate tasks and responsibilities, but to clearly define them and to ensure that their leadership in that delegation remains intact.

When your friends or family “meddle” in your business, the responsibility is actually on you, the business owner.  In this cast, appropriate boundaries have not been set, and because of that it is very easy for the business to get to a point you never expected or even wanted.  Owners will struggle to get any traction on growing in scale the small business if there is a lack of good leadership.  In PaynePoints terms, this is an example of a failure in the Organizational Approach to business.

Scale in Small Business Inspired by (Henry) Ford

The next thing to highlight is not something to be considered a negative.  One of the first things the group does collectively after their organizational discussions is to optimize the manufacturing process of the product called “Penny Blossoms”.  Taking a cue from the automobile inventor, they define an assembly line process.  Each station along the couch and chair is responsible for one part of the manufacturing process.  This allows them to produce more product in a shorter amount of time, to ensure better quality control, and, with a bit of humor,  to sing a sea shanty as they work.  Defining an operational process and implementing it is the correct way to move towards successfully scaling your business.

PaynePoints believes that the vast majority of small business owners are closely aligned with an Operational Approach to business.  That is, small business owners will tend to rely on stability and work to keep their business running smoothly.  This is why optimizing manufacturing of the “Penny Blossom” using an assembly line is relatable and positive.  What the TV show cannot show you is how much detail can go into defining the operational process for a small business, nor does it really depict something that all business owners can benefit from significantly, documenting the process.  The truth is, most small businesses aren’t manufacturing something quite as simple.  It may sound simple, but diagramming the assembly line and ensuring everyone understands their role on paper is extremely important.

Learning about scale in small business from Sheldon

The importance of documenting your operational processes becomes more clear as you attempt to scale small business.  Scaling requires maintaining quality while increasing quantity and efficiency.  Simply adding people to the equation can create quality problems, since one person may do something differently than someone else.  In addition to that, adding a new person is difficult if you have to train them personally every time.  If the process is documented, the roles in the process clearly defined, then training becomes simpler.  Also when you document your process, it can become easier to visualize ways to improve and optimize.  Simply put, getting the process out of your head and onto paper makes tactical communication possible without your presence in every waking moment.

In our example, the very idea of creating an assembly line for manufacturing is both brilliant and correct, as one would expect from Sheldon.  Without it, there is heavy doubt that the group would’ve been able to meet the demand later in the episode.  This is a lesson we can take from the show in a positive way, with the addition of documentation.  In PaynePoints terms, this is a success in the Operational Approach to business.

Is there such a thing as too much?

The final issue to highlight, though there are certainly plenty more that could be talked about in this episode, is the need for balance in a business.  While we don’t really know where Penny was able to secure her small customer base before she involved the help of the guys in the next apartment, we do know that one of the first things they do is to set up a website for “Penny Blossoms”.  Somehow, through the magic of uber-nerdiness, the guys not only design a website in record time, but through what we can assume is sheer luck, orders begin coming in as soon as the site goes live.

As a matter of practicality, this is the least likely of scenarios in the entire show.  Designing a website, adding enough appropriate content, managing SEO, and attracting your target customers to it all takes a lot of careful planning and, most importantly, time.  Tools like Google’s SiteMaster, Analytics, Tag Manager, and AdWords  do not work overnight.  Not to mention the fact that on many of the most popular platforms, it isn’t free.  Web based advertising can be pretty complex to do correctly, and the difference between doing it correctly and incorrectly is the difference between a shotgun and a sniper rifle.

However, this isn’t really the problem with the website in the show.  There’s a deeper issue that is the root cause of the main conflict.  As Leonard designs the site, he’s given a lot of leeway to make decisions about the ordering process.  Among these decisions is the ability to add a rush order option.  Leonard doesn’t consider the combined impact of this option with the current limits to manufacturing faced by the group.  This ends in the true cause of the plot’s main conflict, with someone placing an order for a thousand items under a rush order.

Learning about scale in small business from Leonard

Small business owners are generally more aware of their limitations.  As a result, most people are more likely to see the opposite problem of the “Penny Blossoms”.  Instead of having more demand than supply, a small business would have more supply than demand.  The first questions to ask is whether this lack of demand is a true lack of demand or if it actually comes from a lack of awareness of the product or service.  If the answer is the latter, then growth is much more easily attained in the Creative Approach to business.

The creative approach to business is divided into two main categories.  A lack of awareness speaks to a gap in the Promotional category, whereas a true lack of demand points to a weakness in the Innovational category.  So, the promotional category is the easier of the two to work with, and is exactly what Leonard’s website strives to accomplish.  There are many ways to shore up the promotional category and almost all of it is related to marketing and advertising.  Building awareness is all about interacting with other people, especially those in your target market.  Consequently, one has to know what their target market is before they can interact with it.  Similar to the Organizational Approach, the target market should be documented to ease in training, delegation, and tactical communication.  Once you know who your target market it, the next step is to know where they are.  If you’re target market consists of people 18-30, you might look to advertise to them on platforms like Instagram or TikTok.  If you’re targeting 45-70 year-olds, then you are probably better served focusing on Facebook or even more traditional advertising methods such as newspaper and radio.  There are so many factors to promotion that it can be a discussion in, and of, itself.

So, if Leonard was so successful in the promotional category, why then did the result cause conflict?  This is where the balance comes into play.  A business must grow evenly.  If one area grows much faster than all of the others, then more problems arise as the other areas struggle to keep up.  In the case of our intrepid nerd friends, the improvements to the operations processes weren’t enough to match the success of the promotional process.  Without the ability to have significantly more physical space, people to do the work, or material to manufacture the product, the best way to have kept the business in balance would have been to limit rush orders artificially based on what the group could produce in a 24 hour period.  Of course, that wouldn’t have served the plot, nor would it have caused the complete burn out experienced by everyone that allowed the show to return itself to the same status quo it had at the beginning of the episode.

Lessons for the rest of us

In the end, the fictional story ends up back where everyone started, as a good episodic serial should.  However, for those of us out here in the real world, getting burned out and giving up isn’t an option.  It can be really surprising the lessons we learn from these kinds of stories.  From this one episode we learned about leadership through Penny’s lack of it.  We can learn about process development through Sheldon’s intuition and knowledge.  Finally, we can get a better understanding of the need for balance between operations and promotions in a business through Leonard’s well-intentioned, and apparently extraordinarily successful, mistake.

Businesses are the epitome of a systems problem.  That is, there are multiple independent but interrelated pieces that all must work together as much as possible.  When you change one, other pieces will change along with it.  If you, or someone, isn’t aware of the changes being made in a dependent component, then conflict and problems occur. At PaynePoints, we are well aware of how powerful and delicate these relationships are.  When we work with clients in our small step plan, we strive to first get an understanding of the current state of the systems, and the owner’s intentions for the system.  This is the same as knowing where you are, and where you want to be.  We want to make sure there’s good direction and focus before we even really begin.  Then we set about to make changes and document them, so that all involved are aware of how it affects them.  The success in this process comes from inclusiveness, knowledge, and awareness.

Wrapping it up with a bow

Today we covered three of the four major approaches to business and their relation to scale in small business.  In the Operational Approach, we talked about the success of creating more product faster using an assembly line, and how documenting the process allows for better communication, as well as future improvement.  In the Creative Approach, we talked in detail about the Promotional category is centered around your target audience and how striking a balance of supply and demand will allow your business to achieve growth in a stabile manner.  Finally, under the Organizational Approach we discussed how ownership and leadership are a necessity and the responsibility of the small business owner, by setting good boundaries and sticking to them.

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