Managing a business in its fledgling stage is very different from managing a large, well-established business. The founders of a small business are in a unique position to make decisions and communicate with all employees. Over time, this becomes impossible. Founders must develop a series of systems and procedures so the business can function independently.
Wasserman (2012) provides insight into the difficulties faced by founders as businesses evolve. A business can outgrow the strategies and structures implemented by the founders to manage a small business. Policies which promote flexibility and informal communication in a small business may contribute to a breakdown in efficiency in a larger business. A larger business requires more formal structures to integrate the responsibilities of many employees.
Likewise, other research reveals the challenges faced by management as a result of organizational growth. According to DeSantola and Gulati (2017), as business growth and evolution transforms a venture, founders must identify which business structures can be eliminated, and which must be retained or transformed.
A company can lose what made it successful when it starts growing. A business can experience stress on its resources, like employees and customers, as it grows. If the company doesn’t have the resources to support its systems, for example a centralized distribution center, the growing company can run into problems.
This is the case for The College Closet. The first store would allow me to run the day-to-day business. I could enhance my knowledge of running a business through hands-on experience. As The College Closet expanded to other college campuses, I would lose the ability to run the business in that way.
I would create systems to operate the business for rental cycles. Managing the business to include consistent procedures and standards for cleaning, inventory, and service would allow flexibility to meet the needs of the clientele based on differences in school traditions and local trends.
Because of the expansion, I would have to shift my role to address larger strategic issues, rather than dealing with day-to-day issues to ensure the business is operated consistently.
I think a common misconception among founders is equating business growth with overall business health. A business can quickly become unmanageable and even fail as a result of hyper growth. The College Closet can and probably will thrive with multiple locations but I’d prefer to see the initial location succeed and then open additional nearby locations to ensure the business can effectively manage them.
Scaling The College Closet would likely require continuous improvement of the systems and processes while also limiting change to the company’s overall strategic goals.
References
DeSantola, A., & Gulati, R. (2017). Scaling: Organizing and growth in entrepreneurial ventures. Academy of Management Annals, 11(2), 640–668.
Wasserman, N. (2012). The founder’s dilemmas: Anticipating and avoiding the pitfalls that can sink a startup. Princeton University Press.