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Being small is an advantage - Part 1

Updated: Sep 7, 2019

You would think operating a large countertop fab shop would be an advantage. Larger shops typically have fatter bank accounts, greater purchasing power, better equipment, and more customers.

So how can being small possibly be an advantage?

The bigger a shop is, the more complex its operations become.

For example, if you operate a 5 person shop, there are 4 direct communication points and 10 in total. If you operate a 25 person shop, there are 24 direct communication points and 300 in total. If you operate a 100 person shop, there are 99 communication points and 4,500 in total.

A 5 person shop is 30x less complex than a 25 person shop even though the 25 person shop is only 5x the people.

A 100 person shop is 450x more complex than a 5 person shop even though the 100 person shop is only 20x the people.

Communication connections as you add new people to your shop.

Every time a person is added to your company, the complexity increases far greater than just that single person added. The rate of complexity is compounded every time you add a new person.

This is a large part of why growing any business is hard!

But, we're just not in any business, the custom countertop fabrication market has so many variables, it makes operating this type of business very difficult.

Think about this - why is there no brand name national fabricator in our business, like the McDonalds of food companies, or the Kohler of plumbing?

The fabrication market is big enough to support such a company.

The simple answer is what we do is really hard. And doing hard things is even harder to scale.

So why do small shops have an advantage?

Less complexity.

Less complexity allows businesses to move fast. Little changes move the needle.

Let's pretend we own a shop that does $1,000,000 a year in sales. To increase sales 50%, you only need to add $500,000 in sales.

Now let's pretend we own a shop that does $50,000,000 a year in sales. If we added $500,000 in sales, it would only equal a 1% growth rate!

The small shop could easily increase sales 50% or $500,000 just by making their local market more aware they're in business. A few phone calls a week introducing yourself to new potential clients might just do the trick! No reason to add anyone to your payroll.

Little action, big impact!

Now let's look at that big shop who wants a growth rate of 50%. That would require $25,000,000 in additional sales. A few extra phone calls wouldn't suffice!

We're talking about a massive undertaking. That big shop would need to add 25 sales people, expand to new service areas and find entirely new markets. They may need to even add new physical sales locations to have a presence.

What about manufacturing?

Well the small shop could probably make due with what they already have. We're only looking at 2 more kitchens a week or 0.4 kitchens per day. More then likely, you could just make your current shop more efficient to cover the increased manufacturing requirements.

But the big shop - we're talking about major changes. More machines, more room, more vehicles, more programmers, more operators, more templaters, more installers, and so on.

Moving the needle with a small shop is so much easier than a large shop. It's not even close. If you want to grow your small shop 50% today, you could do it with 0.001% the effort vs the big guy.

Guess what though!

Being able to move the needle easier is not even your greatest advantage.

To be continued in part 2.

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