Too big, too fast?

Did you see this?

If you’re too lazy to click (and by the way, I’m going to make more of a conscientious effort to code all links to open in a new window, although I’m in the habit of using a tabbed browser), No No Kitty is packing it in — no wholesale or retail yarns, just special requests and back to hobby-level production. The explanation: the business grew too large, too quickly.

Now, if an erstwhile hobby takes over your life and ceases to be a joy, that’s a good reason to scale back. But just in case you need this reminder for your own fledgling business: if you think you’re being overwhelmed and there aren’t enough hours in the day, yet you’re not ready to call it quits, hire somebody.

Don’t hire someone to take over the creative portion, obviously; but get someone to pitch in with the more mundane tasks, like packing orders and schlepping to the post office, rinsing newly-dyed skeins, stirring pots, stapling, taking pictures, updating websites, managing the books (if you’re not already using an accountant; besides, since you’re making or losing money in self-employment, your taxes got a little more complicated anyway). Hire a family member for minimum wage, and they become a useful business expense (your aforementioned accountant can advise you how to benefit the most from that sort of thing). Hire a local teenager, because practical experience in running a business is good for everyone. And they get to start contributing to their RRSPs (or 401Ks or whatever the heck you call them where you are).

This entry was posted in Uncategorized. Bookmark the permalink.

12 Responses to Too big, too fast?

  1. j. says:

    Comments will be closed on this post because of a surge of comment spam. Sorry! If you want to comment, feel free to find another post in this category where the comments are still open.

  2. Shannon says:

    Keyword for me: intern. I brought on a recent fashion school grad. Seems they didn’t teach them much about the marketing and business organizational-type stuff I’m good at, so we trade. I teach her the hands-on stuff and she helps out in the studio. It’s good for both of us!

  3. Danielle says:

    I wasn’t going to say anything but in my defence I’m commenting.

    Wow. I am amazed that anyone would post about this besides myself. As the former owner of No No Kitty Yarns, I’ll give you the real reason why the title includes “Former”. You might find it interesting, but you most likely wont. Anyhow I wanted my life back, something that is impossible if you’re company is too big for one person, but not quite making enough money to hire someone else. I was doing mostly (90%) wholesale orders, which if you’ve ever done them, take tons of time, and make next to no money. It stinks to put it nicely. If I’m only paying myself .30 an hour how can I hire someone else? It’s true that if I had chosen to keep the company in say another 9 months I’d be making money hand over fist, I would never sleep, but I’d have enough money to hire someone. So now, I’m heading back to school for computer programming, so that one day I’ll be able to leave my work at work, and have a life with new hubby when I come home. No No Kitty Yarns went from a pound of lace to orders of 50 pounds of yarn + 30 pounds of roving in less than 8 months. I don’t care how hiring someone would have helped with the packing or reskeining; ^^that is a minimum of 60 hrs of dyeing by myself, that would have to be done in less than a week. I’d rather leave things on a happy note now, than drag things out for another couple of months with me growing more frusterated.

    As for all the health care concerns, it’s a PITA, not to mention all the legal paperwork you have to go through to hire someone. I looked into it over the summer when I was getting antsy to hire someone. Even to hire a teenager means mountains of paperwork. If I were to do it all over again, I’d scout out a local art school and hire the student who best fits my own personality to work with. I’d also buy a huge studio, but that’s a pipe dream for a rainy day.

    Oh yeah, and I did limit stock. If you’ve ever checked out my yarns on kpixie, it was almost all super wash sock yarn. Limiting stock doesn’t always help, sometimes people just want lots of a certain thing.

    -Danielle (who finally has her life back)

  4. mamacate says:

    Aw shucks. Those of us who do ramble on will be grateful.

    If the US was really about small businesses, which it claims but of course it’s really about Very Rich MenTM, basic national health insurance would be part of the deal. It would be the biggest single boon to small business growth. But I don’t think that would suit the Very Rich Men. Oh well.

  5. j. says:

    It took two mentions for me to finally clue in that I was underestimating the importance of benefits (health insurance), probably because of the availability of provincial health insurance (and because, when I was young enough to be happy with a part-time job, I was also a dependent under a parent’s insurance plan). Not that it isn’t an important consideration here… just that this must be why I (erroneously) didn’t think of it as important for a micro-business.

    And I guess that, if one *does* want to grow a business, it’s just as important to learn to say “yes” (to outside assistance” as it is to say “no”.

    Need for accountants: if the number of receivables is relatively low, and the expenses are easy to track, and there are no employees, there isn’t much call for an accountant or bookkeeper to manage the accounts throughout the year. I haven’t had to collect or remit GST, but it can’t be any more difficult than withholding and remitting CPP/EI for an employee (which I have done).

    (I’m redoing the website format, and when it’s done there’ll be a bigger comment box, because there’s still a lot more to learn from Cate.)

  6. keohinani says:

    interesting arguments.
    i think perhaps another solution could’ve been to limit stock, i.e. discontinue certain yarns or colors.
    large yarn companies do it all the time, for seasonal changes or other reasons. hardcore fans of the stuff wouldn’t be shaken and sometimes the limited availability still carries consumer appeal; it’s the same logic that makes coming out with a “limited edition” so attractive.
    it’s inspiring to see a hobby become so successful. and though the business “grew too large too quickly,” there is the possibility of it returning to the market, lesson learned and better prepared.

  7. mamacate says:

    Well, I think there are two categories of growing too quickly that can affect businesses. Larger small businesses (I think in the US “small business” is defined as less than $10 million in sales), that have growth as a goal (as opposed to income production for one or two families, as is the case with many fiber-related micro-businesses) can get into trouble by overexpanding beyond what the market can bear, but in some ways that’s a relatively easy thing to deal with: you can diversify (your handpainted sock yarn isn’t selling so well? how about trying some worsted or bulky weight? or maybe lace?), you can try to expand your market (hard to do as a small business, but LYSes sometimes offer free beginning knitting classes, a perfect example), or you can improve/increase your marketing to try to take market share away from a competitor. In my experience, too-fast growth is usually related to human problems. Things like nobody in the enterprise really knows how to manage the money and they don’t trust someone else to handle it; it’s a family business and the second generation is not well-suited to the business; entrepreneurs are inexperienced at operating at the level to which they have grown (now competing against corporate players) and are too insecure to hire help (or unable to do so because anyone at that level would go out on their own). Production difficulties, computer systems that can’t handle new volume levels (like, it was built by one guy named Roger and no one else could ever figure it out, but now there’s too much work for just Roger), and on and on and on. In my b-school education and my professional experience (the latter being far more valuable, of course), I’d say human factors are by far the biggest reason for business problems. Even in big firms. Ask me about the ways in which my partner’s multinational 16,000 employee professional-services firm is like a textbook case for ACOA.

    I think you’re right, some businesses can’t expand beyond cottage size because if you really do the math, the proprietor is barely paying herself, and it’s barely more than a hobby. I’m working with a cloth diaper manufacturer who is struggling with this–the price point for cloth diapers is very low because there are many hobbyists–you can’t get them made (ethically) for anything like what you would need to at the price point. But mostly I think it has to do with personal goals. Do you want to hire and fire and manage, or did you start out wanting to dip wool into dye pots and chat online with knitters. Big difference in job description.

    As for being “the man” I have had pretty good luck with child care folks too, though we use a center. However, truly, it’s the lower-wage (still above minimum wage, but a good casual wage job). Long term, it’s wearing. You get someone good, they go off to college, or graduate school, or whatever. You get ten lousy people who don’t show up to their first day of work, have endless family problems, have chronic health issues, are angry that they’re working a casual, low-knowledge job, and on and on. Maybe there are just more disaffected people here because of all our social problems (like, many smart people have been shut out of higher education; not getting health insurance in your job makes it almost a necessity that you’ll be looking for something else if you can get it, etc.)

    Anyway, that’s a lot of babbling in this small box. I suppose if there’s one single thing preventing me from starting a small business, it’s the growth and staffing issue. So I have a few things to say. Ahem.

    And Jo? We should talk because unless Canadian tax law is way more complicated that US, you probably don’t need an accountant beyond maybe someone to prepare your taxes. That’s by no means a necessity for a solo consulting business.

  8. j. says:

    To (somewhat) rephrase that, I think what I mean is I don’t think of “growing too quickly” as a category of business failure; I see “bad planning” or “a calculated risk that didn’t pan out due to a market change that couldn’t reasonably be predicted”.

    … which, on reflection, are just supercategories that include growing too quickly. You can tell that I never studied anything about running a business.

    And it may well be that certain types of businesses can’t expand beyond a micro or cottage size.

  9. j. says:

    I’ve only been an employer in the child care context (a business that couldn’t grow too quickly with out my, um, growing too quickly). I didn’t provide benefits, but I think I did pay a better than average wage. Being “the man” in that context didn’t seem too bad.

    In this context, I was really thinking of the part-time sort of work that didn’t require very much training–even if someone took off for greener pastures or school or what have you, replacing them wouldn’t be too difficult.

    I see how growing too fast can happen, but I can’t wrap my head around how that could happen if one consciously tried to avoid it. Granted, when you take on a new contract, there’s a risk that it might mushroom beyond what you had originally budgeted for, but you would have done your best to minimize that risk by defining at the outset what the client’s expectations were. And I can also see the risks inherent in making large investments and expanding a business.

    I suppose what this means is that I see “growing too quickly” as “bad planning”, although growing too quickly can still happen despite competent planning. My greater fear in business is growing to meet demand, but then discovering one day that the market has dried up.

  10. JoVE says:

    Good advice but sometimes a business can grow to fast anyway. I remember my dad talking about that as a source of business failure when I was younger and he consciously tried to avoid it (and yes he had staff, right from the beginning).

    Having recently started a business (and observing a former colleague who did the same at the same time), I think that there is a big danger of trying to do to much too quickly and not really thinking about your goals and what might be required to meet them. I’m not very good at detailed planning (and have not yet written a business plan; or hired an accountant though I know that I have to) but I’m also pretty averse to overwork. So I’ve started slowly and am being careful about how much to take on because of repeat business and word of mouth recommendations which take time.

    So I think there is still a category of ‘failed due to growing too quickly’. A shame though.

  11. Ah, yes. I am remembering the advice given to me by a national distributor: Take one small step at a time. I am still a one-person business and not run of my feet. Friends forecast big things, but that’s not what I want. My small business needs to provide me with an income (and my needs are few) but most important, it is my creative outlet-coloring, designing, and knitting. Thanks for the reminder.

  12. mamacate says:

    Well…

    This is why I’m hesitant to start a small business. Hiring and managing people is a huge pain, especially as a small business where you can’t guarantee someone a full-time living wage (and in the US benefits are key and almost impossible for a very small business to provide at an affordable rate). In that situation you wind up with people who want but can’t find something full-time with benefits, or you wind up with people with other commitments, which, in my experience, usually results in people bagging out on you the moment you start getting busy (you know, busy enough to make enough money to pay them). I don’t blame anyone who closes a micro-business because they don’t want to grow into a larger enterprise. I admire people who are willing to take on responsibility for the livelihoods of others, but it’s not an easy road, and it’s not all that different from working for “the man.” And being “the man”? Even less fun.