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The major trick, IMHO, is not to grow. While a "normal" startup is focused on growing! growing! growing! a small company should instead think like a physical r

• stevoski 3y ago
  This is an awesome strategy! I want to print this out and put it above my computer.
• golergka 3y ago
  Wouldn't a real restaurant increase the sitting area, open a second location or increase prices if it had more clients than it could serve?
  • orev 3y ago
    If that’s an option, yes. But for many it isn’t. The building isn’t owned by them. Or there’s no available space next door to expand into. Or the capital cost of remodeling that new section is too high. Or the profit margins are so small they can’t justify the cost. Or they’re already maxed out on loans and can’t afford more.
    • pc86 3y ago
      And a second restaurant is still a second restaurant. There's still a very high (>50% for sure) chance it fails. The second location isn't quite as good. The manager you hire starts to slack off a bit. Food critic gets sick during opening week. A close family member dies and you ignore the restaurant(s) for just a little too long. The list of things that could happen that boil down to "bad luck" is endless.
    • golergka 3y ago
      > Or the profit margins are so small they can’t justify the cost. You mean the cost increase? I'm afraid I don't understand. Who would you need to justify the cost to, the clients? They don't know anything about your profit margins, and they don't really need any justification.
      • orev 3y ago
        Operating the restaurant at the current size might not provide enough revenue to pay for the expansion costs (more rent, renovation of the space, etc.).
  • klik99 3y ago
    Not at all, depends on the owners goals in life. If the goal is to make as much money as possible and you don't mind over working then it could grow, or take on a partner. There was a great breakfast place near me ran by the guy who owned basically all the commercial real estate on the block - the breakfast place was only open in the mornings 6 days a week and occasionally the owner would come in and serve, it was basically a passion project and he wanted to make enough to pay for it. After 15ish years of running he started hosting popups at night and another 4-5 years after that sold to one of the popups. It was a real restaurant and widely love by those in the know. You could say El Bulli fits the bill of don't expand, they shut down after a while and converted the space into food research and events center. A little different, but I was trying to think of a more famous "real restaurant".
  • pcorsaro 3y ago
    I sell stuff to a lot of restaurants. Most of the people that open a second location end up making less money or end up closing everything after they just get run into the ground. Then again, some people do it successfully and make way more money. It just depends on so many things.
  • tweezy 3y ago
    I think the analogy still works in this scenario, though. Like once you've grown so much that your at capacity in your current setup, THEN you can invest in growing your business. For this restaurant this adding a new room or a new location in another town. For a solo founder, this might be when you finally start hiring to free up your time for other tasks. It's not necessarily never grow. It's about growing on your own terms when you can afford to do so.
  • nine_k 3y ago
    A bit of anecdata. My wife ran a restaurant for four years, a reasonably successful one: a lot of praise from customers, profitable enough to stay in business, but nothing like hockey-stick growth. If anything, she decreased the number of tables as the fame and revenue grew. She carefully focused on making her place distinct from other restaurants nearby, and in training her personnel. Her long-time friend also ran a restaurant, for a much longer time, and more well-known in the city. After quite some years, she opened another, at a different part of the city. It struggled for some time, but eventually stabilized as a reasonably profitable place, after, say 6 or 7 years. Several years after that, she started planning to open a third one, and was saying that this would stretch her thin, and she's very reluctant, but the demand was apparently there. This is exactly the kind of business VCs run away from: inevitable slow growth, no way to put in more money and scale the business to get more revenue. Large companies also often shy away from that. This may be a huge opportunity if you hold it right. If you can find such a niche that pays you enough for your needs, it's really great because competition is low: few know about it, and of them, even fewer want to overtake you.
• elseleigh 3y ago
  Exactly. And day to day, ruthless prioritisation.
• zebraflask 3y ago
  Indeed. I'd only add (or rephrase other comments to the same effect) that slow growth is not only about staying within your capacity, it's also about learning what you're doing so well that you can systematize your processes for maximum results with as little speculation and risk as possible. You could call that "being efficient," I guess, but I think I mean it in the macro sense, not looking for nickel and dime efficiencies.
• wrs 3y ago
  Another example from another context: I have a friend who became a solo consultant. Specifically, she is great at diagnosing and fixing dysfunctional relationships between executives that can tank productivity for a whole company. She found herself with too many clients, too much work, not enough sleep, and was frustrated that sometimes people didn’t even listen to her advice. She was happy as a solo practitioner and didn’t want to manage people. My advice to her was to raise her rates…a lot. (Somehow that hadn’t occurred to her.) Now she’s happy with her time commitment, still well-compensated, and people pay attention because they’re paying more! Bottom line: don’t assume you have to grow, but you do need to keep searching for the optimum setup for the size you want to be.
• al_borland 3y ago
  A co-worker of mine visited French Polynesia a few years ago. He mentioned most of the restaurants simply close up shop when they feel they’ve made enough money for the day. Not great for someone looking to get dinner, but I’m sure it makes life much better and less stressful for the owner and employees. They know to get by they need to make $X/day. If they hit it by 1pm, cool, half day.
  • pfannkuchen 3y ago
    Wonder if they also run out of ingredients? Seems like a nice way to simplify operations if you don’t ever end up with waste.
    • slim 3y ago
      Yes, most probably this. The grocery list is retro planned from the wages of the employees. So when they served the last dish, they earned their salary, they split the money and close the restaurant
    • deleted 3y ago
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  • neilfrndes 3y ago
    This behavior was also observed in New York Cab drivers in the paper LABOR SUPPLY OF NEW YORK CITY CABDRIVERS: ONE DAY AT A TIME https://www.cmu.edu/dietrich/sds/docs/loewenstein/NYCCabdrivers.pdf https://www.cmu.edu/dietrich/sds/docs/loewenstein/NYCCabdriv... > ... Our interpretation of these Žndings is that cabdrivers (at least inexperi- enced ones): (i) make labor supply decisions “one day at a time” instead of inter- temporally substituting labor and leisure across multiple days, and (ii) set a loose daily income target and quit working once they reach that target
    • giovannibonetti 3y ago
      They could maximize their earnings by working more on more profitable days and working less on the less profitable ones. However, many people overvalue stability and are scared of variable income.
• riku_iki 3y ago
  > While a "normal" startup is focused on growing! growing! growing! a small company should instead think like a physical restaurant: in tech you still can be focused on users/customers/revenue grows but not headcount/process complexity grows, since you are not limited by number of tables like in restaurant.
• deleted 3y ago
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• muzani 3y ago
  Most growth is exponential until they hit a limit. Startups are a kind of lifehack. It's probably easier to serve a million people with 7 engineers than it is to serve 3000 people with one engineer-PM-sales guy. Eventually the guy with the giant company grabs the customers of that little guy or acquires them. So I think it's very tempting to go large. The trick is finding something with low limits. I call it deep sea ideas. Just go deep enough, outside of shark territory. A shark in the deep sea would implode. Things like specialist CRMs and funnels are classic. But I did diet apps and essential oil apps; VCs won't go near those but the market throws money at it.
• farseer 3y ago
  This will not work for SaaS in most cases. Someone will copy your idea and with VC money grow more features and customers than you, forcing you into a tighter small niche if not oblivion. Restaurants have a captive market in terms of location and maximum number of competitors in the immediate vicinity. A web startup does not.
  • newaccount74 3y ago
    Yeah, that happened to me too. But it doesn't matter. The internet is big enough for multiple players, and niches that are too small for VC money can still be very profitable opportunities for solo entreprenurs.
  • mamcx 3y ago
    I think it could work well (is my case actually). A lot of SaaS is just a simpler/different take on a big one. For example, mine is way less powerful than Freshbooks/amazon. I still live from it for the last 20 years with less than 100 customers (and a lot of time just less than 50). Having a niche or just being available to your customers on the phone and solving the issue in the next minutes/hours is enough to keep customers and run your business. Now, the big issue is that you are growing without the capacity to grow, and then you get a big competitor in your nose and you try to catch it. That is death. Do not try to catch the bunny. Be the turtle and forget about the race, at all.