Wednesday, December 8, 2010

The Business Concept of Critical Mass

I had an appointment with a fellow small business owner here at Kaladi Coffee this afternoon.  She has an established grocery operation here in Colorado.  She makes healthy, organic prepared foods and sells them from the same grocery store location.  Her business has a loyal following: there aren't any big chances of nobody coming in on any given day.  While her business faces a couple of small obstacles here and there, the major reason we came to meet is that her business,  for lack of better terminology, has never really reached what I call Critical Mass.

Critical Mass is a hugely useful and flexible concept.  Originally intended, of course, to describe the mass at which fissile material can create a self-sustaining chain reaction, it has been adapted to social movements, think-tank activity, and at least in my mind, to small business.

Critical Mass is achieved when a business becomes self-supporting: when it no longer requires regular infusions of cash or superhuman inflows of energy in order to continue daily operations, and when ownership can, at long last, begin to draw a little meager income.  We're not talking about money and energy required to GROW a business, mind you (which very often requires inputs)...just that it can sustain itself and its ownership on a day to day basis.  Between birth and Critical Mass, a business is like a baby (a metaphor we will return to over and over again...dirty diaper analogies included) in that all it does is absorb. But it isn't cute.  It doesn't make cute noises.  And the bills you incur by running a baby business aren't cute by any means at all.

But wait...in addition to frustration, business owners get a big special bonus bummer: fear.  The vast majority of babies born in America hit Critical Mass sooner or later, when they get jobs, form friendships with people who manage to stay out of jail, and find their own places to live.  There are what...300 million examples in our midst at all times right here in the U S of A?  The opposite is true with small businesses.  A few die in childbirth, within a few months of startup, and then the vast majority slowly starve (or worse...starve their "parents") over a three or four year period...that excruciating time when, while working fiendishly, owners wonder if their business will ever support them, pay their mortgage, or do anything but suck them dry and waste their time.  After all,  there is only a slim chance that their baby will EVER become a viable business with a Critical Mass of its own.  And any new business owner who denies that they've ever been afraid that their baby isn't going to make it is either an egomaniac or a liar.

So one skill new business owners need is a good measure of patience.  Another is faith.  Stupidity in small measure helps, as does proclivity to obsessive behavior, deafness to criticism, and the ability to make Ramen noodles 300 different ways while waiting for the holy grail: the very first paycheck.

But perhaps in a more useful context, the notion of Critical Mass can help guide startup owners into building a business that has a greater chance of achieving Critical Mass before it strangles Momma and Daddy.  The same way different fissile materials achieve Critical Mass at different weights, differently configured businesses hit Critical Mass more or less quickly, with more or less financial and human-energy input.

Next up: CM part II, in which we look at some of the variables that dictate when a business may...or may not...reach Critical Mass.

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