Today, I read the newspaper about a young company called “Twelve Cupcakes”. It is expanding rapidly. Within a year, the number of outlets rose from 4 to 8. It is encouraging to know that young entrepreneurs are doing well.
My concern is with this type of rapid expansion, the operating cash flow of the business may be negative as the business has to pay for rental deposit (3-6 months for a retail business), machinery purchase, staff training, etc…. in this situation, company need fresh funds from the business owners or bank loans. If the business owners are not careful, they may expand too fast and then run into countless problems later on. Issues like food quality is not maintained, staff are not well-trained, etc are problems associated with rapid expansion.
MacDonalds and Kentucky Fried Chicken took 30-40 years to achieve the result they had today. Twelve Cupcakes management would be wise to learn the lesson of MacDonalds.
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