Techniques: Managing a pie-cart
by David Blakey
You can learn a lot about the basics of management by looking at how a pie-cart, hot dog stand or whelk stall operates.
[Monday 20 August 2001]
I sometimes criticize managers by saying that “They couldn't run a pie-cart.” A pie-cart is the New Zealand equivalent of a hot-dog-stand or a whelk-stall. In fact, when I lived in Britain, I used the expression “They couldn't run a whelk-stall.” Sometimes, people have imagined that this means that I think that they couldn't run even the simplest of businesses. It actually means that I think that they don't have a grasp of basic management techniques.
Running a pie-cart uses several techniques that all managers should be able to apply.
- Scale
Pie-carts are appropriately scaled. Whether they are converted vans or trailers that are towed, they are the right size for what they do. Their size is enough to enable their business to be conducted, but is not larger than it needs to be. A pie-cart does not include any executive suites with individually designed desks. It does not have corridors and spaces decorated with expensive artwork. It does not have reception areas with fountains and pools.
The investment in a pie-cart is focused on its mission to sell hot pies. - Markets
Pie-carts have clearly-defined target markets. Some pie-carts operate in city streets. Others are in squares and piazzas. Others are in parks. Each aims to capture a particular kind of customer.
They may also work at various times. Some pie-carts aim for lunch-time customers, in city streets or parks. Others are aimed at recreational customers, in parks and other public areas, working throughout the day to provide pies to people who are not constrained by fixed meal-times. Others only work late at night, often near taxi ranks and railway stations, to capture customers who cannot eat elsewhere. - Resources
This brings us on to another feature of many pie-carts. One person can operate a pie-cart in the downtown area at lunch-time. Another person can operate the same pie-cart in a park during the afternoon. A third person can operate the same pie-cart at night at a railway station. The resource that is the pie-cart can be applied to different customers in different markets at different times by different people. - Logistics
The logistics of a pie-cart work on a simple model. The operator must buy enough pies, with various fillings, to satisfy the demand of their customers. The operator's margins will fall if they buy too many pies, and revenue will be less than optimal if they buy too few. There will be variations depending on the season, the weather, and special events. More people may be about in hot weather, but they may not want more hot pies. Fewer people may be about in cold weather, but the demand for hot pies may rise. Sporting events, processions and public holidays may increase pie sales.
The pie-cart operator must be aware of these market conditions when planning the number of pies and the amount of other products - such as sauces and paper napkins - that will be needed. Turnover will affect the number of pies heated at any one time, and many factors will affect the amount of fuel needed. - Finance
The accounting for a pie-cart may seem relatively simple, but it contains all the elements of good business practice. The operator must make a target margin. There are overheads, such as licences and the financing of loans for the purchase of equipment. There are costs that vary depending on volumes. There are pricing issues and there may be some element of competitive pricing.
The pie-cart operator must arrange their business finances so that they make a living. Losses can mean the end of the business and maybe even bankruptcy.
- Vertical integration
They do not own or control the production of pies. Many other businesses seem to imagine that they will have little control over their supply chain unless they own components of it. - Horizontal expansion
They do not move sideways into other areas, such as selling ice-cream. Not from the same cart, anyway. Some other businesses move into parallel businesses in the belief that there will be advantages from a shared infrastructure. These advantages will usually be minimal when compared with the disadvantage of their ignorance of these parallel businesses. - Sponsorship
They do not sponsor events that have nothing to do with selling hot pies. Some other businesses sponsor events in the belief that this will “raise their profile”. I am always amused by businessmen sponsoring the performing or fine arts, and especially by their conversations during the interval or when standing in front of a major modern work. But it certainly does not “raise their profile”. Indeed, when they start babbling about the dances of Marius Petipa or the works of Max Ernst they generally lower my perception of them. - Infrastructure
If they employ staff, they do not expend an additional 20% of their wages bill on running a human resources function. Many other businesses add the weight of an infrastructure at an early stage in their growth. They may do this as part of their perception of themselves as successful businesses. They may find that the overheads seriously affect their bottom line. - Services
They do not provide finance to people who wish to buy pies. They do not provide consulting services beyond telling their customers which pies are available. Many other businesses meander into services that seem to fit with their main line but which rarely do. Even in the consulting sector, much damage was done by the invasion of the “accounting and business services” firms. Consulting has been healthier since they moved out of it again.
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