Can I be successful and stay small?
Last week I wrote about a situation where the two owners had conflicting objectives for the business. One wanted to rapidly grow the business while the other wanted to keep it fairly small. The story in that example concluded with the business taking the grow-and-be-big path. But can success be had while remaining small? Absolutely.
Looking back over the last decade I think - very broadly of course - that it was characterised by the pursuit of growth over profitability. In the entrepreneurial space to have big revenue goals was to wear the badge of ambition, and there was a modicum of disdain for those business owners who wanted to stay small. Well they clearly lacked drive. Didn't they?
On the contrary.
There are lots of examples of super-successful small businesses, here is one of my favourites.
The business - let's call it Franks - was never going to be big. At the outset the owner decided to cap the number of employees that the business would hire at 10. He had owned a business previously and learned, rather painfully, that managing lots of people was simply not his thing. The business was in the professional services industry so limiting the number of employees meant that there was a maximum amount of work that the business could do.
Franks quickly earned a reputation for doing a good job and before long the business had too much work. Most businesses would then have hired more staff but the owner of Franks stuck to his guns; rather than hire more employees he sacked the least profitable clients. And he did it again, and again, and again. It's a cycle that continues to this day and has enabled Franks to focus on being brilliant to just a few core customers. A very profitable solution.
While not for everyone, staying small is a good strategy if you:
- Like to do less, better. Like Franks, doing less will enable you to focus your effort on being amazing to a few customers.
- Offer high-value products or services. If your offering is low price you have to sell a lot. Not so, if you have a high value offering and price it accordingly.
- Like the personal relationship with your customers. When you have a small number of customers you have more time to invest in a real relationship.
- Don't get excited by the thought of managing a big business. As I said before, managing a big business is not for everyone.
So growing profitably doesn't need to mean growing big. You can be successful being compact!
To read more Profitable Growth expert advice, click here.
Julia Bickerstaff's expertise is in helping businesses grow profitably. She runs two businesses:Butterfly Coaching, a small advisory firm with a unique approach to assisting SMEs with profitable growth; and The Business Bakery, which helps kitchen table tycoons build their best businesses. Julia is the author of "How to Bake a Business" and was previously a partner at Deloitte. She is a chartered accountant and has a degree in economics from The London School of Economics (London University).