In This Episode
One of the reasons we started this podcast was to help dispel many of the myths we’ve seen in the small business world. One of those chief myths is the idea that if “you’re not growing you’re dying.” This has become so popular in the small business world that folks seem to think it must be true. Not so fast my friend.
Quick question for you, have you ever experienced significant growth in your business? If so, do you remember how it felt? Maybe you recall why people often refer to them as “growing pains” as opposed to “growing joys”. It can be a big pain to manage and absorb all the growth.
So we’re here to tell you that it’s OK not to grow. It’s OK to get your business to a manageable level where you aren’t having to deal with all the excitement, stress, and strain that results from significant growth. What’s wrong with owning a business doing a couple million in sales with 10 employees? As long as the business is nicely profitable and you’re enjoying yourself, this might be a good place to hang out for a bit…or the foreseeable future.
During the show today we addressed several challenges around growth and shared several of our personal stories as well as those of clients who have experienced some of this growth. Chief among them are:
- People: one of the constants we’ve noticed after working with small business owners for several decades is that the primary owner can typically grow the business on their own to somewhere between $1-2 million in annual sales. The challenge becomes growing beyond that first $1-2 million in sales and this typically requires finding at least one if not several key new hires for your business who will help with this growth. I’m sure you’ve heard about how hard it is to find people these days. Especially the right people. So if you don’t have this additional person or people already on board, maybe the biggest gating item to your growth is finding that one good person.
- Cash Flow: we often hear small business owners lament that they’ve run out of money or don’t have enough money to grow. This can often seem like the case, especially in a business where you have to make significant capital investments (e.g. in machinery and equipment, physical locations, etc.). But even in businesses without significant capital investments, there are likely required investments that are needed in people and services. Ever hired someone at an annual salary of 6 figures in your small business? How could you ever afford this person? Your banker can be helpful to a point as they tend to like to loan money when tangible assets are involved. It can become a bit tougher when the investment you’re looking to make comes in the form of people. That’s why we often advise our customers to secure lines of credit from a bank that can be used at your discretion. It can help fund the onboarding of a new “expensive” hire as well as the onboarding of a new large customer who won’t pay you for the next 90-120 days.
- Customers: do you love all of your customers? If you even thought about answering yes to this question then you are in rarified air. Most small business owners can quickly provide a list of all the customers they’d like to fire. Unfortunately too many small business owners feel they are stuck with certain customers who become a big percentage of their sales. Not to mention the hard wiring that exists for most business owners where they can’t fathom firing a customer and instead will bend over backward and any other way they can find to keep all those customers on board.
- The Market: not all markets are created equally. Perhaps you’re in a newer industry that requires a lot of education and changing of behavior. And even though potential customers, employees, and vendors get excited about the possibilities with your business and your new product/service, chances are it’s going to take years for many of these excited people to actually change their behaviors. Perhaps you’re in a an industry that’s a bit long in the tooth and you really can’t grow it too much no matter what you try. At that point you’ll want to focus more on maximizing profitability since you know that cash cow is likely to soon run out. Or perhaps you’re in an industry that is experiencing some consolidation. And while you were able to grow your small business over the years it’s becoming increasingly more difficult and you continue to find yourself constantly competing against bigger and better funded competitors. Maybe the answer at this stage is to look at potentially cashing in your chips and selling the current business and then heading off into the sunset or into another business.
Whatever situation you’re in, keep in mind the goal isn’t to solely grow your sales. Focus more on ways to grow your profits. But keep in mind that you don’t always have to be growing, it’s OK to reach a plateau in your business that works for you and your team. Especially when that business is providing you with sustainable profits.
People, Companies and Resources We Mentioned in the Show
- Pickleball (https://usapickleball.org/what-is-pickleball/)