08/ 31/ 2005
by Jeffrey Moses
Reasons You May Not Want to Expand Your Business Beyond a Certain Point
When starting ventures, many entrepreneurs dream of growing into the next Microsoft, Amazon or McDonald’s. Dreams are the foundation for success, but becoming a large, rapidly developing company has its pros and cons. It may involve extensive capitalization and expansion with layers of managers and employees. Consider the following points when planning to take your company to the next level of growth:
1. Time. Time is necessary to coordinate growth, crunch numbers, manage financing, hire employees and managers and troubleshoot the million-and-one situations that arise day or night, and on weekends. When met successfully, these challenges bring great satisfaction, but they also require an enormous amount of attention and energy.
Do you want to give up many or most of your evenings and weekends? Or would you rather be able to take your kids to soccer and be involved with their homework and other daily activities? Do you want to catch dinner on the run while at work and arrive home late in the evening? Or do you want to spend quality time with your family? These are decisions you must make.
Fortunately, they do not necessarily need to be made at great financial sacrifice. Many small businesses are quite profitable, even when running with a minimum of employees. Certainly, small-business owners spend more time at work than most of their employees, but comfortable profitability does not necessarily require years of lost evenings and weekends.
By working with business advisers and accountants and discussing work schedules and potential financial rewards with owners of larger businesses in your field, you can decide how much time you’re willing to give up for the extra money that can be made through expansion.
2. The pressure of capitalization. The more money you borrow, the greater the pressure on your business and on you personally. Nearly all small companies take on debt, but the scale of debt almost by necessity becomes more pressure-packed when hiring large numbers of employees, expanding into new markets or new product lines, building or leasing larger facilities or taking on increased marketing/advertising costs. The added stress will ripple through all your activities, both at and away from work.
3. The stress of managing unsung problems accompanying growth. These include, among others, hiring good employees, managing managers, setting up and maintaining finances and accounting (ultimately, this responsibility is the owner’s, no matter how efficient the bookkeeper or accountant), maintaining responsible security of all records, resolving employee disputes, resolving customer complaints (and perhaps even lawsuits). Often, successful entrepreneurs are recognized for their knowledge at business strategy, their coordination of internal corporate operations and their marketing savvy. But the little, unsung activities take the time––and ultimately make the difference.
