Is bigger always better? Should you expand your business?

September 8, 2011 by Terri
Filed under Design your Life, Income

We’ve all heard the advise “Work on your business, not in your business. Leveraging is the key to growing your business. Get your business to the point where it can work without you.” In some cases that is good advise but often it’s not.

Yes, leveraging can mean you have some passive income or that you can produce more revenue than you could on your own but bigger does not always mean more money, more free time or more satisfaction.

Some aspiring entrepreneurs have a goal of growing a large business and hanging out on a tropical island while employees run it, but chances are you are going to spend a lot of your time in an office planning, directing and delegating. Is that what you ultimately want your life to look like?

Let’s say you are a custom cabinet maker. If you started your business because you love doing that kind of work with your hands and get satisfaction out of taking the project from design to completion, are you going to be happy doing the work to drum up clients, hiring other cabinet makers, ordering materials, keeping track of payables and receivables and handling payroll? Probably not.

In some circumstances keeping it small is a smart choice. Maybe you don’t want to deal with the administrative side of overseeing a large business. Perhaps you thrive on the actual service you perform or customer interaction. Sometimes growing large can be so costly with payroll taxes, worker’s compensation insurance, remote office rental, etc, that your net profit isn’t much greater than staying small and keeping your costs and quality of service under control.

Years ago after finishing massage school, I intended to open my own body-work center and hire other therapists to work for me for a percentage of the revenue. I’d had other businesses and knew the administrative load involved. To get practical experience in the spa industry, I subcontracted to a few resorts and what I discovered was that while I was comfortable with and good at the work involved in marketing and running a business, what I really loved was the hands on healing work with the client. I didn’t want to give that up in the interest of building a large business.

In the home furnishings business, however, I found I enjoyed the marketing and administrative side more than customer interaction so running a larger business made sense. However, there was a point at which rapid expansion proved less profitable because we grew faster than we could manage.

When I opened a contemporary craft gallery, I loved the face-to-face client contact and knew that I needed to out there with customers to learn their preference. I also needed to do the buying and attend trade shows to keep up on trends. I didn’t want to be behind a desk doing paperwork so I delegated the book-keeping. Even though I loved working in the business, I also wanted and needed some free time for other activities I love like walking on the boardwalk, in the redwoods and traveling. Some small business owners will just close up shop a day or two to have time off but I wanted to be open seven days a week so I opted to hire additional exployees to work the gallery and have money coming in even if I was away. For me, that was the perfect mix of hands-on and delegating. When I was encouraged to expand and add other locations, I knew that wouldn’t fit the lifestyle I was looking for at the time.

Before making the decision to expand your business, ask yourself what aspects of the business truly excite you and which tasks you prefer to avoid. If being out doing the actual service is most satisfying to you, it probably isn’t going to make you happy to have other employees or contractors doing the work and sitting back directing. You may be happier for the long run doing the work yourself and having an administrative person handling the appointment scheduling, phone calls and paperwork. Every entrepreneur has to find her own comfortable balance so don’t assume bigger is always best.

Be Sociable, Share!