Whether you’re a new business owner, or have been grinding it out with entrepreneurship for decades, you’ve probably been asked about one thing: your eventual exit. Maybe it’s your peers, who give you suggestions for company growth and offer their two cents on the best business exit for you. Or it could be your sister-in-law, asking with stars in her eyes about when your company will be bought – or go public – and make the whole family rich. No matter if it’s said encouragingly, in jest, or any way in between, these questions can be sobering. Do you need tips for scaling a business, so you can make one of these grand exits everyone keeps talking about? Or, is it possible you should keep your company small? Here’s how to make the call.
Define Your Version Of Success
To some people, dollar signs are the only thing associated with success. If you own a business, they downplay its legitimacy unless you’re obviously raking in the dough and living a life of obscene luxury. To others, owning a business is really just a means to a lucrative end. If it doesn’t get acquired, get purchased or head toward an IPO, they figure it’s not succeeding.
But there’s so much more to success than these limited views. In fact, as the business owner, you get to decide on your own vision of success. Is it a windfall from a sale or IPO, that will fuel travel around the world and a retirement free of financial worry? Is it less involvement in the day-to-day of your business, so you can spend more time volunteering at your daughter’s school and making memories as a family? Is it expansion into new product lines, so you can enjoy the validation of market domination? Is it simplicity; enough money to be comfortable but enough freedom to use your time how you’d like?
Different people have different values, and therefore different ideas of success. It’s crucial you spend some time figuring out what yours are, so you know what you’re aiming toward. If your goal is more time with family, less involvement in the day-to-day of your business or some picture of simplicity, scaling your business (just because everyone else is) doesn’t make sense. In fact, it promises to derail you on the road to true success. But, if your goals involve expanding or a grand business exit, then scaling is worth considering after all.
Consider Your Industry & Business
Here’s a well-kept secret about entrepreneurship: Not all businesses are suited to scale. Yeah, I said it. I don’t want to burst any bubbles, but it’s important to know this. After all, many driven business owners try to grow and grow, despite warning signs that it’s not going to work. So if you think scaling is indeed something aligned with your values and vision, first do some research.
Have you proven you have a product or services that customers are willing to pay for? Do you have infrastructure in place, for operations, sales and marketing that will serve as your backbone as you grow? Do you have a product or services that can actually be produced en masse? If your answers are no, you might be in an unscalable business (at least for now). Trying to force it could end in a lot of wasted money, if not total disaster.
Map Out The Pros & Cons
If you’re still on the fence about whether you should grow your business or not, I recommend actually writing out the pros and cons. Pros may include more revenue, higher valuation, bigger market presence, more locations, prestige, a grand exit and whatever else is driving you to think about this option. Cons may include larger demands on your time, less flexibility, more significant overhead, more employees (and therefore more HR hoops to jump through) and other growing pains.
Assign weights to each item, based on what it’s worth to you. For example, flexibility may be really important to you since you have small kids at home so you may give that a weight of 5 (on a scale of 0-5). On the pros side, prestige may not be important at all to you, so you might give it a 0 or 1. Looking at the pros and cons mathematically can be a good way to be more objective, and figure out if it really makes sense to you to pursue major company growth or simply stay right where you are.
When all is said and done, there are a lot of benefits to keeping a thriving business small. It’s up to you to figure out if that is best for you, your family and your values, or if you are in fact in a position where scaling is the right path. Want to talk it through? I’d love to chat.
Please note: I reserve the right to delete comments that are offensive or off-topic.