Is Bigger Better?

We often look at business with the view that bigger is better.  In some instances this may be true.  However, sometimes having a larger business comes with additional challenges that may or may not be worthwhile, depending on our personal goals and beliefs.

Big_shoesA small business, often called a micro business or SOHO (Small office/home office) can provide the owner with a good livelihood. This model can be fairly simple in concept and the owner can maintain a good living with the understanding of the maximum earning capacity that the venture can provide.  This in some cases is why we choose to start a business… to provide individual income or a living wage.

If you are comfortable making a good living with a micro business, then why look to expand?  If you increase expenses, including wages, will your revenues also increase?   If not, what are you really accomplishing?  You have increased liabilities and are now increasingly responsible for others’ wages or livelihoods.  You now have to handle or juggle multiple tasks and external issues.  If sales revenues do not meet expectations,  your stress levels will also surely rise.

An example comes from the retail floristry industry.   An owner has a successful florist shop with a few employees and is making a good living.  The owner then considers an opportunity to purchase or start up a second shop in town..   If this owner opens the second location, the expenses will double.  Now looking at the revenues…. Will this new location provide similar revenue to the first shop?  If not, then the net profit of operating two locations decreases.  The roles and responsibility for the owner have increased by twofold.  We often assume that sales will increase and they often do, however, if they don’t increase enough, then the expansion has not provided a benefit to the owner.

According to Robert Tomasko, management consultant and author of Bigger Isn’t Always Better: The New Mindset for Real Business Growth, “[a] more useful definition of growth is one built around becoming “better,” not bigger. A business grows whenever it moves beyond the self-imposed limits that define and constrain it. Growth is about forward movement. It is not about getting bigger or holding a record of unbroken success. Getting bigger may be a by-product of growth, but it is not its main feature.”

In summary, when considering growth for your business, ask yourself:  Does it make sense to expand both financially and personally?  Or am I fine with earning a good living by providing the best possible product or service I can, each and  every day?  If you chose the latter, you just might be surprised at the results.

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