Tweet

How big should your business be?

Written by: James Chan

Article Overview: Many independent entrepreneurs are content to be one-person companies. These people, called the "spare room tycoons," feel that it is more important to be ourselves than to be big, as long as our business is successful and we are prosperous. After all, history has shown repeatedly that one person can change the world.

How big should your business be?

Should you remain a one-person business? Could you offer better services more profitably if you were larger? These are issues that just about everyone who starts a business faces, and because business conditions change over time, they never really go away.

You can~{!/~}t make a plant grow by pulling on it. So says an ancient Chinese proverb, one that I think applies to us spare room tycoons. In most cases, our businesses need to be well-rooted~{!*~}with steady customers, a track record, expanding prospects and sufficient capital reserves~{!*~}before we should even think about growing.

There are obviously some exceptions. In internet businesses during the last few years, the basic idea seems to have been the most valuable, and vulnerable, part of a business. People with good ideas need to rush to make their businesses attractive enough to support an initial public offering, or to be sold to a larger company.

But most spare room tycoons aren~{!/~}t involved in this sort of mania. We need to be assured that our businesses have sustainable natural growth before we take on the additional overhead and labor costs that come with expansion. We have seen in earlier chapters how rapid expansion can add to the stress you feel, and how the normal ups and downs of business can make an overextended business fail.

It is important, too, for you to consider whether you are expanding because your business justifies it and you find it fulfilling, or whether by becoming bigger you are merely trying to prove that you are successful. Think twice before you buy into the clich~{(&~} that bigger is better. Creating a larger firm will most likely require you to spend more of your time managing others than doing what you set out to do.
Moreover, you might find yourself growing into a company that is large enough to be slow and bureaucratic, but not large enough to be a strong player. There is much to be said for being small and agile, and for sticking to the area where your talents lie. If your core talent and passion is managing, your goal should be to expand. All the rest of us should think twice.

Obviously, this book has a bias toward those who have decided to stay small, because if they have grown larger they are no longer spare room tycoons. We like the flexibility of being able to create and recreate our own businesses. Many of us have employees and many more take on staff and independent contractors to help us deal with particular projects. This has become known as the ~{!0~}virtual~{!1~} company, though I think its great virtue is that it is a versatile company, one poised to take advantage of a wide range of opportunities.

We spare room tycoons are at the cutting edge. Our small size gives us the freedom to be creative and experimental. Perhaps the Intels, Daimler-Chryslers and Time-Warners of the world have a similar freedom, but not the smallish and middle-sized firms we would likely become if we were to expand.

While I was researching the book, I met a young woman whom I sought to interview. She works in a creative support capacity in the film, television and advertising industries. She has some important ongoing clients, including a long-running television program. She is the only full-time member of her company, but she employs a stable of more than a dozen people on a project basis. But she didn~{!/~}t want to be in the book because she doesn~{!/~}t consider that she has a business. She just believes that she is working as an individual, trying to get by. If she had a business, she told me, then she could sell it and make some money from it. She would like to have a business some day, she said, but couldn~{!/~}t claim to have one now.
I don~{!/~}t know what her plans might be, but I think an attitude like hers can be dangerous. She is apparently prosperous, she does extremely interesting things, she appears overall to be happy, but she seems somehow convinced that what she is doing isn~{!/~}t a real business. If you feel that way, you might easily be tempted to expand the business in conventional and counterproductive directions. The business might appear more corporate and ~{!0~}serious,~{!1~} but the expansion could divert your energies from the things you do well toward other chores at which you are, at best, mediocre.

Not everything that grows on the earth is destined to be an oak tree. Besides, most plants would be grotesque if they could grow as large. And they can~{!/~}t because they don~{!/~}t have the proper structure; gravity would bring them down.

What~{!/~}s important isn~{!/~}t simply to grow but to flourish. And many of us~{!*~}more all the time~{!*~}have learned to flourish while staying small.

Related Articles

Article Tags: ancient chinese proverb, business conditions, capital reserves, clich, exceptions, faces, initial public offering, internet businesses, larger company, person business, prospects, rapid expansion, spare room, steady customers, stress, tycoons, ups, ups and downs, where your talents



Related Forum Posts
Re: Is A Business Plan A Waste Of Time? - I don't see a business plan a waste of time. Actually it's a great goal-setting tool for a business and it also helps evaluate a business' performance which allows the business owner to see where the business is going. Others say that it is only important when seeking funding from lenders or banks, but I believe it is more than that, that's why I have mine written and it's a work in progress since I first started in business.
Is A Business Plan A Waste Of Time? - According to various government statistics, up to 80% of businesses will fail within their first five years of operation. That number is staggering to me. At the same time, when I look at most business owners, most of them do not have a business plan for where they want to go. When you ask entrepreneurs why they don’t have a business plan, most of them will say something like: “it’s too much work”, “I’m not trying to raise money”, “it’s all in my head already”, or “my business changes too often for a business plan to be worthwhile.” Sound familiar? Did you write a business plan for your company when you first started? Are you planning on doing it for your new business idea?
Is "Good" - Good Enough - I was just reading the thread about whether people need a business plan and this idea hit me. Someone commented that if you don't have a business plan and you're doing all right - then why spend the time or money. But, is doing good or doing all right - good enough? Maybe you're a business that is getting by and making the bills. What if, taking the time to really evaluate your business with a detailed business plan could help you see places to make some changes which could take your business to the next level? Would it be worth your time? I think it would definitely be worth the time. That could be because I've worked with a number of business owners who were "getting by", but once they committed to having someone evaluate the business - they saw a drastic increase in their revenue. So, why couldn't or wouldn't an entrepreneur do an evaluation to determine where the business is, where it isn't working and where it should be going? This could be done in a business plan format. Just some random thoughts. Shri
answer this question - I dont know if this is posted in the right area, or if its been asked heaps of times already. Tell us something BAD you have done in your business that could have potentially(or has) destroyed/ended your business, or that has effected your business in a BIG way. OR, is there something GOOD you have done in your business that has really benefited you in a BIG way.
Re: Unsecured Lines of Credit - Hello, creditguru: Thanks for the recommendation. Here are two questions for you that will further help our forum members to make use of your suggestion: 1. How [u:p6n6npsx]does[/u:p6n6npsx] a business establish a strong business credit profile? (Especially small business and home business.) Please provide some tips or guidelines on how to do this effectively. 2. Commercial credit lines can be helpful to a business, but they do require responsible management on the part of the business owner. What tips, recommendations or cautions can you offer to business owners who are considering commercial lines of credit? Thanks. GT :-]


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

How To Be A Management Legend

The new marketing question. Will they follow?

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.