August 11, 2014
We live in a society where it’s automatically assumed that as an entrepreneur you want to grow your business to be big. While that’s the right call for many folks, it’s not right for everyone. Before you decide to take over the world, ask yourself these questions to see if rapid growth really is your best move:
- Can you afford to grow? In order to grow your business to a new level you may need to invest in equipment, hire more people, or simply purchase substantially more ingredients/packaging. Where will the money to do that come from?
- Are you willing to take on (more) debt or equity partners to help finance that growth? If you’re not capable of financing business growth from the business’ cash flow or from your own pocket, you will have to look elsewhere and that may require that you take on debt or give up some equity in order to get that cash from someone else. If it’s the former, are you sure that you will be able to meet your debt obligations? If it’s the latter, is this someone you want to work with over the long term?
- What will happen to your Net Profit if you grow? There’s a belief that growth will automatically mean you and/or your company nets more money at the end of the day. But with growth comes increased expenses which could quickly eat away at any new profit. If you’re going to put in the work to grow your business make sure that it’s going to be a wise financial decision for you at the end of the day.
- Does growth mean that you will have to step back from why you got into entrepreneurship in the first place? If the entire reason you started up your cookie business, for example, was because you love the physical act of baking and growing your company means that you have to move to a co-packer who will do the baking and leave you with the administrative chores, will this still be a business you love working in and on every day?
- Is business growth in-line with your personal goals? Growth rarely happens without a lot of time, effort, and hard work on the entrepreneurs part and for some people, based on where they are in their lives, that’s not really an option currently. If one of the things you appreciate about entrepreneurship is the ability to, for example, have the flexibility to pick your kids up from school or make it to the after school soccer practices, are you willing to give that up to spend more time working on your business?
- Do you look forward to managing employees? Some folks started their businesses with the goal in mind to create jobs for others but there are other entrepreneurs who love the idea of working by themselves or with a small staff. If growth could only be achieved if you hired people and you don’t look forward to the idea of managing a staff, then growth may not be the best option for you right now.
This isn’t to say that growing your company is bad but it’s not simply such a ‘good’ that you should do it without foresight about what you’re getting into. And remember, just because you say no to rapid growth today doesn’t mean you’re saying no to it for good. That door is still open to you in the future when/if you’re ready for it.