Building a Better Business

    Your Business: To Grow or Not to Grow

    Do you need (and want) to expand your business —and how do you do it and still keep it fun?

    by David Lewis

    If you started your business as I started mine, you did it because you enjoyed it — and it fit in with your “real” job. You know, after your long day, you put in a longer day doing the stuff you really liked to do.

    For me, running my own business full time didn’t start out as my idea. It happened when the company I was working for laid off 75% of its staff (including yours truly). Ouch. When reality sunk in, I realized I  was a business! And being “let go” was the best thing that could have happened. It’s scary, but in a good way.

    For years I had cursed as I watched “management” manage its way into one hole after another. Lots of stupid mistakes that you could see would lead to problems. Well, I always thought I could do better. Now I had  no choice but to prove it.

    I wrestle daily with the ideas of growing … a decision I have yet to make because it’s tough. I work long hours and sometimes it gets rather overwhelming. And to be honest, each year has shown at least 50-75%  growth, so soon, if things keeping going the way they are going, I won’t be able to do it on my own. My daughters are only 4 1/2 and 6, so I can’t hire them yet without violating child labor laws!

    In this column, I’d like to share with you some of the things that have been running through my head with regards to expansion. Maybe they are things you’ve thought of, maybe not, but I hope this will help you  with your decision process.

    Do you really want to be bigger?

    Making a decision on growth is a huge decision. It’s one I wrestle with daily. So, coming to a conclusion should be based on factors such as what you want the growth to accomplish, whether you will still have the  control you want, if the growth will still allow you to deliver the service and quality that you built your business on?

    • What are your goals? For me, at least at this stage, my goals revolve around making a decent income, to be in a reasonable semblance of control of my own destiny, and to work from home to at least be near my  family as I pull long hours.

      In the future, I don’t see my goals changing. Thanks to technology, my office can be a commute down a few flights of stairs and I can still work with clients all over the  world. But if you manufacture a product, or require a storefront, your goals are likely much different.
       
    • Talk to your peers: Talking with folks in the same position as you, or folks that have been in the same position, is a great way to help you in the decision of growing or not growing. Often these people have  been through exactly what you are going through, and as the saying goes, it’s always better to learn from someone else’s mistakes!

      Ask questions about why they chose to expand, why they went the way  they did, and most of all, what they wouldn’t do again.
       
    • Look at the positives and the negatives: While it is easy to say that if you expand, you’ll make more money, have more power, etc., don’t forget the negatives. With growth comes increased costs, more  responsibility, more risk, and, like they aren’t already long, longer hours. Hiring more people doesn’t necessarily mean you’ll have more time—in fact, the opposite is often true.
       
    • Could your growth hurt your business? Now there’s a thought! And that’s what weighs heavily on me. Could my growth actually hurt my business?

      As a service-based business, virtually all of my work has  come from word of mouth … folks that are happy with the work I have done and spread it around. So, if they hire my company to do work for them, at this stage, they are hiring me. Will bringing on a new hire  and growing hurt that? It may. I could become too busy and not spend the time I like to with my clients. I may not be able to respond to their phone calls and E-mails quickly.  The high level of service  I deliver may suffer. Am I prepared to let that happen? That’s why this decision is a tough one. But the first thing to make the transition better is to hire the right people. 

    Hiring

    Well, you’ve made the decision. You’ve weighed the options and you are going to grow. The first thing you have to deal with is getting help and hiring the right people. Hiring employees is a huge step that can  radically change how you work and how you feel about your business—both in positive and negative ways.

    • Friends and Family: As the saying goes … “Better the devil you know.” Your family knows you the best. You know them. But can you work with them? What sort of working relationship will there be? Can you be  their boss and a sibling/spouse/best friend at the same time, or can you separate it?

      One advantage to family is that they may be a bit more understanding when it comes to issues such as late pay,  family situations, etc.  Of course, this could also be a disadvantage (you may also be expected to “excuse” family emergencies). Also, it can be difficult to speak to “employees” as “employees” when they are also loved ones, and this can cause problems—both professionally and personally. You must set clear ground rules in advance and remind people that work is work and personal is personal. This is much easier said than done!
       
    • Full-time or part-time? Just what do you need to grow? Do you need a full-time sales person or will a part-timer do nicely? Figuring out where you need the most help is very important.

      In my case, I  need someone who knows the software tools I use, who can work independently after being given solid instructions, and whom I can trust. A large order, but I have grown my business on my reputation, and  that’s something I don’t want to tarnish, so I’ll bide my time.

      The other thing to think about, aside from the cost of full-time vs. part-time (benefits, taxes, etc.)  is if you want/need these  people as employees or contractors.
       
    • Employee or contractor? The big difference between the two really gets down to things such as taxation and benefits and payroll, etc. With an employee, you have to factor all of those things into the mix.  But, if your job is retail or requires that someone be at your location of business, then you likely don’t have much of a choice.
       
    • Local or remote? One distinct advantage for a business such as mine, or one that uses technology a lot, is that location isn’t as important as it was just a few years ago. I have worked with subcontractors  on projects that were not only out of my time zone, but in other countries as well.  I once worked on a project for which the client was in California, US, I was in New Brunswick, Canada, and the person running the backend systems was in Denmark … cool!

      This arrangement is also good as  the remote person most likely has his or her own equipment (a great expense savings), so you don’t need to open an office to “store” the person (see, more money saved), and you can still have your own mental  space to work in. It also allows you to find the best people—not just the best people in your area.
       
    • Choosing the right person This one is key. If you can’t work with the person you hire, regardless of how qualified they are, you are asking for trouble. Here are some links to stories about hiring that you  may find handy:

    Overhead and additional costs

    With growth comes additional costs and overhead. Being one who is rather frugal with my expenses, I try to look at as many options as possible. Here are a few to add to the mix.

      Office space

      First off, if you don’t need the space, for example, if your small business is purely on-line or you don’t ever have walk-in customers, why rent or lease space? Do you have space in your home to set aside as  a location to run your business? I’m talking about a separate space. One away from your family and one that you can write off on your taxes?

      I set up shop in my basement. I have my whole office there, and it is purely for work. When I pass through the door to the basement, I go from “home” to “work.” The advantage of having my office away from my  main living space is that it doesn’t intrude on me when I don’t want to work. I don’t hear the phone; I’m not as tempted to check E-mail because my computer isn’t in my living room … you get the picture. The  other advantage is that when I’m at “Work,” my family knows it.

      So you need some space—what about a business center/business incubation center? These are popping up everywhere. Basically, you rent out a small office within the center, but with that comes a front desk  person to answer and route calls, access to equipment that you don’t have to buy (fax, copier, etc.), a “prestigious” address, and access to things such as conference rooms that you may not be able to afford  otherwise. This is a great way to start!

      One other option could be to share office space with another company. This is a great way to offset costs, but if you go that route, make sure you set some ground rules, in writing, first. It’s always better  to cover your assets!

      Equipment

      Another killer of expansion is equipment costs. Rule #1 seems to be that leasing is the best way to go. It is better for your cash flow, you can write virtually the entire lease amount off on your taxes  (depends on where you live, of course), and, when it comes to computer equipment and given the nature of the advancements in technology, you won’t be stuck with a useless techno-dinosaur.

      Now, personally, the money side of me, though I can understand the write-off thing, still hates the idea of spending money and not having something at the end ... but I guess I’ll get over that.

      Time

      Yes, that’s right, time.  Remember that it will take a fair bit of time to get your growth level into a mode you are comfortable with. It will take time to hire and train the right person, to set up your bigger office and to get your equipment together. This is an important factor.

    Making the decision

    Making the decision to grow is not easy. I know, from local development agencies, I’ve had pressure to expand. I can hear them now, “Hey, we have X dollars available, how soon can you expand, how many jobs can  you create?” Well, I don’t work that way. I don’t want to grow for the sake of growth; I want to grow at a reasonable rate and have a reasonable amount of control ... as much as I can in a business, so for now,  my decision is to remain undecided. What’s yours?

    About the Author

    David Lewis - HeadshotDavid Lewis owns and operates an 18 year-old electronic publishing company, taybridge.communications that provides a broad range of online services.

  • Prior to starting his own business, David did several tours in the private sector - selling everything from e-learning to guns. Yes, guns. For the past several years, David has been in the public sector.   
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