Why Growing Your Business Makes Your Life Better

I tend to harp on growing your business a lot in this newsletter but it’s been a long time since I covered the “why” of growth and I thought that might be something worth discussing today.

Wanting to grow your business is something I take for granted that any business owner would want to do and I spend most of my time focused on what it takes to make it happen. But I can easily imagine some people saying they are happy with the size they are at and not being that interested in growing.

Even more so, I have heard directly from people who think the effort of managing a staff and dealing with more customers and more moving parts in a larger business is harder and more stressful than keeping it small.

They have reached a point where they can pay the bills comfortably and make a nice living and aren’t much interested in chasing “more” in whatever form that takes.

The thing I don’t think they realize is that staying at the smaller size where you as the owner are still basically just working a high paying job and managing a handful of people is still more stressful and more risky and much less lucrative than getting to the next tier up.

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If you get into a business as your own boss, you can start from scratch and grow your way up to a decent size business that may pull in a million a year in revenue and leave you with $250K in income between wages, distributions, and perks you have the business pay for that you benefit from. And that may be four or five times what you ever earned or would have expected from your past jobs and so it seems like going any bigger is just not necessary or worth the effort.

At that size however, it’s still all you as the owner. If you stop coming in, chances are your staff isn’t trained or equipped to carry on without you for very long. It also probably means you have one or two key people, and if you lost one of them it would be you who would have to pick up all the slack until you could find and train a replacement. Chances are you also do all the sales still, so if you’re not around new business doesn’t come in.

This is the size of business where you can make a nice living but often have little or no time to enjoy it.

And this is the size of business that it can be tough to sell for much of a premium because you need to sell it to someone who is also looking for a full-time job but has the money to buy it from you and wants to work the same long hours you do. So you could stop growing here, but I can think of three key reasons you benefit so much more if you don’t!

Three Reasons Getting Past the Owner Operator Stage of Business is So Beneficial

The first thing you will realize if you decide to grow through this stage is that you can’t do it alone anymore! Of course, you have employees now, but I mean people who are empowered to help manage and make decisions they don’t have to run by you every single time. This takes a mindset shift and you have to lay out clear roles, responsibilities, and expectations. But boy oh boy does it make a difference!

Suddenly you can take some time off. You aren’t the only one deciding everything- even if you are still in the loop you have other people to help. It is a great stress reducer and it helps you get away from the single point of failure problem you have when you are smaller. If you need time off you can take it and the business can not only still run it can even continue to grow in your absence.

You may think you’ll never find people who will care about the business as much as you do but that’s not the case at all. If you hire right and manage right and treat people right you can absolutely build a whole team of people who will want to do a great job even if you aren’t around to watch their every move. If you think that micromanaging is the only way to get results then that’s a problem with you, not the business! The result of growth can be a team that helps you grow even more. You’ll never have the same peace of mind working in a small business as you will when you build a whole team of managers to help. And that peace of mind is worth a lot.

The second thing is that business can be tricky and there are always risks and setbacks. The problem is it doesn’t take much to throw a small business completely into the red. One big client cancels, one key employee leaves, one big vendor fails to deliver and it can go from cruising to the verge of bankruptcy in a few months or less.

Or worse, if the owner gets sick or has an accident or something else happens then it can all be over in a matter of weeks. With a bigger business, you have a lot more insulation against that.

Of course, large businesses fail too, but a lot less often and they have a lot more room usually to work through setbacks. By growing a team and at the same time growing revenue, diversifying customers, suppliers and having more access to savings and borrowing power, you take a lot of the risk out of being in business- risk you can’t avoid when you are small because your very size IS the risk. So growing is a way to avoid risk and further add to that peace of mind!

Thirdly, business value doesn’t go up in a straight line- larger businesses are worth more than a simple multiple of smaller businesses. In either case, you are working hard, dealing with stress, and taking on risk. But if you grow your business to where you have a team and a much bigger revenue base, even though it may then mean you can work less and take more time off, the business itself and the time you put into it is worth exponentially more!

An owner operator business like I described above with a million in revenue may be worth $500-$650K if it was running well and the owner wanted to sell. But a business doing $5M in revenue and $1.25M in profit (the same ratio as the small one) might sell for $6M and one doing $10M and $2.5M in profit could sell for $12.5M or more! Same business, same owner, less work, and way more value!

The hard part has already been done- launching, growing, and getting to the first stage of business is really, really hard! Now, you have the opportunity to move up the ladder to the next stage and I know it might seem like if the first part was hard then the next part must only be that much worse.

But really, it’s the opposite- and the benefits for you- peace of mind, time off, and much higher value- are well worth it. So, when I encourage you to grow your business, it’s because I know what’s on the other side and I promise it is completely worth the effort!