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Do You Need To Scale Your Business To Be a Success?

Do you have to scale your business, to be a success? It’s a common question asked by business owners who aren’t sure how or if they should scale. Your choice to scale and HOW you scale or IF you scale is about what’s comfortable for you and the life you want.

Three types of businesses

There’s solo business owners, who are mainly consultants or artists and choose to be solo business owners. They make money when they’re working. These are freelancers, Seth Godin writes quite a bit about them.

You then have larger companies with employees who are often making from a few million dollars or more in revenue. They have employees, a formal corporate structure and it’s not just the owner running the company.

Then there’s the messy middle. Small business owners.

Maybe there’s the owner and a team of 3 freelancers, making $800 thousand a year. Or maybe it’s 2 partners and 3 employees in a $2 million business? They still have a choice to make. Do they want to stay at this size, which is tough OR do they want to grow more?

Related article: Are You Smart Enough to be an Entrepreneur?(Opens in a new browser tab)

The article below leverages comments from Reddit and curated with Claude AI

The Allure of Scaling and Growth

In the business world, there is an obsession with constant growth and scaling. Many entrepreneurs feel the pressure to continually expand their company, hire more employees, open new locations, and increase revenue year after year. This mentality of nonstop expansion is driven into us, as societal and cultural forces make us feel like failures if our businesses aren’t growing into empires.

However, is aggressive scaling and growth truly necessary for success? A recent Reddit thread on the /r/smallbusiness subreddit explored this very question, with small business owners sharing their perspectives on whether they feel the need to scale their operations. The discussion highlighted some excellent points on both sides of the scaling debate.

The Upsides of Staying Small

Many commenters applauded the original poster for recognizing that bigger isn’t always better. They argued that once you find that “sweet spot” of a business that provides your desired income and lifestyle, there is no need to scale just for the sake of growth. As one commenter stated, “If you’re happy with your business and life now, you’re good.”

The Drawbacks of Aggressive Scaling

On the other hand, some commenters pointed out potential pitfalls of staying too small without any scaling:

  • Market changes, new competition, or losing major clients could threaten the business
  • No additional income stream if unable to work due to illness, injury, etc.
  • More difficult to eventually sell/exit the business if just a solo operation

One perspective was that some incremental scaling focused on operational efficiency and diversifying income streams could mitigate those risks without overcomplicating the business.

Finding Your Sweet Spot

The crux of the discussion highlighted that there are pros and cons to aggressive scaling versus staying small and sustainable. The right approach depends on the individual business owner’s goals, lifestyle preferences, and appetite for additional complexity/stress.

As one commenter wisely stated, “The point of a business is to get autonomy and freedom. If you’re happy, then that’s freedom!” For some, a solo or small team operation hitting their desired income level is the ideal sweet spot. For others, there is a drive to continually scale and an acceptance of the added headaches that come with explosive growth.

Staffing and Managing Growth

One major impediment to scaling that arose in the comments was staffing and managing employees. One commenter stated they preferred staying small specifically to avoid the stresses of hiring, training, overseeing payroll, and dealing with HR issues. As one put it, “I don’t like having to babysit people.”

Those looking to modestly scale often looked to solutions like contractors, part-time staff, and cross-training trusted employees/family members to manage growth without overcomplicated operations. The risk of disgruntled employees leaving and taking your expertise, clients, and IP was also cited as a scaling concern.

Pivoting the Business Model

An alternative perspective that came up was pivoting the business model to be more scalable, rather than just hiring more workers for the existing model. Some possibilities discussed included:

  • Training others to deliver your service and collecting royalties
  • Optimizing processes and automating certain functions
  • Adapting to more passive, product-based revenue streams
  • Licensing/franchising the business concept and brand

For business models with very hands-on expertise requirements, adjusting to a train-the-trainer model could allow the owner to scale by certifying others, while still maintaining quality control.

In Summary

At the end of the day, there is no single right answer for whether a business must continually scale and grow to be successful. Some entrepreneurs crave the challenges and rewards of rapid expansion, while others are content with the freedom and lifestyle their smaller, sustainable operation provides.

The most important aspects are being self-aware of what scalability level allows you to meet your personal and financial goals, and structuring your business accordingly. Growth for growth’s sake can lead to overstressed operations, but a stagnant business can leave you overly exposed to potential disruptions.

As with most things in life, the key is finding that optimum balance – a sweet spot where your business scaled to be successful enough to secure your desired quality of life, without expanding to the point of excessive complexity and misery. Achieve that equilibrium, and you’ve truly mastered the entrepreneurial journey, growth metrics be damned.

Related articles:

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How Often Do Small Businesses Fail – And How Not To Fail?(Opens in a new browser tab)

Top 10 Tips for Struggling Business Owners: How to Survive & Shine

This story, which I’m not sure who to attribute it to, but I saw it first on Reddit is helpful.

The Business Man and The Fisherman

I saw this story first on Reddit, I’m not sure who to fully attribute it to.

An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellow fin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

The Mexican replied, “only a little while.” The American then asked why didn’t he stay out longer and catch more fish? The Mexican said he had enough to support his family’s immediate needs.

The American then asked, “but what do you do with the rest of your time?” The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siestas with my wife, Maria, stroll into the village each evening where I sip wine, and play guitar with my amigos.

I have a full and busy life.” The American scoffed, “I am a Harvard MBA and could help you.

You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats, eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery.

You would control the product, processing, and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually New York City, where you will run your expanding enterprise.” The Mexican fisherman asked, “But, how long will this all take?” To which the American replied, “15 – 20 years.” “But what then?” Asked the Mexican.

The American laughed and said, “That’s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions!” “Millions – then what?” The American said, “Then you would retire.

Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”

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