Growth Issues

As an entrepreneur, the process of building a new business is generally always the same. First, you have an idea, then you put together a business plan, funding, you launch it, get some sales in, get revenue in and you grow. Then comes a time of the age-old question: what do we do? Do we grow even more?

There are a lot of things that happen once the initial growth has taken place in the first 6 to 18 months of a business. I started my first venture selling and making money in 2002 when I was 16. My first real business started when I was 17. I’ve always been hyperactive so I always have a ton of ideas, built several companies, made a lot of money and also have made a lot of mistakes, which is totally part of the entrepreneurship game. That’s how you grow in entrepreneurship. You are going to make a ton of mistakes and the important thing is to learn from those mistakes and not replicate them otherwise you don’t learn anything.

Growing Your Company

What happens when you grow a company? Let’s say you’re just a solopreneur and you’re doing great. At some point, you’re going to think “do I want to expand?” “If I do grow, what’s the sacrifice, what am I to lose? If you’ve gone through the entrepreneurial cycle of building a venture, you know that at some point you are faced with that question of “what do we do”. First, it all really depends on the business model you are operating.

Groupon was big between 2009 and 2011. They had what they call in the tech world the “hockey stick growth”. They emphasize growth and revenue. They sometimes sacrifice profits because they focus on taking the company public, the valuation goes up and that’s how they make a ton of money. I’ve been a solopreneur for the first few months of my business, but quickly started hiring and delegating. At one point, I’ve had over 60 employees, which wasn’t a good experience for me. My ideal infrastructure is between 5 to 10 employees, which allows you to get a lot of things done if it’s well-managed and if you’re operating with a good business model. You need to figure out what’s good for you.

For example, when Steve Jobs came back to Apple, they were 60 or 90 days from bankruptcy. He said that he couldn’t make the company profitable the way Microsoft was, but he could he could turn Apple into a profitable company by reducing its size. The first thing he did when he came back to Apple was that he took out over 80% of the products and he simplified the product line.

Creating the Best Model for Your Company

Think about what the sweet spot is for you. Staying in the situation you are in now is great but does that suit the business model you’re in? I read this quote from a really successful entrepreneur (I would love to give him credit but I don’t remember his name) who said that “something happens when you cross the 12 or 13 employee mark” : office politics, employees stealing from you, different dynamics in business and it becomes a totally different beast.

I remember when I was facing the question of “do we grow the company?” Honestly, the best model for me is in 10 to 15 employees range at most. Sometimes, growth can be sexy from the outside but when you actually operate and you look at the bottom line, you see how much you’re paying in expenses versus generating in revenue, and maybe it makes more sense to stay small.

Don’t be seduced by the shiny object. If it doesn’t match what you want to do or match the business model, it’s not going help the company. Maybe you can work better with a small team and improve your margins much more in volume rather than in employees. Going big is not always the best solution. Staying small maybe the best, most efficient and most profitable solution for you. Think of what you want and think of where you’ll be the happiest. It’s not all about scaling and profits if you don’t feel happy.

What are your thoughts? We would love to hear from you! 🙂

Comments

comments