Should You Grow Your Business? 6 Questions to Help You Decide

Growth is a naturally occurring component of life, and the same is true for the life of your small business. Abraham Twerski, a psychiatrist and rabbi, explains that “the stimulus for the lobster being able to grow it is that it feels uncomfortable.” These words serve as a reminder that stress does not have to be crippling. It can also be a catalyst for positive change.

But, contrary to popular belief, growth doesn’t always have to entail heightened wealth, bigger offices or more employees. It’s important to consider what growth looks like for your small business, and what it will take to achieve it.

Here are some questions to consider to help you decide what comes next for your small business:

1. What is success?

Paul Jarvis, author of “Company of One” and co-founder of Fathom Analytics, has worked for himself for over 20 years and doesn’t want to grow his company in the traditional sense of the word. He says, “It can absolutely be beneficial, it’s not always.” “It’s not our job to say that we’re pro-growth or anti-growth. But it is our job to question it.” Jarvis asks, “If everything goes according the plan and the business grows, will I like my life as it is?” “

At Fathom, Jarvis strengthens the skills he’s genuinely interested in fostering, such as video editing. Although learning more about being a manager would enable the company to hire more employees, it’s not his goal. Instead, to him success entails designing the lifestyle he wants while maintaining his business’s resilience.

2. What are you motivated to grow?

Money is essential, but it shouldn’t be the sole motivation behind growing a small business — the driving force needs to align with a greater purpose. Score mentor Hugh MacMaster explains that businesses arise from the demand for a product or service. He says, “Someone has an unmet demand and you have the chance to fulfill it.” “If it’s focused only on making more money, it doesn’t focus on the customer’s unmet needs.” That usually doesn’t work very well.”

3. Are you looking to manage more people?

Being your own boss is one thing — being other people’s boss is another. Jarvis discovered that he does not want to be the boss of others because it isn’t something he enjoys. It is time-consuming and costly to manage human resources, payroll, create workflows, manage employee benefits, and integrate that information with your accounting. If you’re tech savvy and can foot the extra monthly bill, small-business payroll and HR software can help lighten the workload.

4. What will happen to your relationships with clients?

A small business’s patrons determine its success. A small business’s success is determined by its patrons. If they feel that growing will alienate them or compromise quality for quantity, it could be detrimental. Diana Martinez, mentor at Score, and CEO of Blukastor (a marketplace for Latino small business services), says, “Understand what you can do and then assess it.” “Can I grow with the same clients or should I grow with new clients?” As a pulse check, she suggests asking your most loyal clients for their feedback on any major changes.

5. What is your business’ profitability?

Understanding the numbers behind your business is vital, whether you plan to grow or not. Martinez stresses the importance of setting key performance indicators (KPIs) so businesses can measure success, and set concrete goals. Jarvis also warns against basing success solely on gross revenue. He recommends paying attention to margins. “If you had to spend $10,000 to make $500,000, but you had to spend $900,000 to make $1 million, you’re going in the wrong direction,” he says.

Separately, small businesses can compare their own financial ratios with industry benchmarks set by the Risk Management Association. By compiling financial reports from small- and medium-sized clients of its member institutions, the RMA establishes financial norms. Banks refer to these reports when assessing loan applications. Seeing how well your business is performing relative to your competitors can help shape new goals and determine whether you’ll qualify for a small-business loan should you decide to grow.

6. Is the work in alignment with your mission?

Jarvis sets aside a few hours each week to take a step back from day-to-day tasks and reflect on what his company is accomplishing. He says, “Otherwise, you’re just in the job — you’re just performing the work because it’s the work in front of you.” He suggests that if you don’t have the time to dedicate a few hours, setting up a weekly event on your calendar, even if it is only for minutes, might be an option.

In the end, expanding your small business isn’t necessarily good or bad — but it has to align with your own goals, both as an individual and as a founder. Martinez stresses the importance of developing your own leadership and time management skills throughout this process as well: “Empower yourself because at the end, what you do for yourself reflects on your team.”

Hillary Crawford, https://www.nerdwallet.com/article/small-business/should-you-grow-your-business
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