A Business Forced to Shrink May Be Stronger

By Magessa, Boniface m.
Published: January 7, 2009
It may be viewed as an example of turning lemons into lemonade, but some small-business owners (and employees) make a compelling argument that the current recession is proving something they have known for a while: a business can get too big.Skip to next paragraph
Tool Kit
Writing on his blog Jarkko Laine, a software developer, lays out several advantages of staying small.
Less bureaucracy. “A bigger company means more layers of managers between people.”
Greater engagement. In a small company, and Mr. Laine believes that in a company with no more than seven employees, “everyone is involved in everything.”
It is easier for people to understand where they fit in. You always know what is going on in a small company.
People believe it is their company. “When you understand the big picture behind the decisions and participate in making them, things change. You start feeling that you are an important part of the company.”
Mr. Laine’s challenge to small-business owners is this: “Don’t grow your company. Outsource. Be careful and recruit only people who fit in your corporate culture. But don’t grow if you want to keep your people happy.”
PSYCHIC SATISFACTION ZeroMillion.com, a Web site that offers resources for entrepreneurs, notes that staying small can reduce your concerns, especially if you tightly limit the size of your business.
“The mom-and-pop or one-person operation only has to worry about themselves, not employees,” it says. “If we have a bad month, someone else is not depending on us to pay them. We tighten our belts and work harder next month.”
And, of course, it is easier to take risks. “We can go with our creative ideas. We don’t have anyone to answer to anyone but ourselves. So our creative process doesn’t need to go through channels or get someone else’s approval.”
Fewer clients, more money. Aaron Wall, writing on his blog SEObook.com, offers a simple and potentially profitable strategy for staying small.
“Decide which clients make you the most money, and cut the rest.”
ADVANTAGES FOR YOU Seth Godin outlines on his blog some of the advantages for entrepreneurs who keep the growth of their businesses in check.
“Small means the founder makes a far greater percentage of the customer interactions,” he writes. “Small means the founder is close to the decisions that matter and can make them quickly. Small is the new big because small gives you the flexibility to change the business model when your competition changes theirs.
“Small means that you will outsource the boring, low-impact stuff like manufacturing and shipping and billing and packing to others, while you keep the power because you invent the remarkable and tell stories to people who want to hear them.”
Coincidence? Small Business Labs, which describes itself as focusing “on the key social, technology and business trends impacting small business,” has noticed something interesting:
“Small-business owners often use words like ‘freedom, independence, balance, flexibility’ when describing why they like being a small-business person. They use the same words when describing why they want to remain small.”
LAST CALL There is, of course, an ecological benefit if you can operate your business out of your home, as Tony D. Clark points out with his tongue firmly in his cheek. As he notes: “Rather than sitting in traffic, spewing out carbon into the atmosphere, you simply walk up the stairs, or into the other room. No pollution, no road rage, just natural human energy (though this may be your only exercise).”
And then there is this: “Most home-based entrepreneurs are so involved with their ventures, that they often forget some basic things. Showering comes to mind. That 5 or 10 minutes could be better used to follow up on an e-mail, and at the same time, conserves water and helps the planet.”