The textbook definition of business success is growth: more stores, more customers, more staff and bigger profits. Many small business owners however, would disagree.
A report by Emergent Research and Infusionsoft shows that success doesn’t necessarily mean empire-building, but rather achieving broader, non-financial goals. Small business owners are putting more emphasis on doing work they enjoy. This includes being their own boss, having freedom and control, flexible work hours and having a positive impact on their employees, customers and community. Of course, to achieve this, a certain amount of financial success is necessary and small business owners are aware of this. In fact, 94% of the SMEs surveyed have specific financial goals in place, with 65% confident that they’ll achieve them.
The new generation of SMEs is not interested in growth for growth’s sake. They recognise the benefits of staying small and rather, define success as reaching a financial level that will allow them to enjoy the advantages of a lifestyle business.
Think small and stable
There are many business and lifestyle benefits to choosing stability over never-ending growth. The core advantages are definitely less work stress and more time to spend doing the things you love outside of the office. Here are some important reasons why staying small and nimble makes sense.
Reduce cash flow stress. Growth requires regular re-investments of capital but revenue doesn’t always flow fast enough to balance the books. The resulting cash flow crunch results in periods of high stress.
Simpler financial predictions. Revenue and budget forecasts are easier when your business has fewer building projects, equipment upgrades and new hires to budget for. Less time spent worrying about your bottom line means more time to focus on your customers or family.
Delight your customers. The constant pursuit of growth targets can distract you from actually producing quality work that satisfies your customers. It’s an all too common shift in priorities that ultimately, can do your business more harm than good. With more time to focus on being the best, customers will remain loyal for longer.
Adapt quickly. A small business can stay nimble and move with market conditions, whereas a fixed growth strategy often traps you into a long-term position that remains inflexible in the face of change.
Relax more. For many SMEs, less stress is the priceless benefit of staying small. High-growth might be good for your bank balance but not so much for your blood pressure. The focus now is on living, not just working.
Don’t drop the ball
Running a small and stable business may have valuable benefits, but it still requires hard work to keep it steady. SME owners who have chosen not to chase big growth need to keep a close eye on every aspect of their operations – or risk losing the success they’ve earned.
Regardless of actual business volumes, it’s important to always spread your risk. Don’t drop lucrative clients in order to work with just your few favourites. As soon as you become dependent on one or two accounts, you and your business are vulnerable.
New business development is expensive and time-consuming. Sales and marketing campaigns that are focused on customer acquisition can take time to show a real return on investment. In other words, it pays better to treat your existing customers really well.
As any successful business owner knows, you have to watch the finances carefully to ensure your company stays on course. As soon as costs start increasing and sales decline, you need to know and act. Targets are also important, even if you’re not after big growth. To keep your business steady and on track, include non-financial and financial targets in your planning. Always remind yourself why you chose to start a lifestyle business in the first place. Stay true to your original aim and chase it with discipline and passion.
Your business may be small but that doesn’t mean success will come easy. SME owners all know that achieving and maintaining success is hard work and especially so with today’s ever-changing market demands. The pressure is always on to go bigger, have more and be more; it’s a sign of the times we live in. For those who have redefined the meaning of success though, less is definitely more – and they’re happier for it.
Gary Turner is Xero’s co-founder and managing director for Xero in the Europe, Middle East and Africa region. Xero is a leading online accounting software company.