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A Small Business Is Not a Business Baby

Heidi Thorne is an author and business speaker specializing in sales and marketing topics for coaches, consultants, and solopreneurs.

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The “Started In the Garage” Fantasy

The fantasy of starting a small business in a garage, bedroom, or kitchen, and then growing it into a mega corporation, is alive and well in our culture’s collective mind. The stories of Amazon, Apple, Microsoft, Ford—pick your favorite—are often used as examples of what’s possible for small businesses. Inspiring? Yes, and there’s no doubt that many small businesses are started in the hopes of becoming a big business one day.

However, those who started these “baby” businesses that grew into giants may have had a strong entrepreneurial or leadership drive that helped them create empires.

But that doesn’t mean every small business has that same vision and mission of becoming a mega corporation. Sadly, though, this baby-to-big business fantasy can make some small businesses feel inferior, overreach, and make bad strategic decisions.

What Exactly Is a Small Business?

Here’s an interesting stat from the U.S. Small Business Administration: Nonemployer firms—businesses that have no employees, have at least $1,000 in annual income, and are subject to federal income taxes—account for about three-quarters of all businesses in the United States. Three-quarters of all businesses!

Then there are businesses that would be classed as “SMB,” an acronym for a "small to medium size business." By definition, SMBs can have up to 500 employees. Growing a solopreneur, non-employer business into even an SMB would be quite a feat!

So a large majority of businesses in the United States are probably not on track to join the ranks of the mega entrepreneurs, or even SMBs.

What Is the Impact of the Business Baby Myth?

Erroneously presuming that every small business is a business baby, just waiting to grow up, can have negative consequences. For the small business itself, having this mindset can encourage the owner(s) to take unnecessary risks and overspend their money and time along the way.

I have seen this several times over the years with solopreneurs and consultants who have spent enormous amounts of cash (sometimes well into the five figures!) to build websites, create logos, hire services, rent retail or office space, and more... all to make themselves appear bigger than they are. They can reason that these would be normal expenses for a larger business that they want to be. So they go all in, hoping that the sales will naturally come their way as a result of their investments. Then reality reminds them of who and what they are.

The "Good Problem" Problem

There’s something very heady about seeing a groundswell of sales come in. Some small businesses take that as a sign that they're "growing up" and want to grow faster. In response, they aggressively pursue more sales to make that grown up dream come true. It's somewhat like feeding a baby thousands of calories a day in the hopes that he'll go from being a four-month old baby into a fourth-grader in a hurry.

While it's always good to be looking for ways to increase sales, two things can happen if it's done reactively, in fits and starts, or too aggressively. One, it may not result in more sales due to the law of diminishing returns or because of inconsistent effort. That can be discouraging. Alternatively, if successful, it could cause sales to grow far beyond what the organization has the capacity to handle in the near term. While some say that’s a good problem to have, it really isn’t in many cases.

That “good problem” could also spur spending for more labor, inventory, facilities and overhead. Then what if that sales level isn’t sustainable in either in the short or long term? The roller coaster of costs and operational changes could cause chaos and stress, both personally and professionally.

Small Business Growth Doesn’t Always Mean Organizational Growth

Growth is not for every small business due to a variety of factors such as lack of entrepreneurial or management skill, limited funds to invest in growth activities, and more.

For many solopreneurs and smaller SMBs, getting "big" and growing might mean getting bigger ticket customers and sales, or finding more efficient ways to sell and service... but not creating a bigger organization. For many, this could be a wise strategy that preserves cash and sanity.

So don’t feel bad if you’re a small business and can't or don’t go big, or don’t want to. You are not a business baby! If you’re small and satisfied with your level of sales and accomplishments, you are a success.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2018 Heidi Thorne

Comments

Heidi Thorne (author) from Chicago Area on October 22, 2018:

Beautifully said, Dennis! Bigger is not always better. When my own business was "bigger" in terms of scope, it was also very costly to operate and the returns were not that great. So I've learned my lesson for sure.

And, yes, being inventive in serving your unique group of customers is the best strategy.

Thank you so much for sharing your insights with us! Have a great week!

Dennis Thorgesen from Beatrice, Nebraska U.S. on October 20, 2018:

It is my belief that many believe the only way to survive is to find a way to get bigger. The reality is what they need to do is concentrate on keeping the customers they have and finding enough new ones to become or remain comfortable.

Lately people have been trying to convince me to branch out. My answer to them is always, "I will help you promote your business, there is no need for me to be part of it." Businesses with a narrow focus always do better than those whose focus is too broad.

People don't understand that I have enough. By this I mean there is enough income, there are enough headaches, and there is enough happiness for me in what I already do.

To business owners I say, "Be inventive." Treat your customers or clients with the respect you would yourself. Follow up, and ask is there something you could do to make your product better. When people find you truly care about what they think, they are more likely to be repeat customers. Repeat and referrals are the life blood of every business.

Heidi Thorne (author) from Chicago Area on October 10, 2018:

Dennis, I've never understood why some small business owners are so set on adding to their stress by growing more than they should. Good that their offerings are selling. But I think that's the trigger that gets them in trouble. They're so encouraged by the sales, that their eyes get bigger than their operations can handle.

I'd always prefer to work with the one-man (or woman) shops, too. I know they're the decision makers which is a big plus for us.

Thanks for adding some more great insight to the conversation! Have a great day!

Dennis Thorgesen from Beatrice, Nebraska U.S. on October 09, 2018:

Since my last comment I gave this some thought. Most of what my company earns comes from company owners who are not happy where they are. The want more income and it appears more headaches.

One thing the businesses I help have in common. They have a product or service that is selling. My favorite customers though are those who are one person operations that aren't trying to become SMB's or Mega corporations. They don't pay as much, however they are the most fun to work with.

Heidi Thorne (author) from Chicago Area on October 09, 2018:

Hi Adrienne! It is amazing that with the volume of small businesses out there, and content about it, there is very little that goes beyond the hype of "be your own boss." And success really depends on one's self awareness. Like being a small operation? Great. Want to build an empire? Well, then be ready for that.

Thanks so much for stopping by and have a wonderful day!

Heidi Thorne (author) from Chicago Area on October 09, 2018:

Hi Dianna! True, there's so much to consider. And many of us learn that AFTER we've jumped in. :( Always learning. :) Thanks for stopping by and have a terrific day!

Dianna Mendez on October 08, 2018:

The small business owner has much to consider and this advice would help them to survive.

Adrienne Farricelli on October 08, 2018:

Thanks for writing this, as there is not much information about this topic and any small business owners often needs help understanding what owning a small business really entails. I like that you pointed " If you’re small and satisfied with your level of sales and accomplishments, you are a success." This is so true on so many levels.

Heidi Thorne (author) from Chicago Area on September 22, 2018:

Hello, Yves! Congrats on taking the first steps to building your business. I'm encouraged to hear have you are aware of the overhead issue. It's one that can sink a small business in a hurry.

Glad you found the article helpful. Thanks for stopping by and good luck with your new business!

Yves on September 21, 2018:

Love your advice, Heidi! As someone who is in the beginning stages of opening a small business, with almost no overhead, I am encouraged. Have thus far opened an Instagram account (as a wardrobe consultant & personal shopper), created business cards, and am now seeking clients. I love shopping for others and making people look gorgeous, so why not make a small business out of it, right?? Wish me luck!

Fantastic article you've written here!

Heidi Thorne (author) from Chicago Area on September 14, 2018:

Hi Dennis! Thanks for adding that franchise perspective to the conversation. Have a great weekend!

Dennis Thorgesen from Beatrice, Nebraska U.S. on September 13, 2018:

I always recommend to my customers to have profits decide when to enlarge. Actually to me, creating businesses then selling franchises is the best way to go. That way you will always see some of all the franchises profits. There are also costs involved however the benefits outweigh the costs. This way too there are many small businesses, which are the bread and butter of most tax bases.

Heidi Thorne (author) from Chicago Area on September 11, 2018:

Hi Linda! Thanks for the kind words and for stopping by. Have a lovely day!

Heidi Thorne (author) from Chicago Area on September 11, 2018:

Mary, so glad to hear that your husband was able to keep things manageable for the both of you. In partnerships like yours, there's usually one who's racing forward and the other who's more cautious. Yin and yang. I'm more like your husband in that respect.

It is so important to know what you want out of the business adventure! True, you may find some new paths along the way. But without a goal, the urge to grow uncontrollably is actually stronger because you don't know when to quit pushing so hard.

Thanks so much for sharing your experience with us! Have a beautiful day!

Linda Crampton from British Columbia, Canada on September 10, 2018:

Your advice sounds excellent, Heidi. I like the section in bold near the end of the article very much. It's encouraging and makes sense at the same time.

Mary Norton from Ontario, Canada on September 10, 2018:

You are right Heidi. My husband was right when we started our consulting business. I had dreams but for him, after he retired, he did not want to be again responsible for other people. He just wants to do the things he enjoy and did very well. We never lacked for contracts until we decided to fold up this year. It is wise to know what you want when you start a business.

Heidi Thorne (author) from Chicago Area on September 10, 2018:

Peg, Shark Tank is one of my all time favorite shows! I'm especially a fan of Kevin O'Leary. If these folks need a reality check, I think he's the one to give it.

While those big success companies can be inspiring, we often don't know all the sacrifices and costs that went into them. It's the whole iceberg model: We only see the tip of it, but the part below is enormous.

I'm content with keeping my operation manageable. :)

Thanks for stopping by and sharing! Have a great week!

Heidi Thorne (author) from Chicago Area on September 10, 2018:

Flourish, when I hear real stories of people maxing out their credit cards or jeopardizing their homes, emergency savings or retirement for their "dream," I literally shudder. Talk about putting on blinders!

It's the same as going to Vegas or playing with speculative stocks. The danger is that because they're spending for their own business, they feel like they have control over the outcome. In some ways they might. But the market can be cruel.

Thanks for weighing in on it! Have a great week!

Heidi Thorne (author) from Chicago Area on September 10, 2018:

Great observation, Bill! It's all a matter of perspective and scale. Thanks for adding that to the conversation! Have a great week!

Bill Holland from Olympia, WA on September 10, 2018:

Words of wisdom once again. For some reason this thought came to me while reading this: a small business is large to the person who owns it...always...but oftentimes reality paints a different picture.

Just one more thing to ponder!

Have a super week, Heidi!

FlourishAnyway from USA on September 09, 2018:

This was excellent advice for all those folks who max out personal lines of credit and tap the 401k just to grow their garage business. I’ve seen so many bad business ideas — like a local shopping plaza pizzeria with so so product and terrible service that built their own restaurant — and wondered how much they sunk into the dream?

Peggy Woods from Houston, Texas on September 09, 2018:

We enjoy watching the television show called "Shark Tank." It is often told to people who come for money and who wish to expand their businesses that they might be better off to grow it slowly. In some cases, they might even be better off financially not to expand which necessitates more and more capital and more employees. Not every business needs to be huge in order to succeed.