A Small Business Is Not a Business Baby

Updated on September 9, 2018
heidithorne profile image

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

Source

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 is a Small Business Really?

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 5-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 4-month old baby into a 4th 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.

Disclaimer: Both the publisher and author have used their best efforts in preparation of this information. No representations or warranties for its contents, either expressed or implied, are offered or allowed and both parties disclaim any implied warranties of merchantability or fitness for your particular purpose. The advice and strategies presented herein may not be suitable for you, your situation or business. Consult with a professional advisor where and when appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other damages, including but not limited to special, incidental, consequential or punitive, arising from or relating to your reliance on this information.

Questions & Answers

    © 2018 Heidi Thorne

    Comments

    Submit a Comment

    • heidithorne profile imageAUTHOR

      Heidi Thorne 

      6 days ago from Chicago Area

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

    • wheelinallover profile image

      Dennis Thorgesen 

      7 days ago from Beatrice, Nebraska U.S.

      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.

    • heidithorne profile imageAUTHOR

      Heidi Thorne 

      9 days ago from Chicago Area

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

    • heidithorne profile imageAUTHOR

      Heidi Thorne 

      9 days ago from Chicago Area

      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!

    • AliciaC profile image

      Linda Crampton 

      10 days ago from British Columbia, Canada

      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.

    • aesta1 profile image

      Mary Norton 

      10 days ago from Ontario, Canada

      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.

    • heidithorne profile imageAUTHOR

      Heidi Thorne 

      10 days ago from Chicago Area

      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!

    • heidithorne profile imageAUTHOR

      Heidi Thorne 

      10 days ago from Chicago Area

      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!

    • heidithorne profile imageAUTHOR

      Heidi Thorne 

      10 days ago from Chicago Area

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

    • billybuc profile image

      Bill Holland 

      10 days ago from Olympia, WA

      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 profile image

      FlourishAnyway 

      11 days ago from USA

      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 W profile image

      Peggy Woods 

      11 days ago from Houston, Texas

      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.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, toughnickel.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://toughnickel.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)