"Less is more" might seem counterintuitive in business, where growth often feels synonymous with success. Yet, many small and medium-sized businesses are discovering that relentless scaling isn't the only path forward. Even though expanding seems exciting, it's not always the best choice.
In business, many aspire to grow, grow, grow – without considering the benefits of staying small. That might be a mistake – because, in many cases, maintaining a tight-knit team and niching down can make a company incredibly successful.
Today, we'll show you benefits, good practices, and examples to prove our point.
Why scaling a business is not always advisable
Increased stress and responsibility for small business owners
Scaling often requires hiring more staff, leading to conflict resolution and managing salaries. Small business owners face stress from handling operations and ensuring quality. Balancing financial analysis and accounting with other business services can be overwhelming.
And, on top of that, business owners might have a hard time adapting their leadership capabilities to their growing businesses’ needs. And that's more than fine to have these concerns.
Entrepreneurs often decide to focus on "controlled quality" instead of expansion. Access to capital and loans is tempting, but the added responsibilities can accumulate quickly. Many small business owners choose to leverage their expertise in connecting with clients personally.
They might want to offer training opportunities and focus on upcoming events to support their communities without expanding into a one-stop shop.
Loss of simplicity and control
As businesses grow, founders often miss the simpler days when they had direct control and connection with customers.
Many small business owners prefer to stay small, maintaining that personal touch. The ability to manage operations closely and create meaningful relationships with clients is valuable.
Some entrepreneurs determine that reaching their full potential doesn't always mean expansion.
They want to stay in touch with their client base and provide targeted, niche business services. Partnering with the right resources allows them to offer complete support, keeping their business grounded and connected – much like in the early days.
Diminishing return on small business services
Adding more inputs like staff, money, and space doesn’t always lead to equal growth in outputs. It can take a while before it yields any substantial ROI.
Costs may increase faster than revenue, especially for micro-businesses that tend to over-trade.
Small business owners may find that investing more doesn’t guarantee higher profits. Offering more doesn't mean earning more. Instead, it can lead to increased expenses and financial pressure.
That's why entrepreneurs should always carefully consider their resources and determine the best way to manage their operations. This simply means prioritizing efficiency and making sure that every investment is worthwhile rather than blindly expanding in hopes of more revenue.
Reduced efficiency and quality
Rapid growth can cause processes to become over-stretched. Service levels may decline and efficiency levels might be reduced, bringing about more complaints and quality issues with products or services.
Small business owners might find it challenging to maintain the same standards as they scale up. Clients may notice these changes and feel less satisfied with the business services provided.
And that's not ideal – that's why many owners decide to step back from scaling their operations or offerings before it's too late.
Cash flow problems
Scaling too quickly can lead to cash flow issues, where inflows don't match outflows.
Small business owners often face financial strain as they try to keep up with growth. Access to loans and capital may not be enough to cover expenses, causing stress in managing operations.
Many small businesses decide to scale back to avoid overpulling their finances. The need for careful accounting and finance management becomes clear when rapid growth threatens stability.
Poor hiring decisions
The pressure to grow quickly often results in hasty hiring decisions for small businesses. Small business owners may feel rushed to fill jobs, and this can lead to poor fits high turnover, or both.
Rushed or unverified recruitment processes can impact operations and the overall quality of services. Many businesses that decide NOT to scale, simply realized that focusing on finding the right person would be more beneficial than rapid expansion. The cost of frequent hiring and training outweighs the benefits of quick growth. Understanding the importance of careful hiring decisions helps small business owners maintain a stable team and better serve their clients while avoiding the pitfalls of rapid scaling.
Loss of work-life balance
"Too fast too soon" scaling can overwhelm small business owners, often leading to burnout. Many find themselves working 70-80 hour weeks and sacrifice personal time for business demands.
While it might be okay in the short term, it could become unsustainable and unhealthy over time.
Such intense workload can strain relationships and reduce overall well-being. Small business owners may decide to scale back – or not to scale at all – to regain control over their schedules and maintain a healthier work-life balance. Prioritizing their well-being helps sustain long-term success and satisfaction in both business and personal life.
No proper systems and processes
The mistake that many small businesses make is to scale without adequate and efficient systems in place. As they grow, this might be problematic, as it often results in disorganized operations and increased stress. Without proper processes, small business owners struggle to manage the complexities of expansion.
Recognizing these challenges can help them develop strong foundations before pursuing further growth.
Happiness with "enough"
Many small business owners discover that bigger isn't always better. They've learned the secret of being happy with "enough." Instead of chasing endless growth, they find joy in running a business that's just the right size for them.
Think about it – when your business is smaller, you can get to know your customers. You're not just a faceless company, but a part of the community. You can offer personalized service that big corporations can't match. And isn't that what many customers want?
Plus, staying small often means less stress. You're not constantly worried about hiring more staff or finding bigger offices. You can focus on doing what you love and doing it well.
Potential loss of business value
Bad growth can decrease business value. Low business value makes a company less attractive or even unsaleable. Contrary to the belief that all growth is beneficial, quick expansion without careful planning can harm a business.
Small business owners may decide to pause their scaling ambitions and prioritize preserving quality and stability. A stable, well-run small company often looks way more attractive than a bigger one that's barely keeping it together.
So, smart business owners sometimes hit the brakes on growth. They focus on keeping things running smoothly and making their customers happy.
Examples of companies that didn't scale on purpose yet have grown
The points we mentioned suggest that business owners should carefully consider whether scaling is necessary or beneficial for their specific situation, rather than pursuing growth for its own sake.
Let's explore some examples of companies that remained small and agile yet achieved great success.
Example 1: Consuela - Small Company, Big Heart
Consuela, founded by Conni Reed in Austin, Texas, shows how a company can pack a punch without ballooning in size. This colorful accessories brand raked in $12 million in 2019 with just 20 employees – proof that bigger isn't always better.
Rather than chasing rapid growth, Consuela focused on quality and meaningful connections. They sell through two local shops, online, and in 800 stores across the country. Such a setup lets them stay tight with their 300 Mexican artisans, whose handiwork is seen in 99% of their products.
The company's "It's Not About The Big" program really captures their spirit. By giving bags to women making waves in their communities, they're building relationships that go way beyond just selling stuff.
As Reed puts it, "I know and have seen how meaningful it is to say to people who are the backbone in our lives, 'Hey, I see you, and you matter, and you are awesome.'"
Consuela's story is a great reminder that a company can achieve great success with community impact instead of constantly expanding.
Example 2: Phire Group - small agency, big impact
Phire Group, a marketing and advertising agency in Ann Arbor, Michigan, proves that a small team can light up the business world. Founded by Jim Hume in 2004, this company has found its sweet spot with just 25 employees and $5 million in revenue in 2019.
Instead of chasing endless growth, Phire Group carved out a niche where they can make a real difference without stretching themselves thin.
What sets Phire Group apart is their BonPhire competition. Every year, they offer nonprofit organizations a shot at winning $50,000 worth of branding services. As Hume puts it, "The goal is for my team to choose one organization which we can have the most impact with."
This innovative approach shows how a small company can create ripples of positive change. Hume believes their true power lies in their daily work, saying, "The real impact that we have is through the work that we do every day."
Phire Group's story highlights how staying small can allow a company to remain nimble, maintain quality, and still make a significant impact in their community and beyond. This might not be possible if the headcount was higher.
Example 3: The Goulet Pen Company - Niche Focus, Big Success
The Goulet Pen Company in Henrico, Virginia, shows how getting into a niche can lead to impressive results without massive expansion. Founded by Brian and Rachel Goulet, this fountain pen specialist turned a hobby into a successful business, hitting $13.8 million in revenue in 2019 with just 31 employees.
Starting in 2009, the Goulets didn't just sell pens - they became part of the fountain pen community. They created tons of informational videos, blog posts, and reviews, building trust and expertise along the way.
What's cool is how they've resisted the temptation to branch out. Despite offers from manufacturers to expand their product line, they've stayed laser-focused on fountain pens. As Brian puts it, "We can't be the best at fountain pens if we're spread all over the place."
This dedication to their niche has paid off big time. The Goulet Pen Company proves that you don't need to be a jack-of-all-trades to succeed. By staying small and specialized, they've become a go-to resource in their field, showing that sometimes, less really is more in the business world.
Extra example: Dragon's Den
Dragon's Den, the popular TV show where entrepreneurs pitch their ideas to investors, has seen its fair share of success stories. But here's a twist – some of the biggest wins came from businesses that walked away from the Dragons' offers and said no to rapid scaling and yes to sustainable growth.
Let's take a peek at a few of these rebel success stories:
- Trunki: Rob Law pitched his colorful ride-on suitcases for kids in 2006. The Dragons said no, but Rob didn't give up. Today, Trunki has sold millions of suitcases worldwide and is worth over £8 million.
- Tangle Teezer: Shaun Pulfrey's detangling hairbrush was dismissed as a "hair-brained" idea in 2007. Fast forward to now, and Tangle Teezer is a global brand valued at £200 million.
- Hungryhouse: Shane Lake and Tony Charles left empty-handed in 2007, but their online food ordering service later sold for £200 million to Just Eat.
- Cup-A-Wine: James Nash's single-serve wine glasses were rejected in 2009. Today, his concept is used by major airlines and festivals, proving sometimes the Dragons miss a good sip.
- Brewdog: The craft beer company was told their beer tasted like "alcoholic lemonade" in 2009. They were seeking a £100,000 investment for 20% of the business. Dragons weren't interested in that offer – now, that £100,000 would be worth a whopping £360 million.
These stories show that sometimes, the best growth comes from believing in your idea, even when the "experts" don't. Just like Basecamp, these companies found success by focusing on their vision rather than chasing quick investments.
It goes to show, that in business, trusting your gut can lead to some pretty tasty success.
Conclusion
Going big isn't the only way to win in business. Sometimes, staying small and focused can lead to amazing success.
Companies like Consuela, Phire Group, and The Goulet Pen Company show us that you can make a real impact without growing into a giant corporation. It's all about knowing your strengths.
Remember, it's better to run a stable, profitable small business than to overextend and risk it all. Success comes in all sizes!
