From 1999 to 2007, I was cofounder of First Research, which provides industry profiles for sales and marketing professionals. We maintained good profit margins, but we kept our foot on the gas—adding employees and quickly expanding the business without taking outside funding. Chasing fast-growth was the only strategy I knew. But could I have implemented a different strategy and still created a valuable, fun company?
First Research Sought Growth
My cofounder Ingo Winzer once told me he would have preferred First Research remain small—eight to twelve employees—and continue to enjoy both the success and the lifestyle we had enjoyed. By remaining small, First Research would have still grown, but not quite as fast and without the management complexities and stress that come along with it. First Research would have been a perfect “life-growth business.” A life-growth business:
- doesn’t allow its financial success to dictate how it’s run; instead, it allows the company’s culture and enjoyment to dictate how it’s run.
- grows, but only adds a few employees at a time to help it grow faster.
- works well with niche products that serve niche markets.
- remains financially lean and is therefore price-competitive.
- maintains big or at least solid operating profit margins.
- implements non-traditional sales and marketing techniques that fit the personality of the founders.
Back to First Research. During 2004 and 2005, I made the decision to hire five vice presidents who’d manage separate departments. By doing so, I had punted on creating a life-growth business. From then on out, we sought growth. Those five people didn’t sign up to work for a company that wasn’t chasing big success. The strategy to grow fast paid off, at least financially, because in 2007 we sold First Research for $26.5 million.
So keep in mind, there could be a financial cost to building a life-growth business. By doing so, you could be holding your company back from becoming all that it can be. But honestly, I’m not sure the money was worth it. If I could do it all over again, there’s a good chance I would have taken Ingo’s advice and kept us small.
Wes Aiken, founder of a restaurant work scheduling software called Schedulefly, has built the quintessential life-growth company. He’ll never hire a “leadership team,” nor will he create departments or budgets. But Schedulefly’s team is successful because they have happy customers, growth revenue, and are profitable. In 2012, Wes wrote an excellent blog, “I think of Schedulefly as a “Lifegrowth Business”. He ends noting, “So I think we are a hybrid of a Lifestyle business and a Growth business – let’s call it a Growstyle business. Nah, let’s call it a Lifegrowth business.” This is a must-read!
Which do You Prefer? Consider These Questions
Here are some questions to ask yourself to help you consider building a life-growth business versus a fast-growth business.
- Do I want to build a company that has a unique culture that works for my long-term vision? If so, organize the business around niches, slow your growth, and enjoy the ride.
- Should I run my firm in a non-traditional manner in a way that works for employees, customers, and shareholders? If so, a life-growth business could be for you.
- Do I want my company to become all it can be in terms of revenue and impact on the world? If so, plan to make personal sacrifices and build a fast-growth company.
- Does my target market have huge potential? If so, and if you don’t enjoy the complexities and stress of running a large, fast-growth company, go for it.
- How quickly do I want to grow? Typically, the faster you grow, the more attention you need to give towards leadership and structure.
- What makes me happy? At the end of the day, this is the most important question when trying to decide what type of company you’re building.
Many founders want to have their cake and eat it too. They want a growth company without the stress that goes with it. Guess what? You can!
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