In January of 2008 my business partner and I faced a significant fork in the road.
Path #1: Stay small, grow slowly, and keep it simple.
Path #2: Get bigger, grow faster, and become more complicated.
Almost 5 years later, I’m very happy to say we chose path #1: a small and simple business, or as I like to think of it, a life-style business.
Our kind of business is typically run out of the home office or the trunk of a car. At times we are very busy and even a bit overwhelmed when the tide of business activity is high. But at other times you may find us completely relaxed and visiting a cathedral in Spain, hiding away for a month at the beach, or hiking to Inca ruins in Peru.
The temptation to get bigger, take on more help, get an office, make more sales, and possibly make more money was alluring. Most of the business advice we studied made an assumption that we should grow bigger.
Who wouldn’t want to make more money?
Who wouldn’t want to be the biggest and best in town?
Who wouldn’t want to solve more problems for more people?
Luckily for us a few conversations with mentors and reflection about our true goals pointed us in an alternative direction. Our goals required not only money, but also time and flexibility. So this required us to take an unconventional business path.
I’ve come to realize my business and lifestyle preferences don’t coincide with everyone. So if my approach outlined here doesn’t suit you, no problem. There is room for more than one way to be in business. But if you’re someone who wants a fun, profitable, and meaningful small business that also gives you time and flexibility to do other things in life, I hope you’ll keep reading.
In this article I will give you 5 (of many) reasons to keep your business small and simple.
1. Small and Simple = Less Risk
“It’s hard to fall off the floor.” ~ Jack Miller
In the last year I watched in amazement as my now 1 ½ year old daughter learned to walk. She fell thousands of times along the way. She cried after a few falls, but for the most part she just got up and tried again.
What was the secret? She’s so close to the floor! How much force can you really build up with a 1 foot drop plus a diaper as a landing pad?
Small businesses are the same way. While you’re learning to walk, it’s safer to stay close to the floor. Borrowing a lot of money may allow you to start a big business quickly, but you’re still a wobbly toddler. Falls from great heights could cause fatal damage to your business and to your finances.
It’s far better to stay small and patiently learn your business. Then you can fail, get back up, fail again, and then get back up. You will always make mistakes, but you want to avoid mistakes that will set you back for years or forever.
2. Small and Simple = Less Stress and Hassle
You’ll never avoid all stress and hassle (and a little bit of the right kind of stress is a good thing), but you can reduce the amount and the longevity of stress and hassle by staying small and simple.
From my experience, getting too big, too fast creates stress because you take on more complexity than you’re ready for as a new leader of your business. I admire leaders of large organizations, but those expert leadership skills were acquired over years of practice, often working under other expert mentors and leaders. As a small entrepreneur don’t jump too fast into leading others before you’re ready.
It’s ok in the early days of your business to do everything yourself. Of course you’ll have to work hard and long, but that’s less stressful than losing control before you’re ready.
Learn every task and responsibility. Make the most common mistakes yourself. Build checklists and systems to correct a mistake each time you make it. Over time these checklists will allow you to delegate (not abdicate, big difference) to someone else. Because you have done everything yourself you’ll be much more ready to hold this new person accountable.
My little business has two employees – me and my business partner. We don’t do everything anymore, but instead of full-time employees we contract out work, like bookkeeping, repairs and maintenance, administrative tasks, and sales to part-time team members.
We’ve slowly built our little team over the last 9 years. This slow and deliberate pace has reduced and spread out much of the stress and hassle that come with growth.
3. Small and Simple = Adaptable
In 2009 my wife and I took a 4 month sabbatical. We travelled to Spain, Peru, Chile, and Argentina. We lived with families, I learned to speak Spanish (my wife already spoke it fluently), we toured amazing sites, and we soaked in new cultures at a peaceful snail’s pace.
I didn’t take this trip because I won the lottery or because I had millions of dollars in the bank. I took this trip because I saved up the money (less than you might think), and because my little business was adaptable.
Often when your business is big and growing fast, it takes on a life of its own. I’ve had friends who describe their business as a run-away train or a Frankenstein monster. That means your business is threatening to swallow you up! Yikes.
I like the idea that you can turn the volume of your business up and down when it suits your life. I have really busy times when I work hard and hustle to move ahead. I have other times when I work at a slower pace.
Life is cyclical. Your energy and enthusiasm are cyclical. It makes sense to keep your business small so that it can adapt to your own natural cycles.
Aside from adapting to your life, a small business can also adapt to changes in the market. What happens when your best customers stop buying? What happens when expenses go up? What do you do when your entire industry changes over night?
A small, nimble business can change gears and change direction quickly. When you work in your small business you are also more likely to notice these changes quickly. The size of large businesses may give them other advantages, but they’re heavy and slow like a huge boat. In competitive, dangerous economic oceans full of icebergs, these businesses often sink like the Titanic (unless they’re bailed out by the largest slow-to-change organization, the U.S. Federal government, but that’s another story:).
4. Small and Simple = Lucrative
You don’t have to sacrifice your goals and dreams by staying small. Quite the contrary – by staying small you can tailor your business so that its fruits serve your own definition of success.
I know professionals with very small businesses that make huge incomes. I know real estate investors who manage all of their properties themselves using a cell phone and home office who make hundreds of thousands of dollars each year. These are little known stories, but they’re not unusual.
But even if you earn an average income as a small entrepreneur, you still have many advantages over someone earning the same income at a job.
First of all, you can give yourself a raise if you really need it. Most entrepreneurs sell a product or service, so if you want more income, go sell more! Second of all, no one can fire you. If you want to keep doing this business the rest of your life, you can as long as you provide a useful product or service. Third, entrepreneurs enjoy many opportunities for legitimate tax savings by creating entities that can write off expenses normally paid for personally (think healthcare, retirement accounts, cell phones, etc).
If your goal is to not work forever, but rather to earn money, accumulate assets, and eventually live off the income from these assets, a small business (especially one focused on or matched with real estate investing) can accomplish that.
Here’s my little game plan to do just that:
1. Earn as much as possible
2. Save as much as possible
3. Invest as safely and profitably as possible
I set yearly goals in each of these categories, and I measure my progress. I want to earn a certain amount, I want to save a certain amount, and then I want to invest that amount and add it to past invested capital.
The third step for me is measured in regular income generated from real estate investments. Like a little trickle from a fresh water spring, your income from investments is very small early on. But as you continue to work this plan over and over, your income stream will begin to compound and grow until it is a small brook, a rushing stream, and some day a mighty river.
5. Small and Simple = Meaningful
We all have to take care of ourselves financially. Adding value to our customers’ lives and earning money in return to meet our personal needs is an honorable process.
But I have also been amazed that my business can meet even more of my needs than just a paycheck. On a deeper level, my business has given me meaning, fulfillment, and happiness.
I can hear some cynical responses or at the least hesitation and doubt. We live in a world where many of us feel like our role at work is just a cog in a meaningless wheel. We contribute to organizations that give us a paycheck but they give us little feeling of gratification or fulfillment. We leave our fun, our meaning, and our fulfillment until after work during recreation, at church, or volunteering at charitable organizations.
Your own small business, however, has the potential to be much more because you create it. You get to decide its purpose, its mission, and your role within it. You get to choose the customers you will help, the problems you will solve, and the values and standards by which your business operates.
Your business can be a vehicle to make a difference in the world. And in addition to all of that this wonderful business can still make a profit for you. Those two concepts are not mutually exclusive.
Like me, earning money might be the motivation that drives you to start your small and simple business. But I also hope that like me, you find that the larger meaning of business is what keeps you excited over the long run. You might just decide to be in the “business” of positively changing the world for the rest of your life.
I love your feedback, so let me know if any of this was helpful or inspirational to you in the comments section below.
Enthusiastically your coach,
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