Today I am sharing the final post of a three-week series on small business. I began two weeks ago by sharing lessons I have learned about starting a business, and last week I share lessons related to sustaining a small business. Today’s post is all about growth.
When your business is established and sustainable, the next logical step is to grow. There are a lot of ways to think about growth. Growth can mean expansion, as in a second location or more offerings or increased hours of operation. Growth can mean increasing your profit margins which will require investing in labor or equipment that can get the work done in a more efficient manner or finding ways to source materials for a lower price. Growth can also mean delegating in a way that gives you, the owner, more freedom to step away from the day-to-day management of the business. This would require increasing sales to create the revenue to pay someone to do what you currently do.
My point is, growth can take a lot of forms, and the truth is you don’t have to grow. There is nothing inherently virtuous in growing. If your business works and is sustainable and profitable in a way that you find satisfying, then continuing in the same pattern is a wonderful option. There are unique perks to staying small and profitable. However, if you are interested in growing, here are a few lessons I have learned.
Know your why.
If you haven’t already, determine the why of your business. Why are you doing the thing you are doing? Beyond the specifics of a product or service, what is important to you? What are your values? What matters? What would be a deal-breaker for you? I would suggest putting this in writing and making sure when you read it, it sparks that initial joy inside of you that made you want to start a business in the first place.
Knowing your why will help you decide whether growth matters to you, and if it does, how to grow in a way that aligns with your values. Don’t decide to grow because another business is doing it or you feel like you should want to grow. Your growth should reflect your personal values as it relates to your business.
For me, I get requests every week for Hurley House to open a second location, but opening a second location does not align with my why. Growth for me does not look like opening a second location, even though opening a second location would provide growth.
I have decided that growth in my business looks like learning how to increase our profitability, investing in talented people, merging my creative work with what Hurley House offers, and creating space for me and my employees to flourish as individuals without sacrificing our sanity or time with our family.
My definition of growth and the values I use to make growth decisions are unique to me and my why. When you are in a position to grow, make sure you understand your why and use it as your north star.
Growth inhibits specialization. Whatever your concept or product is, it is fine if in the beginning if it is very special, customized, homemade, and one-of-a-kind. Unique products are fantastic! But if you decide to grow and scale whatever you do, it is important to determine whether or not your very special product is profitable at scale. Making ten very special products might be profitable for you in your business. But what if you had to make five hundred? Would the labor, space, time, supplies, and creativity still work? Would it still make money? Sometimes special things are no longer profitable at scale, and this can be one of the liabilities of growth.
Hurley House does not sell pie because with our unique set up and in the context of everything else we make, pie is not profitable for us at scale. We could make two pies a week and they would be profitable. But 100 pies? Now we are a pie shop, and we would need to pivot our business model (which is an option to consider if you really enjoy making pie) or delete options from our menu to allow space in our kitchen for pie production, or we need to not offer pie. I chose to not offer pie. This decision aligns with my why, and it is an intentional growth decision.
These are the kinds of considerations that will surface when you choose to grow. It is helpful to consider whether or not you may have to let go of some of the special aspects of your business for the sake of growth.
Niche as you grow.
This point is very similar to the previous one, but with a twist.
When you start a brand new baby business in a particular field, you can offer a lot of different products or services that fall under your sphere of expertese. Sometimes saying yes to a lot of different requests in the beginning is how you get your name out and how you generate revenue.
This is how I started Hurley House. I said yes to any sort of cooking or baking or catering or event request. I said yes to every custom request and special detail. I did it all, and I was a one-woman show trying to get an idea off of the ground. Along the way I established a reputation for excellence and exceeding the customer’s expectations. People began to trust me with their important life events, and word got around that Hurley House was providing value in my chosen area of business.
This worked fine in the first year, and I was grateful for every dollar. It became a bit more challenging in year two and three when I was still operating out of my home and looking for a retail space, but I persevered and put in the sweat equity for the sake of the bigger picture.
However, when I opened the storefront in year three, I could not continue to do it all while growing. I had to make choices about what Hurley House focus on and what we would let go of for the sake of serving a larger audience. I tried to keep saying yes to as much as possible (I could not afford to fail, and I needed every penny of revenue), but I came very close to reaching burn out.
Once I had my feet underneath me and the store was working and serving a loyal client base, I started to niche down and saying no to certain special requests. Growth was important to me, and in my case, growth required me to say no to a lot of things that I said yes to in the beginning. This was not an easy choice, but it aligned with my why and ultimately allowed me to create a business that could grow and mature well.
Over the past ten years, for the sake of growth that aligned with my why, Hurley House stopped offering catering, wedding cakes, intricate custom cakes, delivery, and ingredient-specific requests. Any of these items could make us more money, but they would have required me to let go of another product or make decisions that pushed me outside of my why. I chose to grow, but I did so by niching down instead of trying to be all things to all people.
Grow at the speed of cash.
When I started Hurley House, I did not have a large back stock of capital. I had $300 which I earned from singing at a women’s retreat for my church. With that small sum of cash, I said yes to requests for cupcakes and boxed lunches and coffee cakes, worked out of my house, and I kept putting the money I made back into the business so it could grow.
When I opened the Hurley House storefront, I did not have the capital to renovate the space and install a commercial kitchen, so I took out a loan. In addition to taking on overhead like rent and payroll and taxes and utilities and commercial equipment, I added debt. This is a risky financial move, and if I were giving advice to someone today who was in my shoes at the time I would tell them to wait. I would tell them to grow at the speed of cash.
This is the kind of advice that is sound, but isn’t sexy. If I had taken my own advice and waited until I had the cash to renovate a space, I probably would still be waiting, and I’m not sure I would have had the stamina to continue operating out of my home. I took on debt, and it worked out. But I’m not certain that is how the story usually goes.
From where I stand today, with the debt paid off and with a business that for the moment is stable and sustainable, you could not pay me to repeat my actions. The idea of taking on debt for growth, rolling the dice and hoping it works out is not wise. Whenever there is an avenue for growth at Hurley House, whether it is buying a piece of equipment or hiring a new team member or making improvements to the space, I do so with cash.
Growing at the speed of cash keeps you honest. It prevents you from making big decisions that you can’t afford. You have to have the money before you spend the money, and this is a very grounded, wise way to grow.
There are other people who think differently about debt and see it as a wonderful tool that you can use to leverage what you have for the sake of expansion and growth. I understand their argument. More times than not, these people have financial safety nets in place that provide a level of comfort and ease when it comes to debt. For me personally, I know what is required for a small business to be profitable. Adding debt to that equation can squeeze any possible chance for life right out of the business before it ever has a chance.
Growing a business is a position of privilege. It is a place that comes with scars and lots of trial and error. To grow is to acknowledge that you have crossed certain checkpoints, and that is to be celebrated! I am grateful every day for the business I own and the opportunities it affords me to put my work out into the world and see it make some kind of difference in the lives of the people it serves.
Leave a Reply