As a small-business owner, you don’t have Wall Street pushing you to one-up your financial figures every quarter. In fact, if you don’t have any investors, you may never feel pressured to expand your offerings or open a new office. You may just want your business to stay small.
In some cases, maintaining the status quo can actually work in a company’s favor. “Businesses are meant to stay small if their owners want them to stay small,” says Barbara Findlay Schenck, co-author of Business Plans Kit for Dummies.
And many do. More than half of U.S. entrepreneurs say the primary reason they started a business was to be their own boss or to get a flexible schedule, a 2011 study shows [PDF]. Only 34 percent say they did it primarily to generate income.
Although every company should have a business plan that defines its goals, its customers, and its strategies, not all companies need a growth plan, Schenck observes.
She and her co-authors cite as an example an entrepreneur who wanted to create a chain of stereo stores but fumbled under the weight of inventory and leases and the lack of a strategy for managing growth. What he had failed to consider was whether he truly wanted to grow his business.
It’s a critical question that all small-business owners should ask themselves, Schenck says, and “no” is an acceptable answer. “If the owner wants to hold customer count, staff count, market share, revenues, profits, or any other size indicator at a steady level, then a plan to enhance business strength while capping business growth makes perfect sense,” she says.
However, staying small should not be confused with staying the same, she cautions. Business owners still need to plan for change as technology advances and consumer demographics, trends, and the competitive landscape evolve. “Any business, even a business that is avoiding growth, must either adapt to meet the forces of change or prepare to be overtaken by more nimble competitors,” Schenck says.
At least once a year, take time to review your business strategy, she suggests. “So long as the business aims to retain current customer and sales levels, growth plans aren’t necessary,” she says.
“But whether the business aims to grow or not, owners absolutely must plan to quickly and strategically address changes in marketplace conditions; changes that affect products, processes, and distribution channels; economic and technological changes; and any other forces that can upend the stability of the business and the comfort of the status quo.”