In my 15 years of serving the small business community in Rochester, New York, I've seen a lot of business owners come and go. The ones who are successful have a strong understanding of their own capacity for growth and the ability to outsource the job if necessary. It's important to honestly assess your goals. Denial is dangerous; if not for your checkbook, then definitely for your health.
Here are four signs that you are funding a lifestyle rather than a business.
1. Your goal is to be the boss
If allowing others to take the helm—the way the founders of Dell and Apple did—is not a comfortable option for you, then chances are good that you should stay a lifestyle business. Consultants are more apt to be successful on their own (or with a small staff) because they are so personally involved in their product...them! They really do need to be their own boss. And they need the flexibility a lifestyle business gives them.
2. You feel stuck
If you have been trying to increase your sales for several years to no avail, you are probably the wrong person for the job. This doesn’t mean you can’t grow, it just means you aren’t going to be the one to drive that growth. A client of mine who was a licensed electrician believed that if she could get a government contract and become a preferred vendor for the local schools, she could become a general contractor, spend less time doing the electrical work and still make a lot of money. Implementation required her to take on a significant amount of debt, which she spent hiring employees and buying equipment. By the time she realized her lifestyle wasn’t conducive to a big, cumbersome company, she was filing for bankruptcy. Had she stayed at the level of a subcontractor and maintained as a lifestyle business, she would have fared much better.
3. You are a micromanager
Get honest here. If you have to be involved in all areas of your business and firmly believe that "If you want something done well, you have to do it yourself," then you're probably a micromanager. You will drive yourself and your employees crazy if you try to grow too big without some kind of help. You may need to bring on a partner or hire a CEO with a history of taking companies to the next level.
4. You need concrete evidence before you can make a business decision
Growing means being able to implement resources based on assumptions about a future event. If you get the assumptions wrong when you are small, it is easier to readjust, but as you get bigger, so do the consequences of not getting it right. You need confidence and faith in the abstract to go forward.
One of my clients owns an manufacturing company, and a few years back he expanded his business. This expansion required him to bring on more people, incur more debt and make more of a time commitment. He wasn’t able to visualize his company scaled up, so he kept doing things the same way he had when he was small. Fortunately, he quickly realized that having some personal time and financial freedom was what he desired and a bigger company wasn’t working for him. So he scaled back and now has exactly what he enjoys: a business that sustains just enough revenue and employees to maintain his lifestyle.
Most successful transitions are made by founders who recognize that the very qualities that got their companies to this level won’t take them to the next—qualities like risk-taking or having a strong ego. These very qualities that gave you the gumption to start your company can turn nonconstructive once you hit a certain size. Business owners either give up some control over their life, or stay a lifestyle business. And, in the end, they live the life they were really dreaming of all along.
OPEN Cardmember Pamela R. Bauer, E.A. is the President/CEO of Abacus & Co of NY Inc., an accounting and business consulting company out of Rochester, New York, specializing in small business .