Is Bigger Better?

Among the perennial debated issues in business is, “Is bigger better?” In one camp, you have those that say “grow or die.” In the other, they say that the size of your business should be a reflection of what you want as an owner. If you don’t want to have a big company and all of the headaches that come along with that, then staying small is just fine. While I personally want a big company, I had always believed that your business goals should follow your personal goals and could agree with those who wanted to stay small. However, I am rethinking this of late. In certain situations and industries, it is critical to continually grow and get to a certain size. Here are a few reasons why:

Size gives you a deeper bench. Let’s say the size of your business calls for having two salespeople, but one leaves or isn’t performing. Now you have a big problem. In fact, your company could be in jeopardy. However, if the size of your business calls for having eight salespeople and one leaves, you have a more manageable problem.

Size gives your more options. I recently spoke with a successful entrepreneur and we discussed how hard it is to hire salespeople. One idea we talked about was for him to start his own sales training program. His business is growing to a size where he could hire five or six entry-level salespeople and train them knowing that one or two will ultimately work out. When you are small, you can’t afford to do that.

Size gets you a better exit. Many entrepreneurs that I speak with are realizing that most exits in their industry are earnouts, which doesn’t provide the liquidity event that most entrepreneurs work all their lives for. However, if you can grow to a $30-million- or $80-million-dollar company, you will attract bigger suitors who can pay cash for your business. On the other side of this issue, I know a lot of entrepreneurs who are acquiring companies with earnouts like crazy so that they can have the big exit.

I still think that the growth of your company should be determined by your personal goals. Whether you stay small or pursue growth, you will have challenges. In the end, bigger may actually be better.