How to not grow your lifestyle business
Small Business Guides
6 min read
Small businesses are often encouraged to grow, but bigger isn't always better. Sometimes it makes sense to stay small and nimble. Here's how you can run a successful lifestyle business without constantly chasing growth.
Growth isn't always good
A lot of small business advice assumes that you intend to grow. You may be advised to hire more staff, open more stores and do more marketing to win customers.
But what if you’re happy with your current business size? Perhaps you:
launched your business for lifestyle reasons and don’t want to take on more work
feel you’re already at optimal business size
have other commitments that prevent you investing more time in your business
don't want the stress of expanding your business
feel it's less risky to stay small
It’s entirely possible to maintain a smaller business size while making a healthy profit.
Advantages of a lifestyle business
Choosing stability over never-ending growth can lead to big benefits for you and your business.
You don’t have to reinvest so much money
Growth requires investment, but sometimes revenue doesn’t grow fast enough to repay it. The resulting cashflow crunch can be stressful. Non-growth businesses don't have to worry so much about this.
Financial predictions will be simpler
Revenue and expenses are simpler to forecast with a smaller lifestyle business. There are fewer building projects, equipment upgrades and new hires to budget for. That stability can make it easier to balance your bottom line, so you spend less time worrying about your financials.
You’ll feel less stressed
It can be hard to relax when you keep pushing, growing and raising expectations. Ongoing expansion generally requires a lot of bandwidth. That might be good for your bank balance – but not for your blood pressure. Less aggressive targets can reduce stress and leave you more time to enjoy life.
The quality of your work may be higher
Even with the best of intentions, business owners who are focused on growth and money can be distracted from the quality of their work. With a lifestyle business, you can focus on doing high quality work all the time.
You can build goodwill
Non-growth businesses often spend more of their energy on non-financial goals like delighting customers and being best-in-class. The extra focus on serving the market can create goodwill and encourage greater customer loyalty.
You can adapt quickly to market conditions
To chase growth, businesses often have to lock themselves into long-term strategies. But what if the market conditions change? When business size isn’t so important to you, you can stay nimble. With no fixed growth strategy, it can be easier to change direction.
You can take it slow, but don't stand still
It's been said that businesses are like sharks – if they don't keep moving forward, they die. There's some truth in this because of the twin forces of depreciation and inflation:
Depreciation eats into the value of the assets your business owns.
Inflation reduces the value of the money you earn (and causes suppliers to hike prices).
Chances are, your competitors are also working hard to take market share off you. With all this going on, you can’t afford to stand still. At zero growth, you’d actually drift backwards. But you can maintain a viable business size with just a few percent annual growth.
In business, we hear so much about growth, expansion, and ambition. Yet the vast majority of businesses stay small – many of them by choice.
Keep your options open
You might not plan to grow your business now, but there may come a time when you want to. And if you decide to sell your business, you’ll probably want to demonstrate that it can grow to prospective buyers.
To keep the growth option open, make sure you maintain your market presence and networking. It’s important to know where new customers might come from. It’s like fishing – you might not want to go fishing right now, but it pays to know the best spots for when you do.
Five top tips to keep your lifestyle business steady and stable
- Spread your risk
If you don’t have to do a huge volume of business, it might be tempting to drop clients and work with just a few of your favorites. Try to avoid doing that. You don’t want to become too dependent on one or two accounts.
- Value every customer
Finding new customers is expensive. It takes a sales and marketing push, then you may have to onboard them. If your revenue’s relatively flat, you probably won’t have a big budget for all this. So treat your customers well and aim for only minor churn. It’s much more cost effective to keep your existing customers than gain new ones.
- Stay on top of your finances
If you’re running a lean business, you have to watch cashflow closely. If costs start climbing or sales start dropping, you’ll need to course-correct quickly. Make sure you have access to the numbers you need to keep an eye on. An accounting dashboard will track those metrics in real time so you can check in whenever you like.
- Keep setting targets
You might not be chasing big growth, but you should still set targets to keep you focused. Not all your goals will be financial. You might aim to achieve 99 percent customer satisfaction, for example. But make sure finances are still represented. You need concrete targets to help keep the business sustainable.
- Don’t forget your aim
If you chose a lifestyle business because you wanted more time and flexibility, keep reminding yourself of that. Business can be addictive. You might start chasing extra work because you get a buzz from closing deals or your competitive instinct kicks in. It can take just as much discipline to maintain a small business size as to go all-out for growth.
Avoiding the lifestyle business trap
People regularly start small businesses to be their own boss, set their own hours, and try for a better work-life balance. In reality:
almost 90 percent of small business owners end up wishing they could work faster
a third say saving time is a key goal
Day-to-day business administration gets in the way of the dream. And the sense of being time pressured goes up the smaller the business is. If you’re in that situation, business software could provide a lot of relief. For about $30/month, a smart accounting package will:
allow you to create and send quotes and invoices from your mobile
automatically send invoice reminders to late payers
track and organise business expenses (and autopay them, if you want)
chart money in and money out on a dashboard, so you can always see cashflow
Systems like this also keep all your financial and tax information in one place, which makes it much easier for your accountant to keep your business compliant. Plus you can plug in other apps for point-of-sale, inventory management, payroll (if you decide to grow, after all) and many other tasks.
Plot your course and stick to it
In business, we hear so much about growth, expansion, and ambition. Yet the vast majority of businesses stay small – many of them by choice. There are several advantages to targeting only modest growth and it’s a legitimate business strategy. But like all strategies, success requires a firm grasp of the numbers and plenty of planning.
If you stick to it, and use smart tools to do a lot of the administrative grunt work, you could run a profitable lifestyle business. A business with low stress, fewer working hours, loyal customers and a strong sense of satisfaction. With all that – who needs growth?