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 Channel Futures

Sales & Marketing


Should You Grow Your Business Quickly — Or Slowly?

  • Written by Mitch York 1
  • October 19, 2009
One of my favorite small-business bloggers, Anita Campbell, recently wrote that the key to being successful in your small business start-up is to be very careful with how you spend money, even if it means growing very slowly.

small-business-growthOne of my favorite small-business bloggers, Anita Campbell, recently wrote that the key to being successful in your small business start-up is to be very careful with how you spend money, even if it means growing very slowly. She has some no-lose advice, including being picky about adding products and features, partnerships and employees; acting like the small company you are without faking the accouterments that go with being big; looking for discounts before you buy so much as a box of paper clips; and of course focusing on growing sales.

It’s hard to argue with motherhood and apple pie, and I can think of plenty of examples that prove her point. One business I know quite a bit about, a promotional products company, grew very fast with venture capital backing but quickly found itself in trouble when expenses got too high and sales didn’t grow fast enough. Fortunately, the owner was a very tough guy. He got the VCs out, downsized, and grew organically and survived.  But still,  I think are some other things to consider.

About Growing Slowly: The slower you grow, the less chance you have of wasting resources. Businesses that expand too quickly make more mistakes, and in the first few years of a business one too many mistakes can be fatal. Just one problem about being in the slow lane: to quote John Maynard Keynes slightly out of context, “This long run is a misleading guide to current affairs…In the long run we are all dead.” Many startups these days are owned by Baby Boomers (like me) who launch a business after a corporate career. If you’re 40-60 years old, the long run is indeed no longer that long. The sand is running out of the hourglass and you can’t ignore either it or the mortgage or the tuition. If you’re going to gamble on entrepreneurship rather than have a real job, you should think about how fast/slow you need to to get your business to the point where it meets your needs.

About Being Stingy. Anita writes, “Of every expenditure, I would ask myself: how many hours would I have to work to pay for this expense? That one question brings clarity.” I do that, too. In my catering business, I have often asked myself how many cappuccinos I will have to sell to make back that marketing expense. So again, motherhood and apple pie. On the other hand I sometimes wonder whether I am giving in to “scarcity thinking” when I go down that road. My coach teaches me to focus on creating an abundance of what I want, not just having enough to get by. So if I believe in a marketing concept or a new product, and that means investment, do I really want to calculate having to sell 4,265 lattes to pay for it? Maybe, but I’m not sure. (P.S. Tuition this year is costing me 11,250 lattes.)

About Acting Small: Anita writes, “Instead of the snazziest website possible, have a more informal website or blog. ” Keeping it simple is definitely good advice, as is not pretending to be something you’re not. But do customers want to work with a business they know is small and fragile? Isn’t that risky for the customer? What if you or your business gets hit by the proverbial bus? I like my clients to feel that my business is big enough to never let them down, and it is.

Where are you on the small/big, fast/slow, penny-pincher/big spender spectrum?

Contributing blogger Mitch York coaches executives who are evolving into entrepreneurs. Find York — and his personal blog — at www.e2ecoaching.com. Follow MSPmentor via RSS; Facebook; Identi.ca; and Twitter. And sign up for our Enewsletter; Webcasts and Resource Center. Plus, check out more MSP voices at www.MSPtweet.com.

Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs Sales & Marketing Strategy

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11 comments

  1. Avatar Rebecca October 19, 2009 @ 1:50 pm
    Reply

    Interesting post. One concern in our market with growing too slowly is competitors are catching up fast.

    When we started our MSP side of the business years ago there was very limited buzz about the industry. Not many people offered it – and even fewer did it well. Now however, the industry is growing rapidly. Every month we have new competitors – from a small local VAR turned MSP, to the big guys like Dell.

    Our perfect growth pace is where it’s just doable to keep every client thrilled with their service. Any slower than that and the competitors are winning. Any faster than that and we just have a bunch of lukewarm clients we’re always afraid will leave. No one wants that!

    Rebecca Everding
    http://www.motherG.com

  2. Avatar Joe Panettieri October 19, 2009 @ 3:05 pm
    Reply

    Rebecca: Great points. Down at the N-able Partner Summit last week, a lot of N-able executives and attendees were noting that “first mover advantage” in the MSP market no longer exists. I plan to blog a bit more on that topic, hopefully later this week.
    -jp

  3. Avatar George Sabados October 19, 2009 @ 9:12 pm
    Reply

    Growth should occur at a pace natural to the existing structure of the business. There is also great merit in ‘faking’ that your are big – it creates the space required for growth. Putting the brakes on a business is, in my opinion, thinking ‘small’. For instance, rather than interpreting the cost of marketing in terms of how many lattes you would have to sell to recoup the money spent, I recommend that business owners view their operational expenses in terms of ‘Costs’ vs ‘Investments’. A cost is an expense to the business which does not have a direct impact on sales. An investment is a ‘cost’ to the business which when shelled out, directly affects sales (upwards). It is a minor shift in thinking but a major one in results!

  4. Avatar Paul Barnett October 20, 2009 @ 10:09 am
    Reply

    Mitch,

    I ran my own business for close to a decade. About four years in, I found myself in a situation where my enterprise exploded overnight. I went from ten employees to close to eighty in less than a two year span. At that time, I had no clue how to run a business that size. I remember feeling completely overwhelmed and unsure how to manage things during the growth period. I tried to keep my hands in everything, which proved to be impossible and nearly drove me insane. I finally gave in and hired a corporate consultant. One of the best things the consultant taught me was that I had to give up day to day menial stuff. She told me to hire good people, give them objectives, and hold them accountable. It is the e-myth principle, “work on your business, not for it.” It was hard for me to give up the micromanagement, but once I did, things ran smoothly.

    Paul Barnett
    Marketing Director
    Virtual Administrator

  5. Avatar Promotional Items by Gallant October 20, 2009 @ 2:34 pm
    Reply

    Being a promotional agency ourselves and online for the last 15 years. My best advice is to grow your business slowly and offer great features – http://www.gallantgifts.com/dcw_cart/search.php
    and services – http://blog.gallantgifts.com
    that keep your clients coming back for more.

    If you looked at a yekllow pages from just two years ago, you would find that 60% to 70% of the promotional agencies are no longer in business.
    Some of the biggest players in the industry have made the same mistake that e-promos made.

    Thanks for the great article.

    Gallant
    http://www.GallantGifts.com

  6. Avatar Joe Panettieri October 20, 2009 @ 2:52 pm
    Reply

    [email protected]: I wouldn’t advise putting the breaks on growth. But I do understand why some MSPs might hesitate to launch a new product or service if their current services still need polish. Always wiser to over-deliver on your current offerings before you launch new ventures.

    [email protected]: Great tips. Letting go of certain day-to-day tasks can be painful for some entrepreneurs. Including me. But I’m trying… …

  7. Avatar Edward Stringfellow October 21, 2009 @ 10:58 pm
    Reply

    I think that in most cases slow growth equates to a lifestyle business versus rapid growth, which is well, a growth business. This is especially true in the technology space where most companies are started by individuals delivering the services themselves.
    Three years into starting our company I looked around and realized that we were making money, but growth was slow and I was a little tired of the “smallness” of a lifestyle business. Slow and steady wasn’t all that exciting. So I made the conscience decision to go into growth mode.
    Fast forward three years and we have tripled clients, revenues, profits, etc. Yes, it is a lot more stressful but definitely not boring! I think in the end the decision is really more about the owner’s wants and desires with free time, place in career, family, and all those “personal” variables.

  8. Avatar Joe Panettieri October 22, 2009 @ 12:18 am
    Reply

    Edward: Can you mention two or three specific steps you took to drive growth? Many readers are working hard to find growth opportunities and I’m sure they’d appreciate your thoughts. Thanks in advance for any follow-up you can offer.
    -jp

  9. Avatar Edward Stringfellow October 24, 2009 @ 10:04 pm
    Reply

    Joe: Glad to offer up a few steps I made to change our business from a “lifestyle” company to a “growth” company. The biggest step was to change my mindset and go from being a technician delivering services to a manager running a service delivery business.

    –Define what the business will look like in one, two, and three years. How many employees, clients, revenue, etc. Then map from where you are to where you want to be. Basic I know, but it must be done. Most important part of this exercise for me was realizing that growth requires the service delivery (technicians) to be separate from the management of the company.

    –Establish what your target client profile(s) is (are). Then define what services each profile needs to be pitched. This allows a business to focus on delivering services that are the right fit for each profile and hopefully they are also the most profitable. Strangely, it’s the prospects you turn away that can make you the most money!

    –Invest in getting your company’s brand and message clear and out there. There seems to be a new “MSP” focused shop starting up each day, so the model isn’t the differentiator, it’s how YOU deliver the services within the model.

    Hope this helps!

    –E

    http://www.stringfellow.com

  10. Avatar Nathan McGinty March 29, 2011 @ 8:09 am
    Reply

    There’s a number of different angles you can take when trying to grow your MSP business. The problem is, most MSP guys are techies and not marketing/salespeople. That problem, can always be fixed with a little knowledge.

    Webinar on growing your MSP business

  11. Avatar Nathan McGinty March 29, 2011 @ 8:10 am
    Reply

    Whoops, sorry. Forgot the webinar link….

    http://www.mspbusinessmanagement.com/webinar/grow-your-it-business-and-be-more-profitable

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