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:
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launched your business for lifestyle reasons and don’t want to take on more work
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feel you’re already at optimal business size
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have other commitments that prevent you investing more time in your business
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don’t want the stress of expanding your business
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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.
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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 cash flow crunch can be stressful. Non-growth businesses don’t have to worry so much about this.
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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.
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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.
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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.
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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.
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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:
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Depreciation eats into the value of the assets your business owns.
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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.
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Reproduced with the permission of Xero.
Xero is software designed to make life better for small businesses and their advisors. Its online accounting platform provides the foundation on which businesses can build a complete business solution. It connects businesses with their bank, accounting tools, their accountant, payment services and third-party apps, so everything is securely available at any time, on any device.
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