Stay small or grow?

Business may be booming and unexpected new opportunities may be knocking at your door, but beware of growing too quickly or taking on more than you can handle. It can be easy to forget the difficulties associated with a new venture, which is what a larger business would be in its early stages.

In order to successfully navigate this lucrative dilemma, look at the issues from both an analytical and an emotional standpoint - that is, from the professional and financial as well as the personal points of view.

First, while you may be experiencing solid cash flow now the first consequence of expansion may be that most of your cash is siphoned into new areas of the business as it expands. Consequently, you need to take a hard look at what it will cost you to build the business. Do a financial analysis: What will your monthly cash-flow needs be if you put resources behind growth and pursue these newfound opportunities? What would your revenues be in the growth scenario? And don't forget about your salary: Will there be enough left over to pay yourself a salary that meets your personal financial needs? These are all questions you should answer honestly before you decide to grow or stay small.

Next list all the hassle factors associated with growing the business. Include things like managing employees, setting a good example as the boss, payroll taxes, office management - whatever is appropriate to your case.

Now for the emotional side: Divide a fresh piece of paper into two columns - one side lists all the negative aspects of expansion and the other side lists the positive ones. On the left side write down all the personal, psychological, and emotional reasons why you don't want to grow the business. Include items such as added stress, less vacation, less time with the kids, and the inability to pursue other interests. On the right side put ideas such as prestige, extra purchasing power, and more travel opportunities.

Next week we look at the other side of the argument, examining how economies of scale can actually benefit your business.

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