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Want to Stay in Business Longer? Keep Your Company Small--Very Small. Here's Why

I was recently talking with Ian, a business coaching client who had seen amazing growth over the course of the past year.


By David Finkel, Inc.

I was recently talking with Ian, a business coaching client who had seen amazing growth over the course of the past year. He had increased his revenue by almost three hundred percent and had reduced his overhead and staffing costs by almost seventy five percent. He had great systems and controls in place, and was able to scale with a staff of only five employees. He was well on his way to building an owner independent business that was projected to reach three million in revenue by the end of the year. 

During our conversation Ian mentioned proudly that he was no longer a "small business owner" and was now a "medium sized business." And I had to stop him for a second and explain that he was not only not a "medium sized business" but he was also no longer a "small business owner"....and why that was a good thing.


Here's What He Actually Is....A Micro Business

According to the Small Business Association, "Microbusinesses (firms with 1-9 employees) are the most common kind of employer firm.... America's 3.7 million micro businesses make up 75.3 percent of all private-sector employers."

The majority of business owners have the preconceived notion that the size of your business has more to do with your sales numbers and less to do with the number of employees that you have. But as Ian worked towards increasing profits and streamlining his operations he had actually changed his status from "Small Business" to "Micro Business."


A Micro Business Is a Good Thing

And for the majority of us, a micro business is a very good thing. Here are three reasons why.

1. Tighter control on finances and overhead.

A traditional small business may have a large staff and office space that really isn't needed for maximum growth and productivity. One of the first things we look at when a client is struggling with cash flow is their overhead and look for ways to reduce their recurring costs.

  • Do you really need a full time bookkeeper or could you do just as much by outsourcing the task to a third party?
  • How much money is spent on IT and HR to manage your staff of thirty? Could that money be spent elsewhere to grow your business?
  • Do you really need a full time sales team or could you outsource it when you launch a new product or in times of expansion?

By analyzing and reducing his overhead costs, Ian was able to increase his profit margins and focus on the most important goals for his company with a staff of five.


2. Higher chance of success (statistically speaking).

Eight out of every ten small businesses fail within the first five years. However according to the Small Business Administration, 62 percent of micro businesses are over five years old." So it stands to reason that the smaller the footprint, the higher the chances are for success over the long haul.


3. Ability to scale and grow responsibly.

And the third reason I think that micro businesses are a good idea, has to do with scaling and growing responsibly. As your business grows, you are going to want to pay close attention to your profit margins and adjust accordingly. It is much easier to hire as you go, then to downsize to maximum profits. So by starting small and making smart decisions, you can grow into your business.

Ian is a proud owner of a micro business well on it's way to crushing it's revenue goals for the year. And that's something to be proud of!

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Finance Magazine: Want to Stay in Business Longer? Keep Your Company Small--Very Small. Here's Why
Want to Stay in Business Longer? Keep Your Company Small--Very Small. Here's Why
I was recently talking with Ian, a business coaching client who had seen amazing growth over the course of the past year.
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