The truth about business growth

The goal of an SME owner is not necessarily to be the biggest or the best.

The business literature often talks about companies needing to be the best, the biggest, or number one in their industry or market. That’s fine for larger companies and the Sol Kerzners and Raymond Ackermans of this world. But more often than we realise, owners of SMEs just want to be their own bosses and make a decent living for themselves and their staff – nothing more.
So your local laundromat, hardware shop or Wimpy franchise frequently does not aspire to open a dozen more branches or grow to double its size. The owners are actually quite happy to continue the status quo and earn a decent living while doing their own thing.

In 1983, at a time when the literature on entrepreneurship was still in its infancy, I did a thesis for my MBA on the nature and personality of an entrepreneur. It concluded with a personality questionnaire to determine entrepreneurial motivation. A significant research finding was that, while there are people in large corporates (now known as intrapreneurs) and business owners who dream about building the next Pick ‘n Pay, Edgars or Standard Bank, the goal of many, and probably the majority of small to medium business owners, is to be independent and to be their own boss, way above any other desire or goal.

In fact, for these owners, the thought of the effort and hassle involved in building the next multinational, turned their stomachs. Hence the small businesses in any country vastly outnumber the large corporates by around 100 to one. In South Africa, according to CIPC statistics, there are just over one million operating businesses, but only about 10 000 have more than 50 employees.

This means that the small business sector employs the majority of people. They contribute more to the country’s GDP and they provide a greater degree of inventiveness and innovation. After all, they are competing against companies with vastly greater resources, but much more bureaucracy, formality and inflexibility.

Sometimes the flexibility and manageability of a smaller business is recognised by big business entrepreneurs. Richard Branson is on record for saying that, as soon as a company or division in the Virgin empire grows to greater than 70 people, he breaks it up into smaller units. He also seems to understand people’s need for independence, responsibility and status. The leaders of these smaller units get all of that, plus they have the stability and security of large corporate support.

It’s also interesting that a huge number of start-up businesses are begun by entrepreneurs who come out of large corporates with the belief that they can do it better than their employer. And despite the fact that the stats say that 95% of start-ups fail in the first three years, there are always people setting out on the entrepreneurial road to keep that figure constant. So the drive for independence is worth the risk of failure.

So, if you are the owner of a small business who doesn’t want to double in size in the next six months, and don’t want to be the next multinational in your industry, you’re not alone. There are a million other businesses who think like you do.

The funny thing is that business writers so often aim their books and articles at the large corporates, while there are 100 times as many small businesses. And as we’ve seen, huge growth is not the be all and end all of doing well in business.

Author:

garth trumble

Garth Trumble

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2017-07-09T15:47:47+00:00

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