Many people set up their new business for the sake of personal and financial independence and do not want to go beyond that.
Ill considered or involuntary expansion can often lead to the founder or proprietor becoming a slave to their own business.
This is an important reason for many failures as people tire of their obligation and see being a wage slave as an attractive way out.
Typically this problem stems from someone who has originally set up the business to do technical work resisting the need to transition to a more hands-off management role.
Often the balance cannot be found between the drive to do the technical work, the need to earn a specific income and the human need of having sufficient free time away from work.
For an early stage micro business set up on the basis of the technical skills of the proprietor, then we can be reasonably clear what is going on.
The painter and decorator who gets a professional job done without charging too much may be able to build a reliable stream of work based on reputation and referrals. Increasing sales may not be his concern, in fact he may get to a point where he has to defer work or turn it away because he has reached the limits of his physical capacity.
In this instance sales growth is very much connected to capacity and how the business is structured. To make the sales grow, the proprietor with the good reputation has to add personnel and step back increasingly from the detailed technical work. As sales depend upon his personal reputation, being less involved in delivery brings great risk which will have to be addressed.
Also, as the number of people in the business increases, referrals alone may not be enough to increase sales to cover the additional capacity. So the technical wizard who has never had to sell now has to become a salesman.
Something that seemed so simple becomes really very complex very quickly. This is the reason why many sole traders stick with the work they know and walk away from additional work and income. The increased complexity of the larger business is not for them as it takes them away from the work they love.
This is their choice, but we should be clear that they do not normally have a salable business.They also carry a burden of long term personal risk as an accident or illness could remove their ability to earn overnight.
Adding personnel and building a professional operation based on the good values that got them started will immunise them from the personal risk and give them a salable entity that could be sold for a substantial sum.
The reason to sell could be retirement or any other personal reason to exit the business. The key point is the additional choices available as the business grows.
Where the stopping point is very much depends on the indivdual. There are many businesses running in the UK today where the owner has contracted to bring the operation back down their comfort level.
The right answer to how big the business should or can grow, will depend more on what the owner really wants than anything else.
