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How Big Is Too Big For A Home-Based Business?

You can let your business grow as much as it wants, and still keep it at home, but you need to make the choice

how big is too bigThe thread on the email discussion list started like this:

If sales increase again next year I may have to actually hire someone to help me and I’m not really sure if I want to do that yet. Has anyone’s business grown to the extent where they needed to hire additional people? Would you say it was a good experience? In the back of my mind I’m thinking that if I get to that point that my business may become less enjoyable.

Another list member chimed in with this:

I think I’m at about the same point as you – getting too busy for one person but hesitant to growing into a larger business. It’s a lot to think about! I’m very interested to hear from those who have done it or decided against it…

Growth in a home-based business is something that many of us fail to consider at the time that we start our businesses. There could be any numbers of reasons for that. Maybe we assume that we’ll never get to that point. Maybe we decided to start the business in the first place because we wanted to be at home with our children, and were considerably surprised when our modest idea for a home-based enterprise took off. Maybe we have not done enough marketing to expect to be seeing so much growth in our sales volume, perhaps because we didn’t take word-of-mouth into account.

For whatever reason, sometimes we find ourselves in the position where we are starting to think about growth and about whether we want it and how much of it we want. And when we start to think about it, it seems that there are two fundamental questions we wind up asking ourselves.

First, how much can I grow and still run my business from home? And second, how much can I grow and still have fun?

The answers to these questions are as individual as the businesses we run. But there are a few things we can think about when making those decisions, and it is probably a good idea to think about them before the situation arises so that we can make plans and operate our businesses with those strategic decisions already in mind.

There are three distinct ways to think about the growth of your business. You can think of it in terms of the number of employees your business has, or the amount of annual revenues you realize, or the size of your market and your share of that market. Obviously, some of these things overlap. The larger your market share, the higher your annual revenues will be. The higher your sales volume, the more likely it is that you’ll need to hire additional help. And which of these things will or will not make the business less fun for you is a matter of individual choice.

When it comes to both annual revenues and market share, the outlook is often much the same.

Not many of us would complain about making buckets of money, but making buckets of money implies ever-growing sales volumes. That, in its turn, implies the eventual need to hire help, and that brings us back to hiring people.

And it is often the prospect of hiring people that gives many home-based business owners the willies.

Why? Well, for starters, hiring people increases the level of responsibility you assume with the operation of your business. As soon as you have employees, you have people who are depending on you for their livelihood. If you make a major error of judgement with respect to the management of your business, suddenly it’s not only you who is going to suffer for it. And what happens if you hire people because of increased demand for your goods or services, only to have the bottom drop out of the market next year? Can you handle having to lay off employees if you find you can no longer afford to pay them?

For home-based businesses, there is the legal issue of your local zoning laws to contend with as well. In most locations in the country, even when home-based businesses are legal and zoning laws are home business friendly, home-based business owners are still not permitted to hire employees unless they are members of the immediate family who, presumably, live in the house too. The reasons given for this have to do with traffic to and from the residence, as well as with issues of workplace safety and employer liability. With some kinds of employment, distance workers can solve the problem admirably but there are other sorts of hired help that need to be on the premises.

And then, of course, there is also the additional paperwork. There will be forms to fill out when you hire people, and more forms to fill out — as well as taxes to remit — when you pay them. You’ll have to think about benefits packages if you want to hire and keep really good people. The additional administrative burdens of employing people is often enough to take the fun out of running your business all by itself.

So, what do you do? Do you let your business grow and reap the financial rewards, or do you start turning away business because you dread losing the zip you found in running this business to begin with?

“It’s just that many reach that point.. and don’t think they can handle success,” says Donna Snow, Editor-in-Chief of HerSmallBusiness.com. “It’s as if they don’t believe that they have the ability to be successful, so they don’t try. But they don’t realize they are doing it to themselves.”

In actual fact, there are a number of options for you here, and no real need to cut off your nose to spite your face. The choice that you make will depend on a number of factors, and on your overall understanding of the growth process in the business world.

In a very fundamental sense, businesses grow until their sales volume reaches a point at which they can no longer meet it within the context of their current resources. This may mean their human resources or their financial resources.

Perhaps the problem isn’t that you need to hire more people but maybe that you need to be making more of what you sell in order to meet demand. In that case, if you want the business to continue to grow, you’ll have to start outsourcing the manufacturing process to keep up with your sales volume.

Or perhaps, you’ll get into a subcontracting arrangement, in which your customer orders from you and you place an order with another vendor who sells the same goods as you do. You instruct that vendor to ship direct to the customer, the customer pays you and you pay the third-party vendor. Eventually, you may even elect to hand that customer over to your subcontractor as a permanent customer, if you have decided that you don’t want your business to grow beyond a certain point.

Maybe you have examined your market and need to decide whether you want to expand your product offerings in order to enlarge your market share. You may want to launch a new product and perhaps need to seek some modest financing in order to stock the item and market the product launch with enough gusto so that you can expect a reasonable return on your investment.

If you rise to the challenges presented by that first growth spurt, and find yourself able to meet the additional demand, your business will continue to grow until, once again, you are unable to meet demand within the context of your enhanced resources. You need to either hire more help or seek financing because the orders are outpacing your capabilities or your cash flow. You have reached the next growth phase of your business. How will you handle it?

Of course, you can decide to deliberately avoid doing things that will cause your business to grow. For example, if you work your business on a part-time basis, the statistical chances are that the fewer hours and days you work will translate into lower revenues. If you decide never to hire employees, that will also increase the statistical probability that your business will not grow beyond a certain point in sales volume or in revenues.

Alternatively, if you do let your business grow and the find that you are not having much fun with it anymore, you also have the option to sell it and take the money you realize from that sale to start another business. Then you can have fun again — if you had stopped having fun because you were “too successful” for your own comfort.

Then again, maybe you discover that meeting the challenges of growing your business while maintaining a home office is a lot of fun all by itself. People like Rene Siegel and Jeff Zbar demonstrate vividly that it really is possible to grow a home-based business — whether you grow it fast or slow — and still keep it at home. You may even opt to move the main office out of your house and then telecommute, hiring an assistant and only coming into the office yourself one or two days a week.

In the end, there are no right or wrong answers except the answers that are right for you. Growth, says Ms. Snow, is an affirmation of the viability of your business, not the prelude to a frightening ordeal. “They need to determine what they consider ‘not fun,'” she told us.

When it comes to growing your business, the only thing needed to arrange your work and life just the way you want it is the creativity that enabled you to start this business in the first place. And, more often than not, the only obstacle of any significance is your own fear.

If you are afraid of being overwhelmed by your growing business, then that is an entirely different issue. Then it is time to take those fears out, examine them closely, and deal with them in ways that are appropriate and healthy. Is that self-preservation talking, or simply your insecurities? Are you afraid of failing or are you afraid to succeed?

Meanwhile, as you embark on your self-examination, be sure to keep in mind that you are in the driver’s seat. The only real reason to avoid letting your home-based business grow to its fullest potential is because you don’t want it to.

About Dawn R. Rivers

Dawn Rivers (formerly Dawn Rivers Baker) is a writer, journalist, publisher, microbusiness expert and advocate, She's written articles for many media outlets including US News & World Report.


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