You have probably already decided, consciously or unconsciously, what size you want your business to become. It´s in your mental picture of what your business will be when you can call it a success.
"Large" means different things to different people. Some think of revenue; others, number of employees. Still others consider profit per shareholder. And $500,000 revenue may be huge to some entrepreneurs, while others think their business has to reach $5 million before it is large.
Your business plan identifies targets for the first 2 to 5 years, probably based on revenue. But believe it or not, for some entrepreneurs, achieving their targets can limit their potential, because they don´t have a vision of ever achieving more. Now is the time to consider some factors that can help your business be all it can be.
— For your type of business or industry, would scale be an advantage or a liability? If you are producing goods, scale matters. You can realize greater profitability with a larger scale operation, at least up to a point. If you have an antiques store, there are practical limits on the size you will want to be.
— How big is the market for what you offer, and could it support a large business? The market may be huge if you sell on the Internet but relatively small as a local business. If you choose a niche business with a finite number of customers, your potential is fixed unless you diversify.
— What are the costs/benefits of multiple locations? How easy is it to "clone" your business? Restaurateurs may find maintaining quality in more than one or two locations can be challenging because of the influence of the head chef, while other retail businesses can successfully take advantage of similar operations in different cities or neighborhoods.
— If a mega-business enters your market, can you survive? Would the presence of a large chain take market share from you? You may need to be large to compete with the big guys, but not necessarily. Differentiate yourself, either through a unique product line, targeting an up- or down-scale market segment, or through extraordinary service.
— Are you willing to relinquish some control over your business? As your business grows, you can´t — and shouldn´t — continue managing everything. And if you share equity in your business, others will deserve a say. Be sure you are willing to share control with others before you aim for a large business.
— What is your experience managing large operations? Without this experience you will have a steep learning curve if growth comes quickly. If you aren´t confident overseeing a large organization, find a business partner who has done it. Or you can choose to remain small and run the business yourself; if you do, be sure that "small" is viable for your type of business.
— How willing are you to take risks? A large business may appear to be a success, but it may not be. Profits can be larger from a big business, but if the business fails, the losses are also large. If you go for "big", have contingency plans to help protect you against losses. Bankruptcy is an unsatisfactory option due to recent legislation.
— How comfortable are you with a large staff? For many entrepreneurs, meeting payroll is nerve-wracking. You need to add staff to grow the business, but your cash flow is unpredictable. How many families’ livelihood you´re willing to be responsible for may dictate the size of your business.
Whatever size business you choose, stay flexible, keep your eyes open for opportunities, and don´t let your business planning targets blinder you from branching out or expanding when the time is right.