第3章

KEY NO.1:

THERE'S MORE

THAN ONE WAY TO

DEFINE GROWTH

"DECIDE WHAT YOU WANT,

DECIDE WHAT YOU ARE

WILLING TO EXCHANGE FOR IT.

ESTABLISH YOUR PRIORITIES

AND GO TO WORK."

H. L. Hunt

"THERE ARE MANY WAYS OF

GOING FORWARD, BUT ONLY

ONE WAY OF STANDING STILL."

Franklin D. Roosevelt

OUR OBSESSION WITH SIZE creates a number of challenges for the owner of a small business: perceptual challenges regarding the relationship between size and success, for example, as well as the assumption that a business must grow quantitatively or die, a business commandment Inc. Magazine featured as a New Economy Myth.[1] For the steward of a big-vision small business, the conflict between an internally motivated desire to build a distinguished organization and the externally motivated desire to create a company that is successful according to cultural norms can be significant, even paralyzing; it is the golden carrot that can lure us down the wrong path, where we may well find that the sparkling gold was merely a thin, colored-foil wrapper.

So how might we know the difference between the real golden carrot and the foil-covered one? This awareness—between the genuine and the superficial, the qualitative and the quantitative—is one factor that sets the big-vision small-business owner apart from her or his small-business peers. This section will begin to explore the distinctions between small and large enterprises and between qualitative and quantitative growth, and how all of these issues play out in the day-to-day lives of big-vision, small-business owners.

Chapter 1

FINDING QUALITY IN THE LAND OF QUANTITY

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FINDING EVIDENCE of quantity worship isn't difficult, even in the midst of so-called small-business advocates. Take, for example, Small Business Week, an event sponsored in May 2000 by the U.S. Small Business Administration (SBA). After referencing some of the contributions made by small businesses to our economy, the organization's Web site went on to list the selection criteria for Small Business Person of the Year, emphasizing growth in the number of employees and increase in sales or unit volume as indicators of success. The SBA also has defined as "small" those businesses with up to 500 employees, a size most owners of truly small businesses consider very comfortably midsized, or even large.[2]

In a smaller but no less insidious example, one of the business owners interviewed for this book was named employer of the year by a statewide professional association in recognition of his employee relations practices. In the press release announcing the honor, the association representative referred to the award-winning business as "a small but growing firm," as if the small group that warranted such recognition in the first place wasn't quite enough. Seemingly trivial, perhaps, but language matters because it reflects deeply held assumptions and perpetuates an inappropriately narrow view of small business. These examples are just two indications of our culture's unhealthy and often thoughtless bias toward big.

Surely increased sales or employee count provides one definition of growth but not the only one, and not one that guarantees profitability or success, much less a positive impact on the community or good quality of life for its founders. After all, one has to look no further than the recently worshipped, fast-growth dot-com companies to know that rapid expansion, in terms of employees and capital commitment, doesn't guarantee a solid business concept, sustainability, profitability, nor economic (not to mention qualitative) contribution.

But just as expanded size doesn't equate with profitability, satisfaction, or success, neither does an advocacy for refined smaller enterprises eschew the need for profitability and good business judgment. Personally, my advocacy for what author and economist David Korten has called the human-scale, locally accountable enterprise is inseparable from my preference for a good standard of living, which includes a self-defined degree of financial freedom. A preference for small business is not, for me, synonymous with a vow of poverty. It is, however, inseparable from knowing what is enough and what is—at the end of the day or of one's life—truly important.

So if we're willing to step away from our torrid cultural affair with size and linear progressions even for a moment, we might allow that growth can also mean an evolution or transformation, with an emphasis on qualitative aspects of business ownership, personal development, and contribution to the community. Unlike the more traditional, numerically focused entrepreneurs, big-vision small-business owners define growth in just this way—more a matter of polishing a gem and perfecting its facets, if you will, than of acquiring an ever expanding number of gems regardless of quality or of the fact that they might be permanently depleting the mine. Ultimately, the choice regarding what's most appropriate must be left to the business owner, whose business, family, and life are most affected by this very personal decision.

The problem is that the decision to grow quantitatively is rarely driven by a reflection on one's personal preferences or an assessment of other ways the organization might continue to live and thrive. Too often, the decision to expand is a result of an unquestioning acceptance of the "grow or die" myth, when in fact the end product of this approach might well be "grow and die."

What are you the small-business owner to do in the face of such questions? Consider that there might be more than one way to grow, reflect on your options, decide what path is most consistent with your vision for your quality of life and desired contribution to the world, and then determine how business size or evolution can provide the best vehicle.

Chapter 2

APPRECIATING THE POWER OF SMALL ENTERPRISE

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WE LIVE IN A CULTURE that engages in what E. F. Schumacher, in his book Small Is Beautiful, referred to as the "idolatry of large size." Despite this, many enterprise owners still opt to keep their organizations small in size and big in vision and craftsmanship. Others, however, succumb to the myth that adding locations, employees, and revenues is the only route to growth and success, even if such a course conflicts with other lifestyle goals or the founding vision of the enterprise. Many even pursue quantitative growth, though it ultimately results not just in the erosion of their vision but in the failure of their company as well. Why? And what choices exist to help make growth-related decisions more deliberate and thoughtful?

One problem is rooted, again, in our assumptions. We assume that, because politicians talk about "helping small business" and large corporations create advertisements extolling the virtues of small business, we have a culture in which people actually demonstrate appreciation for the challenges and contributions of individual small enterprises. We too easily mistake the talk about small business being the engine of the economy, or the buzz about how the smallest businesses consistently create more jobs than their colossal brethren, or that woman-owned companies alone employ more people than the Fortune 500, or the enormous richness of the small-business market, for actual appreciation of small business.

The reality is that small businesses—and I'm not talking about the proliferation (and even more recent demise) of many dot-com Internet startup companies—make an enormous contribution to our neighborhoods, our cities, and our nations. Collectively, the smallest businesses form a force to be recognized and reckoned with. Individually, small businesses offer ideas, innovations, practices, and lifestyle options that larger companies increasingly and unsuccessfully attempt to imitate. But small businesses are what they are and contribute what they contribute because of their size. Similarly, many little, low-budget independent movies that have generated a big grassroots following in the past decade have taken the film industry by storm because they are not products of the large corporate studios. The larger studios can more easily create blockbuster epics and marketing juggernauts, while the greater degree of originality and creativity—both in the art of film and grassroots marketing—more often comes from the budget-challenged independents.

"Growth for the sake of growth is the ideology of the cancer cell."

EDWARD ABBEY

The issue is not so much that large corporations are overappreciated but rather that the smallest enterprises are underestimated and underappreciated. Given that small organizations make such a significant contribution to the economy and the communities in which they're located and provide a wonderful vehicle for creating a good quality of life and being of service, the problem is that so few people fully understand and appreciate these very real contributions. To a degree, rhetoric is mistaken for action. The bottom line is that we have work to do in raising the awareness of the true merits of small-size big-impact enterprises. Big-vision small-business owners—whether by example or overt advocacy—promote the virtues and possibilities of a vision- and integrity-driven small enterprise.

A true appreciation will mean that the organizations that lobby on behalf of small enterprise must focus on the vast majority of their constituency—the smallest enterprises, not the larger-scale operations. Heightened awareness will mean that their lobbying should result in policies that better support the small office/home office (SOHO) demographic of enterprises that have fewer than 20 people. It will also mean that local officials won't blindly welcome big-box retailers into the community without simultaneously creating plans to ensure a robust small-business community and that small-business owners won't let their assumptions regarding growth dictate their decisions and the quality of both business and life.

What Is a Small Business?

Before looking at some of the contributions small enterprises make, you may be asking, "What exactly constitutes a small business?" It's a good question and a necessary one if we're to discern the general contributions of small business or discuss the unique merits of big-vision small business. Unfortunately, relying on current data or definitions yields more than one answer.

We've seen that U.S. agencies such as the Small Business Administration often categorize a small business as any enterprise with 500 or fewer employees, though in other cases they define a small business as having fewer than 100 employees and a microenterprise as having 19 or fewer people. Chambers of Commerce report that the majority of their members—70 to 90 percent—are enterprises with 20 or fewer, which is the range used by Working Solo, Inc., a SOHO-market consulting firm, to define a SOHO enterprise.[3] In the United Kingdom, most small-business advocates use a standard of up to nine people for a microenterprise, 49 or fewer for small business, 50 to 249 employees for a medium-size firm, and 250-plus for a large company. The European Union defines microenterprises as having fewer than 10 employees, small businesses as those with up to 50.[4] Other organizations use a variety of measures, recognizing that industry plays some role in defining what a small business is, since "small" in manufacturing might be 50 while that number might constitute a large enterprise if applied to a florist, printer, or typical consultancy.

While the lack of common, contemporary definitions for small business is troublesome, perhaps worse still is the fact that, according to the U.S. Census Bureau, the single-person enterprises that make up close to 75 percent of all U.S. businesses aren't even included in many statistical surveys.[5] Why? Because most have lower overhead and no one but the owner on payroll and thus comprise only 3 percent of business tax receipts. So despite their sheer number and despite their overall economic and cultural importance, this group of SOHOs is invisible to the government, at least for the purposes of having access to business-supportive policies and resources that stem from statistical prominence.

The multitude of definitions of small business and the exclusion of most self-employed or single-person enterprises from many statistical surveys and reports create problems in discussing and meeting the needs of the majority of small-business owners. The U.S. government hasn't yet caught up to the reality of solo or SOHO entrepreneurship. According to the SBA Office of Advocacy's 1998 State of Small Business report to the president, "static data cannot be used to measure dynamic change."[6] While SOHOs are increasingly recognized for their economic and cultural importance in other countries, SOHO-supportive policy making consistently lags in all countries, particularly the United States. Yet even while imperfect, the existing data can be pieced together and mined for clues as to why small business—and particularly big-vision small business—is so vitally important from both economic and cultural perspectives.

I've elected to rely upon the SBA microenterprise or SOHO definition of 20 or fewer people, since many of the big-vision business tenets can be more deeply explored and adopted in groups of this size or smaller, for reasons I share throughout this book. Since most statisticians rely on a variety of numerical definitions for small business or are altogether vague about what measure they're using, it's not always possible to include breakdowns of statistics as they relate specifically to SOHOs.

The Contributions of Small Business to Society

The good news is that the value and increasing visibility of microenterprises and SOHOs is resulting in additional research to quantify the contributions made by this particular group of enterprises. Even people who readily quip, "Small businesses are the engine of the economy," are often very surprised when presented with the specific reasons that underscore the truth of this statement, including the fact that the majority of those small businesses are, indeed, very small in size. Do you have doubts about the clout of the smallest companies, particularly those that are both aware of and intent upon leveraging these potential strengths? Consider the following:[7]

THE SMALLEST BUSINESSES ARE NUMEROUS

Nearly three-quarters of all U.S. businesses are self-employed individuals with no one else on payroll and are responsible for $580 billion in sales. SOHOs, those small enterprises with 20 or fewer employees, comprise one of the fastest-growing market segments, with more than 31 million SOHO enterprises in the United States as of 2001, spending an average of $103 billion each year. According to the Entrepreneurial Research Consortium, another 7 million people are considering business ownership or self-employment. All of these sectors—self-employed persons, home-based offices, small offices—are expected to grow in number and strength in the coming years. These statistics make clear that the vast majority of businesses are not just small businesses but very small businesses, and they're an increasingly relevant group economically and culturally.

THE SMALLEST BUSINESSES CREATE JOBS

In fact, small enterprises don't just create a few jobs, they create the majority of jobs, representing 99.7 percent of all employers in the United States. Between 1992 and 1998, small U.S. firms created nearly all of the 12 million net new jobs. The smallest of those, businesses with fewer than 20 employees, generated more than two-thirds of the new jobs. Firms with fewer than five employees generated just over half of those new jobs. The Office of Advocacy also reports that small enterprises are more likely to employ inexperienced and older workers; offer greater opportunities for women, minorities, and immigrants; and provide welfare-to-work or other opportunities for financial self-sufficiency. Since home-based and small-office businesses are both numerous and resilient, they create jobs directly through their own hiring, and also their spending. After all, SOHOs purchase office furniture, supplies, telephones, computers, bank services, and all of the other products and services necessary to run a business—products that often come from larger companies and whose purchase stimulates the creation of jobs to support manufacturing, shipping, and sales.

THE SMALLEST BUSINESSES FOSTER ECONOMIC DIVERSITY

Small businesses help create a more diverse, resilient economy, allowing a greater variety of products, industries, and participants. Unlike one-company or single-industry towns, communities with a healthy contingent of small, locally owned enterprises are less vulnerable to a recession or an economic downturn that affects a particular industry. In this way, economic diversity fosters a greater degree of local self-reliance than would be the case when a locality relies too heavily on a small number of large corporations whose fortunes are tied to the fickleness of Wall Street analysts or global market shifts and whose investors and decision makers may live far from (and thus care little about) that community. And as the Office of Advocacy's State of Small Business report emphasized, the smallest enterprises contribute to diversity through innovation and creativity and offer opportunity for both self-sufficiency in financially disadvantaged communities and advancement for minorities, women, and immigrants.

THE SMALLEST BUSINESSES CONTRIBUTE UNIQUENESS

In addition to featuring an environment defined by the personality of an individual business owner, small enterprises offer a more unique array of merchandise and a more personalized buyer-seller connection or service level that augments the products and services offered by large corporations or chain stores. If you visited five cities that had only chain stores, the stores of each chain would differ little from one another, but you'd know what to expect regarding the atmosphere, merchandise, and service. When you add local boutiques, bakeries, restaurants, and bookstores to the mix, the places take on a more unique flavor that makes each more of an adventure for the visitor, and more like home for those who live there.

THE SMALLEST BUSINESSES OFFER QUALITY OF LIFE

Small enterprises are personal enterprises, often focusing on the community or region and increasingly operating wholly or at least occasionally from a home-based office. A small-business owner has more control over decision making that affects the time he spends with his family or on other non-business interests, as well as over decisions that affect the quality of his own workday. If there is a schedule conflict, he can more easily choose to plan around it. If an ideal project or client profile crops up, she can choose to plant the seeds that will grow those opportunities in her business garden for the next season.

In addition, small businesses are often associated with community service and the quality of life of others. Examples of small business-dominated service industries include restaurants, retail services, outpatient care facilities, health care-provider offices, residential care facilities, special trade construction contractors, architectural and engineering services, computer and data-processing services, day care providers, job training, and counseling and rehabilitation services. Such industries accounted for about 64 percent of the 2.5 million new jobs created in 1996 alone. And that's not the extent of small businesses' contributions to local quality of life. Small businesses donate more in cash and in-kind services—$800 per employee—than do their large-organization counterparts.[8]

DAVID AND GOLIATH

This isn't to say that big companies or even megacorporations are irrelevant or unnecessary. They have their place and the potential to make a positive contribution as well, particularly in areas requiring large-scale manufacturing, mass distribution. Even a company like Apple Computer, whose sales account for less than 5 percent of the computer market,[9] requires a sizeable employee base to conceptualize, design, manufacture, and distribute its products in their competitive industry. The same could be said for larger companies that manufacture and distribute lifesaving medical equipment and medications, for example, and transportation and communications companies that help connect those in need with the people and products that can improve health, community, and quality of life. These examples demonstrate areas where a larger organization can be more effective than an informal network of small enterprises.

Proponents of large corporations also note, justifiably, that these companies also create jobs and provide employment and a sense of community for people who prefer being a part of a larger enterprise. While it is a myth that large firms create the majority of jobs or provide more-secure employment, given the regularity with which they swell their ranks only to lay employees off in droves, large corporations often have the greater financial resources necessary for such things as employer-matched retirement programs, subsidized health plans, on-site day care or cafeterias for workers, and funding for social-responsibility initiatives. These are benefits many employees find desirable in their search for some degree of perceived security. Yet not everyone agrees that such benefits ensure security, much less provide an indication of actual caring for the employee or other stakeholders.

This was evidenced by the collapse and ensuing ethical scandal involving Enron Corporation in 2002, where the crack in the company's "good corporate citizen" veneer revealed a plethora of unethical practices and organizational culture norms that resulted in significant loss and pain for both employees and average investors. Big-vision small-business owners, while perhaps not having the economies of scale to offer such lucrative financial perks as Enron had, would not choose such unethical and deceptive practices. Nor would their small size and local visibility allow them to conceal such practices easily (or make them as immune to accountability afterwards).

"Never doubt that a small group of thoughtful, committed people can change the world. Indeed, it is the only thing that ever has."

MARGARET MEAD

According to author, professor, and sustainable-business advocate David Korten, the corporation is a legal instrument created for the purposes of making money, rather than an entity concerned with community stewardship or quality of life. In a dialogue with Paul Hawken in Yes! A Journal of Positive Futures, Korten emphasizes that the greater contribution is made by more mindful, human-scale enterprises—such as local bakeries, small farms, boutiques, hardware and book stores, and cafes—whose owners live and work in the community and are therefore accountable for their effect on the local quality of life.[10] While a large enterprise might itself provide an on-site day care, gym, dry cleaner, or cafeteria, for instance, a network of small businesses within a community can offer the same.

When considering the value contributed by large versus small organizations, one isn't necessarily better than the other, but one or the other may be a better career and lifestyle choice, and organizational size does affect the organization's ability to remain true to its vision. Such consideration most definitely challenges commonly held assumptions regarding both large and small business. Regardless, the smallest businesses—those place-based, human-scale organizations Mr. Korten describes—are able to make a significant positive contribution to sustaining the healthier workplaces and communities where most of us spend a good deal of time.

So small businesses contribute in both tangible and intangible ways to the communities in which they reside, a point reinforced by the renaissance in downtown revitalization and the trend toward new downtown centers under development in so-called soulless suburbia. According to journalist Craig Savoye of the Christian Science Monitor, 30 to 40 new downtowns are planned or completed in suburban communities, and about 6,000 cities have downtown renovations in progress. Why? According to Savoye and others, people have an increasing need for local community as the world becomes faster, more global, and technology-driven. Savoye dubs the trend "a civil war against the United States of Generica."[11] What's the typical vision of the quintessential downtown? Rows of Main Street-style small businesses offering personalized service, a sense of community, and a variety of nonhomogeneous shopping options and providing an array of high-quality services that also support the needs of an area's larger corporations. In our "post-9/11" world, a higher degree of personalization, humanity, and connection—not to mention local self-reliance to help protect a bit against global shockwaves—become more important than ever.

Vision-inspired businesses aim to consciously make qualitative contributions, and these average-yet-extraordinary people invest their time, passion, energy, money, and other resources to create and sustain such businesses. The following chapters take a look at some pros and cons of operating a small versus large business and share real-world stories of how four big-vision small-business owners came face to face with choices regarding qualitative and quantitative growth.

Chapter 3

WHICH IS BETTER, BIG OR SMALL?

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FOR A MORE DELIBERATE consideration of what growth can and should mean for an individual business and its owner, you might begin with an understanding of the advantages and disadvantages of small versus large organizations. This seems an obvious point, but it's amazing how frequently business owners overlook this consideration in the face of external pressure to add people, revenues, production capacities, or locations. In truth, opting to have fewer employees or one location is the perfect choice for some small-business owners, while growing in size is a necessity for others. Big-vision small-business owners make sure they're not just aware of but building upon the strengths associated with small-size enterprise, just as they know about and work around the disadvantages. Indeed, they view this very exercise as an opportunity for qualitative growth. So what makes them decide to revel in small size? And at what cost and benefit?

THE PROS AND CONS OF SMALL SIZE

The advantages of small-scale organizations or groups are matters of quality and depth—of vision, relationships, communication, adaptability, evolution, creativity, and contribution. And quality of life. Qualitative excellence—that master-craftsman level of refinement—goes to the very heart of what's more possible in a small group.

According to group dynamics experts, the optimal size for a highly functioning group is five people.[12] Why just five? In a group this size, there are enough participants to allow for multiple perspectives but few enough to avoid the separation into divisive factions that begin to hinder efficiency and the quality of relationships in larger groups. Also, the smaller the group, the greater the opportunity for personalized connection (and the personal accountability that such visibility demands) and the less need there is for bureaucratic processes, systems, and layers. These are some of the reasons that Navy SEAL teams and other highly specialized units tend to have eight or fewer people.

What are some of the specific qualitative factors that distinguish an effective small group, the kind that big-vision small-business owners consciously cultivate and put to work?

? SMALL GROUPS CAN BE MORE EFFICIENT.

Without layers of corporate hierarchy (which are required to run a larger organization effectively), the small enterprise is less bureaucratic and more nimble. Its response time is quicker because the distance between "decide" and "do" is much shorter. Just by virtue of their size, small enterprises require less overhead—office space, supplies, payroll, equipment, furniture, insurance—which can translate into lower expenses and, in some cases, lower fees.

? SMALL GROUPS CAN BE MORE CREATIVE.

Innovation is a hallmark of smaller enterprises, again in part due to the lack of hierarchy and bureaucracy that hampers the chaos required for creativity. Innovation applies not only to product development, though about 50 percent of new inventions are associated with small firms, but also to creative approaches to providing services. A large organization finds its efficiency and reliability in order, quality control, process, and the hierarchy necessary to keep the many units of a large enterprise functioning compatibly.

? SMALL GROUPS CAN BE MORE PERSONAL.

For the same reasons, a small enterprise can offer a more personalized connection to the customer or delivery of a product or service. Because it has fewer people and locations, and presumably lower overhead expenses, a small enterprise is able to offer deeper connections and be more selective in its work. The vision can be more connected to personal interests, spiritual beliefs, and lifestyle preferences. Communication can be more personal, less formal or systematized. The greater the overhead and distribution and the more complex the organization, the more the focus turns to quantifiable processes, activities, and measures that generate the revenue needed to sustain the enterprise and provide profit to a broader array of shareholders. As it grows in size and overhead and becomes more dependent on external investors, the organization moves by necessity from a subjective, personal focus on building relationships to a more objective, process focus on generating revenues.

? SMALL GROUPS CAN BE MORE SPECIALIZED.

As is the case with right relationships, which is a form of specialization, a small enterprise can distinguish itself by offering depth rather than breadth, a greater level of distinctiveness and craftsmanship instead of the quantity a large-scale operation can provide. Whereas a larger organization or multilocation franchise relies upon standard processes and tolerates fewer deviations in order to meet operating goals, a small enterprise can personalize, customize, experiment, and even be downright quirky in its product offerings and service delivery.

? SMALL GROUPS CAN BE MORE FLEXIBLE.

Just as small boats can turn more quickly than large ocean liners, small enterprises can shift and adapt more quickly than can large corporations. Why? Several factors lend themselves to flexibility: fewer layers, lower overhead, and greater compactness or localization. Greater flexibility can translate into benefits such as an ability to accommodate customer preferences or requests and responsiveness to abrupt market shifts. Small size and independent ownership more easily translate into a greater willingness to take risks or deviate from the business plan, which is less likely in a publicly owned corporation that is expected to deliver ever increasing profits to investors. This may be one reason that market niches can be more readily exploited by smaller, innovative firms, with some of the resulting products and services adopted and expanded by large corporations with greater resources and reach.

? SMALL GROUPS CAN BE MORE ACCOUNTABLE.

As is the case in any tight-knit community, breaches of trust and responsibility are more immediately visible and have a more immediate effect. In a small group, for better or worse, there is literally no place to escape accountability. Individuals in a small enterprise can't hide behind a huge brand or public-relations machine nor lurk unnoticed in one of hundreds of cubicles in corporate campus buildings. If someone doesn't do his job, it doesn't get done, and everyone knows it. The visibility and small margin for error in a small business create a more stringent requirement for personal efficiency and accountability. In a large enterprise, timelines stretch, and committees, departments, or operating divisions, not individuals, become the focus for organizational performance-related expectations. If one branch of a well-established company—a large advertising agency, for example—botches a project or loses a client, it doesn't affect the other units unless the backlash is enormous. A large enterprise absorbs such occurrences more easily. A small group is more immediately and significantly affected.

? SMALL GROUPS CAN BE MORE RESILIENT.

The owners and principal members of a small enterprise are so personally invested in the business that failure is not an option. The small organization is more about the idea, the vision, which continues to exist regardless of market cycles, infrastructure shifts, or even individual failures. Small enterprises can also be more resilient because of the familylike dynamic and thus the personal connection with or investment in the organization's vision and survival.[13] Closing one's business or leaving one's enterprise is like divorcing one's own identity or family; it happens, but is less likely to occur without a deeper level of thoughtfulness, particularly in a big-vision small business that has cultivated the vision, fostered the level of relationship, and enhanced the meaningfulness of the work by connecting personal interests—or even a vocational calling—to organizational mission.

REFLECTION POINT

? How would you evaluate your group against the above strengths?

? How does your group leverage these strengths?

? Are there strengths that you associate with your enterprise that

aren't on this list?

DISADVANTAGES OF SMALL-SCALE ENTERPRISE

And what of the limitations or disadvantages of being purposefully small-scale? As with everything, choosing to keep an enterprise small in size has a shadow side. Whether the shadow factors are a problem or a catalyst to creativity is a matter of choice and circumstance. The very strengths of small enterprise can turn on their heads to become limitations. For example, the primary disadvantages associated with small enterprises or groups include:

? Limits in distribution capacity

? Limits in access to funding

? Limits in breadth of services or products

? Limits in objectivity

These areas are often identified as large-company advantages, and with good reason. Manufacturing and distributing a product requires more people, equipment, and supplies. If you need a reliable network for coast-to-coast or worldwide transportation, it may be somewhat chaotic to count on a large number of two-person enterprises. While not immune to its own challenges, a large corporate structure can provide the consistency and stability required for endeavors that are geographically far-reaching. Having more people, equipment, and supplies requires greater access to capital, and a tangible inventory also increases the likelihood of obtaining the necessary financing, even if the corporation is troubled. This was evidenced with Kmart's bankruptcy in 2002, when the company received access to $2 billion in loans even though its performance record had been poor and its future viability was sharply questioned. In addition, the checks and balances of multiple levels of hierarchy, and the need to report to outside investors, can increase the need for objectivity in researching, planning, and moving ahead with new initiatives.

As an enterprise moves from qualitative to quantitative business, or from services to material products, it becomes more focused on objective, quantifiable, external factors and less reliant on deeply personal vision, preferences, intuition, inspiration, or relationships. That the former can be more readily quantified puts bankers at ease, and makes it easier to associate the enterprise's function with the standard activities of the industrial age. Enterprises that rely more on personality, relationship, and service are harder to quantify, more difficult for data-focused people to understand. And thus they seem riskier than do the quantifiable, tangible enterprises. Though the massive dot-com failures and other corporate ethics scandals demonstrate the shortcomings of this thinking, it is nonetheless the norm in policy and finance circles, which might otherwise, with greater awareness, be more supportive of small-scale enterprise.

What's more, being a member of a small, SOHO-size business, with its deeply personal connections and high levels of personal visibility, can be too painful for some people. This is particularly true when the leader and employees of the enterprise wallow in familial dysfunction and don't practice the tenets of a big-vision small business.

And how do these themes play out with real-world organizations? According to Keith Rollins of The Resource Hub, the one-stop entrepreneurial resource center in Portland, Maine, specialized consulting companies with a regional or local niche might choose to remain smaller in size, focusing attention and resources on honing skills in their area of experience and the service they deliver. A retailer who wishes to cultivate a unique inventory featuring local artisans might also do well to remain small in size and big in vision. If a company owner wishes to concentrate on a specific, exquisite-quality product, such as the uniquely illustrated leatherbound Bibles created by one successful San Francisco company, he might do well to cap quantitative growth to ensure that profitability doesn't require a product-line expansion or less exacting quality standards. Similarly, if a big-vision business owner wishes to maintain an unstructured or familial work environment in which right relationship is practiced with internal and external stakeholders, she might be better off limiting quantitative growth that would require a more formal, structured workplace.

Rollins agrees, however, that manufacturing businesses, for example, usually require a minimum number of people to produce their product and a larger number of people to expand the product line or the market reach. Oakland-based certified public accountant Sandy Collins, who advises many small-business owners, holds a similar perspective.

If you're in a retail environment or product-based business that is subject to standardized processes, then you can choose to grow in number more easily. Growth becomes more a function of finding the right people than of maintaining a highly specialized service or quality level. If you have processes, routines, and procedures documented, then anyone walking in with a minimum degree of skill or experience can do the job. But if what you focus on in your business is highly refined quality and personalized service, the smaller you stay the better you are, because you can hire for fit versus quantity, and continue to give your clients the high level of customized expertise and service they expect.

Collins also advises her clients to consider personal preferences, skills, and lifestyle goals in deciding whether to expand the business quantitatively:

If a business owner sees the business with the idea that they're going to sell it eventually, or they don't see themselves doing the same thing in 10 years, they might choose to grow a salable business. But other business owners have no interest in doing something different from their craft or the small niche market they've created. They don't want to do what happens to many unsuspecting business owners who choose to add people and expand facilities: they end up marketing, administrating operations, or managing people rather than doing what they started the business to do.

One thing is certain: a small-enterprise leader will be wise to consider and build upon the strengths associated with and more possible in a smaller group. A big-vision small-business owner, having reflected on (and for good reasons rejected) the lure of quantitative growth, turns to qualitative growth as a way of pursuing her vision, enhancing the business's competitive edge, deepening relationships, maintaining a particular lifestyle quality and balance, building wisdom or honing skills, and keeping the business fresh.

The next chapter takes a closer look at some of the assumptions concerning quantitative growth, helps to clarify the definition of qualitative growth, and is followed by a series of profiles of four big-vision small-business owners that help bring to life these growth-related issues and decisions.

Chapter 4

MOVING FROM QUANTITATIVE GROWTH TO QUALITATIVE EVOLUTION

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BIG-VISION SMALL-BUSINESS owners seek a definition of growth perhaps more aligned with evolution than quantitative expansion, focusing more on questions such as "How?" and "Why?" (versus "How big?"). Requirements for ongoing qualitative growth and mastery include having a clear, idealistic vision; a bridge between vision and action; an emphasis on creating right relationships; and a strong "supporting cast" of wisdom and mastery practices that both inspire and sustain.

But how do we begin to challenge our limited perception about the ways an organization can grow, much less challenge society by embracing a definition of growth or entrepreneurship that is outside the celebrated norm? We can start with a few prevailing definitions, strip them of common associations with size, and adapt them to meet the needs of a big-vision small-business owner—an entrepreneur who opts for deep refinement in the tradition of the master craftsman.

For example, in his 1999 Leader to Leader article, "The Growth Imperative," author and University of Michigan professor Noel Tichy emphasizes that leaders can find opportunities for growth in several areas: finding new ways to serve existing companies, finding new customers for existing products and services, or identifying new products or services for a new set of customers.[14] Though Tichy is talking mainly about large corporations that might routinely create new divisions to accommodate such growth, these categories are relevant to the big-vision small-business owner, who can plot out an evolutionary pathway to introduce these new ways of thinking and working.

Contributing another perspective on quantitative growth, Larry Greiner, in his classic 1972 Harvard Business Review article, "Evolution and Revolution as Organizations Grow," said that management, eager for quantitative growth, "overlooks critical development questions such as: Where has our organization been? Where is it now? And what do the answers to these questions mean for where we are going?" Instead of asking the necessary introspective questions, argued Greiner, organizational leaders are inclined to focus on external factors such as market performance, which are less relevant to an organization's guiding vision.[15] Small-business owners can certainly ask these very questions, among others, for a deeper understanding when they find themselves talking about numerical expansion.

Another assumption many business owners make is that growth is something that can be meticulously planned and managed. Not so, according to London Business School economist Paul Geroski. Based on Geroski's studies, growth in companies large and small is erratic and random, a pattern he calls a "random walk." In reviewing a variety of available data on company growth, Geroski challenged the popular notion that company growth can be analytically studied and predicted. In addition to the theory of random growth, Geroski found that growth is not so much affected by the general strength or weakness of the economy or the company's industry niche as it is by innovation.[16]

Unfortunately, these and other assumptions about growth lead some business owners right over the cliff. For instance, they may succumb to pressure applied by advisers and investors to expand the enterprise in order to survive and stay competitive. Such was the case of John Peterman, founder of the J. Peter-man Company and proud owner of what is now a cautionary tale about the pitfalls of quantitative growth.

Peterman founded his retail company in 1987, after stumbling across a cowboy-style duster coat that he loved and thought others would as well. He was right. The J. Peterman Company, guided by Peterman's vision of retailing the romance of another era, became known for its creative inventory and readable catalog, which the company called its Owner's Manual. By the end of 1990, the company had grown quickly to more than 75 employees and nearly $20 million in revenues. The fast-growth path had also set the stage for the company's ultimate fall from grace into bankruptcy not 10 years later.

"But it's never a good idea to grow just because you're desperate, where you're hiring people who may not be right for your environment. It's better sometimes to call and reschedule clients so that when they do come in, they get the quality service that your reputation has been built on."

NINA UMMEL

In hindsight, Peterman tracked the problem to the elements inherent in the rapid expansion, including hiring for numbers rather than fit; recruiting executives from outside the company while systems and processes were changing; shifting from the original vision and intuitive marketing style to a revenue-generating model preferred by financiers; and adopting other expansion-mode practices like more frequent direct mailings, the proliferation of J. Peter-man retail stores, and a broadening of the inventory away from the company's original focus. Where the emphasis had once been on the romantic image, unique inventory, and creative style, it had been refocused on new ways to expand reach and grow revenues. The company collapsed under the pressure, and J. Peterman Company went into bankruptcy in 1999 and was purchased by Paul Harris Stores. The company's founder found himself without a company, and out of a job.[17]

In other cases, our choices regarding the size and evolution of our businesses are reactive—a result of unexpected and often unwelcome crises such as employee turnover, canceled projects or accounts, market fluctuations, or cash flow shortages. In the face of these types of common challenges, some business owners close shop or claim bankruptcy, while others dig deep to reconnect with their originating vision, find resolve, put together a turnaround plan, and begin a transformative journey that may require them to be more deliberate and aware regarding their expectations about—and options for—growth.

Kevin Owens agrees, and offers a perspective about growth that has been hewn from personal experience. Owens cofounded Select Design, Ltd., in Burlington, Vermont, and quickly grew the enterprise from a two-person partnership to a company of 50 employees. His firm's growth spurt had its rewards but also created unforeseen problems that led Owens to new insights:

It's a simple point, but easy to miss: We were so focused on capitalistic growth that we forgot ourselves and our families. It's a lot nicer feeling when we remind ourselves that we don't have to buy that new piece of equipment or hire 10 new people over the next year. We can, but we used to do that because we thought that's what everyone does, that's what a business is supposed to do. But that's not the way it has to be. The only reason to grow a business or make it different is if it makes our lives better, and if it affects us and our families positively.

Transformative Small-Business Journeys

Unfortunately, many business owners view organizational growth too narrowly, perceiving far fewer options than in fact exist. So it isn't until a crisis forces a decision that they review potential avenues for action. While we can certainly be creative in the face of crisis, if we wait until then our choices are often more limited. By looking at the experiences of other business owners regarding the journeys through which they and their companies have evolved, perhaps more of us will reflect on these options for growth before a crisis forces our hand or will choose more purposefully in the face of challenge.

What follows are honest profiles of the journeys taken by four big-vision small-business owners as their assumptions about business, growth, success, and meaning were challenged by recessions, booms, employee turnover, intellectual property theft, and a variety of other circumstances common in running a business. Each of these company owners has had frontline experience with quantitative growth and has found that the meaning of growth is far richer than they might have ever imagined. Their journeys became their teachers, and they share what they've learned. In reading the vignettes from these four big-vision enterprise leaders, you may recognize patterns and learn from their experiences, so that their stories can inform your own perceptions and decisions about growth as it relates to you and your business.

Chapter 5

PROFILES IN GROWTH

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DID YOU EVER WISH you could step for a brief time from your world into someone else's small-business reality, just to gauge how others go about making crucial decisions, find out what they do when they make mistakes, or learn something you could use to refine your approach to your own business? Here's your chance. In this section, you'll meet four big-vision small-business owners—Stephen Marcus, Tony Canaletich, Shelby Putnam Tupper, and Nina Ummel. The profiles are snapshots into their experiences with and insights gained from growth that confronted or eluded them at some point on their journeys as business owners. Since each business owner's story is unique, the profiles vary in length and composition.

And yet there are similarities, too, in that the challenges they faced deepened their experience and knowledge base, demanded clarification of their vision and reasons for being in business, and altered their perspectives about growth. By sharing their stories, they help all big-vision small-business aspirants view their own enterprises and journeys with greater clarity, patience, inspiration, and wisdom.

Perseverance: The Journey of Stephen Marcus and AIRS International

No one knows the transformative power of unexpected challenges more than Stephen Marcus, founder and president of AIRS International, a San Diego-based fragrance products company. After years in the fragrance industry, Marcus started his business in 1989 and appeared on the Inc. 500 list of fast-growth companies in 1993-94, having taken the company from $100,000 to $3 million in revenues in just a few years. It was in the mid-1990s, fresh off several high-growth years, that things started to unwind for Marcus and AIRS.

"You reach a point where you've got a place, you start buying equipment and hiring more people, and things are just rolling," says Marcus. "Then you decide you want to grow the company further, so you start hiring so-called professionals, and the people who helped you in your start-up phase start to seem antiquated in comparison."

For Marcus, hiring a series of senior people from outside the business was one key element that sent the company into a tailspin from which he spent several years recovering. In addition to Marcus's challenge with a growing staff that was increasingly in conflict, a glitch surfaced in the manufacturing process for a new product in which he'd made a significant investment. According to Marcus, the company consequently became vulnerable and fell prey to a less than ethical investor who, in short order, hired away several of his key staff members, along with the proprietary knowledge they possessed, and established a competing business. With the loss of knowledgeable employees and a subsequent lawsuit to prevent the new competitor from using its client lists and other confidential information, AIRS teetered on the brink of bankruptcy, and Marcus found himself at a crossroads. In the face of a severe financial and business crisis, Marcus said he opted to rise to the challenge, put together a plan, and go back to the basics of what made the company a success in its earlier years.

"The trouble with the rat race is when you win, you're still a rat."

LILY TOMLIN

"We've had a lot of expensive lessons about doing business," says Marcus, "but we've gotten through that period and out of the resulting debt." He adds that the things that made the company unique at the beginning, such as the inspired fragrances and the company's mythology-infused and story-rich packaging, ended up too easily in the hands of competitors. "But our competitors made the mistake of thinking that what they were copying was just packaging, and AIRS is about more than that," Marcus says of his vision of bringing people together in a greater appreciation of beauty and nature. According to Marcus, who now has the wisdom of hindsight, the experience wasn't without a silver lining, however stiff the challenges.

"In retrospect, it's clear that the crisis situation forced us to grow and get creative about what really distinguishes this company, and about who we really are," says Marcus, who went on to rebuild his team, redesign the product packaging, launch the company's Web site, and pursue new products and markets. While running the company isn't without fresh challenges, AIRS products can be found in a growing number of retail outlets, and Marcus feels the company is more grounded in its originating vision.

Redemption: The Journey of San Francisco Renaissance

For Tony Canaletich, cofounder and president of San Francisco Renaissance, expansion was the logical path during the real estate boom of the 1980s. His niche-concept renovation construction company grew to well over 100 employees, and he and his two business partners found themselves executives in a large, thriving business. More than a decade later, Canaletich is happily leading a smaller team of 14 employees in a transformed company that once again focuses on its originating vision and superior craftsmanship on some of San Francisco's oldest Victorian homes.

What happened to San Francisco Renaissance in the interceding decade? Nothing less than a total renovation of the business, a renewed appreciation for the advantages of a smaller, tightly managed organization, and an owner's reac-quaintance with his founding vision for the company. "I started San Francisco Renaissance because I love these old houses in San Francisco and I hate seeing them torn down," Canaletich says. "So that mission of restoring Victorian houses, for me, has a very high value. I wanted to stick to the purity of my vision, which was either to build something that would last for at least a hundred years or to work on something that needed restoration in order to last another hundred years."

Like many business owners, Canaletich has the satisfaction and wisdom gained from persevering through a crisis that threatened the very existence of the business. A different feeling comes from being able to see and talk about such a challenge from the other side, having weathered the challenge a bit wiser and perhaps more resilient for his troubles, which started with the temptation to grow with an economic boom.

? EXPANSION

"It's tempting to grow, because your gross sales are easy to expand. The numbers go up, and it's exciting for everyone," Canaletich says. "New people come in and everyone sees the gold mine, but what they don't realize is that it's temporary. I've learned that market booms don't go on forever." Canaletich and his two partners rode the wave, increasing to 150 employees at the firm's numerical peak. And, as with many rapidly expanding companies, Canaletich saw what he now believes was a negative effect on the owners' roles, as well as on the quality of the firm's work, its organizational culture, and financial health. "We were doing so many jobs in the late 1970s that I didn't even know about half of them," he remembers. "We had supervisors, and I was basically an executive."

As the company grew in size and his role changed from craftsman to company officer, Canaletich found himself more distant from his clientele and field employees and more focused on getting increasing numbers of large accounts. As the client list grew, the company's mission—and stability—shifted. "We were going to be the biggest remodeling and reconstruction business in the Bay Area. That was our bottom-line goal," Canaletich says.

For many people in our culture, looking in from the outside, such a fast-growing business, with its 150 employees and hefty client list, appears the ultimate success. But not for Canaletich, who saw quality and financial issues—as well as the marked departure from his founding purpose—as increasing problems. First, the company's rapid growth required aggressive hiring. "When you're hiring for expansion, the pressure is so monumental to fill those slots and get the numbers up that you make compromises," he says regarding the fit between the employment candidates and the company's core vision. With the quickly growing roster of new employees and clients, quality deteriorated.

"We were in such expansion mode that our quality and customer service started to suffer," says Canaletich. "It's really hard, with new personnel and an old system, to keep that system running at 100-percent optimal. You find yourself maxed in terms of key personnel time and resources, and when the economy finally started to contract, we had clients out there who weren't as satisfied as they should have been; and those are the key clients you want when the business does slow down."

"Also, when there's a boom, you can borrow a lot of money to fund an expansion," says Canaletich. "We were able to get loans based on the amount of business we had at the time, and we were able to borrow more money than we'd be able to pay off, personally, if the business became no longer viable."

? CONTRACTION

When the construction industry flattened in the early 1980s, Canaletich and his partners found that their worst fear had come true. "We had all these construction loans out, but we were no longer doing several million dollars worth of business, and we were no longer able to pay the loans," he remembers. "We had to default on some of the loans but were lucky enough to be able to work with our bankers, who gave us time to pay back the money we owed."

The effects of the firm's financial crisis unfortunately didn't stop with renegotiating loan payment terms. Seeing that the company was on the brink of collapse, Canaletich decided to radically reorganize and return to the ideals upon which the business had been founded. A painful part of his reorganization plan was downsizing to 10 employees and having to go forward without the participation of his two business partners.

"It was a very devastating experience, and there was a great sense of shame," he offers candidly. "But I also thought, ‘This could be an opportunity; this could be where I tailor this business to be more of a lifestyle than the expansion business it had become.' I realized that wasn't the lifestyle I wanted to live; it didn't make me feel good. What makes me feel good is doing a job well, knowing the client, making sure the job's done with a high standard of quality, and getting paid for it."

? REDEMPTION

Canaletich found himself wanting to rebuild the business not from the perspective of size but with a strong grounding in its vision and a connection to how craftspeople had once operated: "When the craft system was first developed, one's life and what one did for a living weren't separate, and certainly weren't separate from one's spiritual life."

With the gift of the wisdom gained from the crisis, Canaletich now caps expansion during building booms like the one San Francisco enjoyed during the 1990s, opting to add employees carefully to ensure a compatible devotion to high quality and the building craft. "If I allow myself no more than 25 percent expansion during a boom period, I can accommodate that with a minimal impact when the market contracts," he says. "I've learned to be realistic when business is booming, meaning I have a target for how many jobs I can do and what my gross sales are going to be, and I don't go beyond that. It's really learning to say ‘no,' and knowing and sticking to the limits required by my business to function at its peak." And also learning, Canaletich says, not to succumb to the prevailing trends during a boom.

"It comes down to a choice you have to make, and not getting caught up in the mass hysteria," he says. "There's a momentum that seems to happen when the company is doing well and the economy is strong. It's like the Gold Rush, with a lot of speculation. The companies that emerge through that have a very clear vision of their capacities and their limits, and of what they want to achieve, and they stick to it regardless of the mass hallucination."

Renewal: The Journey of Shelby Designs & Illustrates

When the crisis at hand is the result of a blazing dot-com employment market and staff turnover, the stress and expense can be significant, and the whole experience can test the business owner's resolve. For Shelby Putnam Tupper, founder of Shelby Designs & Illustrates in Oakland, California, a staffing crisis—during a period when demand for graphic designers was high and she was starting a family—took her to near breakpoint and back to basics. The result? A thorough spring cleaning and a renewed sense of momentum and enthusiasm for her six-person graphic design company.

Tupper's firm produces award-winning work for an impressive array of clients ranging from wineries to health care systems and technology companies. She and her staff produce memorable visual images, and she's very particular about the service provided by her firm, the work environment she creates, and the reputation that results. During her first seven years in business, she maintained a loyal staff with little turnover. Thanks to the dot-com boom with its frantic hiring and inflated salaries, she also survived a several-year period during which she saw more than 20 staff members come and go. That experience was the source both of extreme stress and of dedication to renewal. "I feel traumatized by the last several years," she says. "But we're still here, and we have a greater number of clients, the majority of whom are very, very happy. It was the skeleton beneath the business that needed repair."

"We grow because we struggle, we learn and overcome."

R. C. ALLEN

Tupper started her firm as a one-person, home-based business in 1989 and soon after hired her first employees: a part-time intern and a full-time multital-ented staff member. "All three of us were in the upstairs bedroom," she remembers. "The living room was turned into a reception area, the dining room turned into a conference room, and it got so crazy we finally moved the business out of the house."

Tupper maintained her group of three for another year, before a growing client list prompted several additional full-time hires, bringing her staffing roster to about six—a number she considers near optimal to maintain the variety of work and office atmosphere that is consistent with her vision. For a period of several years, business was constant, client referrals increased, and employees stayed with the firm for several years at a minimum. Then, in 1997, in the midst of the dot-com frenzy, several longtime staff members left the firm, starting a rumbling that would become a several-year avalanche.

"It's been very awkward for me, because I've had to replace a lot of people in a relatively short period of time," Tupper says. "Half of those people left for legitimate reasons, like a spouse got transferred. But you have that many transitions and you think, ‘Am I awful? Is my business terrible?'"

Tupper, intent on maintaining the same level of projects and staffing, started what has seemed like a nonstop recruitment effort. Looking for staff members who are dedicated, creative, and professional and fit with the firm's small, highly creative and service-oriented organizational culture, Tupper found herself with limited prospects and worse—designers who would accept a job only to leave for another employer in short order. "You do your best during the interview, and I've got an interview form and a list of questions I ask, and I wouldn't hire anyone who didn't seem like a good match," she says. "Yet I'd list four ads over a period of four weeks and get little in response. On paper, candidates would seem appropriate for an interview, but would arrive with green hair and a bone in their nose, which isn't an image my clients would find acceptable."

Tupper persisted in her recruitment efforts, replacing individuals who left and working nearly around the clock herself, despite having a toddler and a baby on the way in the middle of her staffing crisis. When the situation seemed endless and both her energy and resolve had started to wane, Tupper got a boost in the form of several former employees who returned to help her stem the flow and get the business back on stable ground. "It felt spiritual in nature," Tupper says of the return of her first full-time employee at a time when she was most needed. Two other former employees, one who had been with the firm for five years and left to become a freelance designer, another who had worked part-time while going to school, also returned for temporary stints, allowing Tupper to craft a turnaround strategy and begin to stabilize the staffing situation.

With the help of her team, Tupper put together what she called her October Plan, which called for a reorganization of the 10-year-old business. As part of the program, Tupper and her employees would be reviewing and updating everything from technology systems to client lists and floor designs. For Tupper, a self-described antichange freak, the overhaul was not easy. "I don't like change, and that's not a good quality for a small-business owner. I can be fully aware that things need to happen and put them on the back burner. So, in this situation, I was very lucky," says Tupper about having the assistance of a former employee who was more objective and less reticent about pointing out what needed to be overhauled.

"Having worked with me for several years at the start of this business, she knows I don't like change, I know I can trust her, and we both know that change is necessary right now for our growth. In reviewing everything, we found all sorts of things that hadn't been done properly. I'm just unloading cash on new people, new furniture, new technology. I'm looking at what's wrong, and I'm changing it."

To keep her focus on the highest priorities, Tupper also had to learn to delegate activities over which she'd maintained control. "I'm delegating administrative tasks that I'd held onto because I like to have control," she says. "But I looked at it and saw that by holding onto those tasks so tightly, I ultimately didn't have control at all. It's killing me not to butt in and get focused on [office management details]. It shouldn't matter to me, but it does. But I'm encouraging my staff to fix what's broken and letting them do what they need to do. That's all part of the plan."

While staff members implement the administrative and operational transformation, Tupper gives her attention to business development, client service, and of course, recruitment and employee management. "I've had interviews with existing staff members too," she says, "to discuss the changes and make sure they're happy here. They've committed to riding out this wave, even though it means working extra hours; and in return, I'm remunerating them with extra vacation and other perks."

Tupper also found that her staffing crisis, aside from being the catalyst for a thorough spring cleaning, brought her face-to-face with her original vision. "I started the business to have freedom, and that backfired. I found myself a slave to my business," she remembers. "When I started, I was completely unencumbered, so working until two o'clock in the morning was fine. That was okay and rewarding then; it invigorated me. Now I've got two small children, and I'm pooped." Tupper's October Plan was created, she says, to renew the business and to help create some balance between the demands of business ownership and the other priorities in her life. "I want to make sure the business doesn't collapse if I'm not here, and right now it does. My goal is to balance it out so I can have the flexibility, the freedom for which I started the business."

"It's tough," she continues. "We've got a lot going on right now, and a lot changing. But it's also very exciting. We're updating technology, changing our floor plan, referring inappropriate business or smaller accounts, celebrating 12 years in business, and revisiting our founding vision. We're really streamlining, and there's a lot coming to fruition."

Emergence: The Journey of Ummelina International Day Spa

Although containing quantitative growth is the perfect choice for some small-business owners while a larger business is more appropriate for others, there are times when a business owner finds that, through deliberate expansion, her vision unfolds and the business blossoms. While she may ultimately choose to cap quantitative growth, a certain amount of expansion allows the business to find its optimal size for manifesting her vision. Such was the case of Nina Ummel, whose Ummelina International Day Spa has more than doubled its payroll, from 25 to over 50 employees, and quadrupled its square footage since her 1998 decision to move to a new location and expand services.

"The key to growth is the introduction of higher dimensions of consciousness intoour awareness."

PIR VILAYAT KHAN

Ummel graduated from college intent on teaching inner-city children, a desire that took her from her Indiana farm home to Seattle. When offered positions in Washington's rural areas, she decided that she'd have to create other options for her livelihood. Since her grand-mother was an herbalist, her father a farmer, and her sibling an entrepreneur, Ummel decided to parlay her interest in skin-care, wellness, and education into a career, and ultimately her own business. After five years of work in other salons, Ummel launched her own three-person salon, Ummelina Day Spa, in 1986.

"It was clear to me that the direction everyone was taking in skin care was different from what I envisioned," says Ummel. "I had started using natural products, essential oils, and aromatherapy, which wasn't even talked about then. And there were no happy, soothing environments that supported that approach, so I decided to create my own."

After 10 years, Ummel found herself at a fork in the road: to maintain her business as it was, with about 20 employees in an increasingly cramped space and a resulting inability to take on additional clients, or to expand the business into a larger space that would accommodate a wider client base. She chose to expand. "It was a real debate. For 10 years, I had this little space and got to the point where I felt my wings were clipped. We just couldn't grow anymore. I saw expansion as a way to polish my gem," says Ummel. "I debated whether to stay fairly small, because I was concerned about finding enough high-quality, qualified employees required for an expanded business. Instead, I decided to have more space to allow people to move freely, create an environment, and allow more treatments. I opted to look for new space and grow."

? EXPANSION CHALLENGES

As is the case for many business owners who choose to expand their business, Ummel faced challenges that preceded her staff recruitment concerns: finding an appropriate commercial space and gaining the financing required for her plan. She spent two years searching for a new location in Seattle's increasingly tight commercial real-estate market; while she searched for space, leasing costs in the city tripled.

"It came down to four months before my lease was up, and I still didn't have a space," she remembers. "I couldn't look for a space on the street level, not for a service business. My ideal was to have my retail area at street level and my services either upstairs or down below street level. But every time I'd find a space, the big guys, the national chains, would come in and just blow away my offer. No matter how much the landlord liked me or my concept, the chains seemed like a more secure choice to them."

Ummel finally found a space two streets from her original location, but financing remained a challenge. While she ultimately obtained an SBA loan, the search wasn't an easy one. "Even though I felt very established in Seattle, with 10 years of experience and success with my business, the bankers really didn't understand what a spa did," she says. "I really had to take them by the hand, take them through the business, show them the figures, explain what we did."

The larger banks in the city continued to deny her loan applications—even the bank with which she had a 10-year relationship. "They told me that they might consider it if I had a manufacturing business, but not for the spa," recalls Ummel. At another bank, Ummel was told that the small business department was really just a hand-holding operation for minorities and women while those parties looked for another source of funding. At yet another bank, the loan officer told her they didn't understand her business and wouldn't take the chance. Ummel was finally referred to a more community-oriented bank branch that might better understand the needs of her small business.

"I had to go outside of the city to find a loan," she says. "So it was almost a matter of what philosophy the bank had, with many of the city bank branches being larger as a result of mergers and having offices 25 floors above the street. There was a big difference, for me, between the community bank and the big, downtown corporate bank. The bank was used to loaning money to small businesses, and didn't need all the protocol that the larger bankers required. Large, urban banks just didn't understand small business, and they just didn't get what a service business was about."

From a financial perspective, the expansion was more expensive than Ummel anticipated. "The cost of moving, settling in, finding the right employees, training people—it took more money and more time," she says. She found that costs expanded beyond the obvious, due to inefficiencies following the move and while the company was growing. In addition, making financial projections for the business was completely different since she could no longer use historical, pre-expansion numbers to project future costs. She also found that, due to higher costs for space, her profit margins decreased.

A neighboring hot-dog stand proved to be one of Ummel's frustrations at the spa's new address, primarily because the smell of boiling hot dogs was incompatible with the environment she was trying to create. The owner of the stand was supposed to have vacated the spot prior to her arrival, and she was to have had that space as part of her lease. But the hot dog vendor stayed. Ummel and her group, trying to make light of a challenging situation, nicknamed the business Spa Dogs. But less than one year after moving to the new location, she found herself faced with a surprise—and another challenge. The hot-dog vendor suddenly relinquished the space, forcing her to assume responsibility for the extra square footage or risk having an even more aromatic neighbor. She signed another lease, expanding her square footage, and her risk, well beyond her plan.

"Many people think that business owners are protected from financial misfortune if the company is incorporated, but you're not. You sign everything," says Ummel, referring to the risks business owners take in pursuit of their dreams. Like many of her peers, Ummel found the added risk level inspired her toward greater mastery. "Fortunately, I don't think I'm here to learn the effects of failure. That's a very powerful motivator!"

? THE MYTH OF MANAGED GROWTH

One of the things Ummel heard from her lender, among others, is that the quantitative growth she planned was fraught with peril. "People talked to me about managing growth, how that would be my biggest challenge, and I had no idea what they were talking about," she says. "Now I do. It's like a whole different business."

For Ummel, as for other business owners, quantitative growth challenges fall into several key categories: people, systems, and culture. First, in growing her staff from 20 to over 50 employees in eighteen months, Ummel noticed distinct changes in her employees and in her own role as the group's leader. "I've always loved change, and didn't realize that most people don't," she says. "There's a very clear disorientation that occurred, even in those very qualified employees, as a result of the move to a larger space and staff. We were so crammed in the old space, and now we look for people and can't find them! Everything was in a different place, so finding things was a challenge. Things just don't run as smoothly."

Ummel and her group had to adapt to the larger space and the growing staff and client roster while simultaneously creating new systems for working more efficiently in the revamped business model. Whereas they'd once used only two computers to run the business, they now had many computers, a new network, and new software that required working out a fair number of bugs. "Just the amount of time it takes to computerize functions that we'd been doing on paper has added to the challenge," she says. "We're very close to moving solely to the automated functions, but the biggest concern is that, with our scheduling and record keeping, that's where our money is. If it goes down without a backup, it'll kill us. So we've been duplicating computer and paper for six months until we're confident with the system."

Ummel also found that her familylike group, by doubling in size, had become more factionalized. "Former employees started regaling [new ones with] the good old days, and I noticed that, with people in positions of new responsibility, a more corporate structure started appearing, and people started worrying about who was above whom," she says. "I didn't want to allow that kind of work environment." So Ummel sought out a new vision of her organizational culture and found a new metaphor for Ummelina Day Spa: "It's a village now, a tribe instead of a family, and there are many families within the tribe. So that's how I'm running my business: not as a corporation, but as a tribe."

Having studied herbalism and tribal concepts, Ummel took a closer look at how tribes work and drew inspiration from that to find a new language and build a new culture at Ummelina. Treatment therapists became guides, reinforcing the experience of being taken on a journey at the spa. And Ummel adopted a circular, rather than hierarchical, structure. "It's a circle, rather than a pyramid," she explains. "Everyone is in the outer circle of guides, and we have an inner circle we call the Council. You have the chief and his or her council who have the decision-making responsibility within the tribe. And I created a group called scouts, who look ahead and scout out what's happening. The families within the tribe are divided up into different licensing areas or environments within the spa, and each family has its scout, who talks with the people within his particular group and brings any issues to the Council for discussion."

And the staff's response to this new cultural model? "Everyone comes in with this concept of the boss being at the top and all these people in between. They're programmed like that, whether from school, family, or other work environments where authority figures are the bad guys, the ones who tell you what to do," Ummel says. "So having to figure things out on their own and do them, sometimes that works better than other times. It just takes constant focus and attention, guidance all the time and reiterating that this is how we do things here."

Ummel says she learned a long time ago that not everyone is a right fit for her business. "Some people are better at understanding the concept and working within it than others, but that's what makes the decision of who should be here and who shouldn't," she says. "One of the pieces of advice I most remember when I was a new employer was from someone who said, ‘Nina, you've planted your garden, and you have to weed it.' And you do. There are some people that have to be removed so others can grow and your garden is a healthy one. I know that the right employees only walk through the door when the door is open and other people have left, creating space for them."

To maintain a positive work environment and keep right-fit employees on staff, Ummel offers some standard benefits plus those that are unique to her environment. She offers free classes to employees and clients, and the former Spa Dog space has become a soothing Tea Spa that clients and staff members can use to relax, rejuvenate, host special events, and have educational conversations with the resident herbalist.

? FINDING SUPPORT DURING THE GROWTH SPURT

Ummel has an advisory council that includes one of her investors and a retired banker, and she meets in person or talks by phone with them when necessary. "They've been a tremendous support, sometimes just an emotional support when it gets really scary," she says. "Sometimes it's hard to remember what you've accomplished, which to other people seems pretty incredible. But to me, I'm still trying to create the best. So my advisers are good at reminding me what I've done and what's normal, since I can be very critical of my own business."

Ummel says she also gets support from employees, in the form of feedback on the work environment she's creating, and from her clients. "Hearing from our clients what Ummelina's done for them, what changes we've helped them make in their lives, and how much they enjoy coming in, how much healthier they are and how we're a part of their celebrations, that's a tremendous source of support," Ummel says. "So anytime it feels like it's overwhelming, just get around your clients more and listen!"

? MAKING THE CHOICE TO EXPAND

So what advice would Ummel pass along to other business owners considering quantitative growth for their companies? Not that it will be easy, and not that it's the only sure bet, but that each business owner has to follow his own heart.

"You have to be quiet enough to hear what you're really supposed to do. As business owners, we have the power to make those decisions," says Ummel. "We can ask ourselves whether we really want to take those risks to grow, how much more time we are willing to spend, and what kind of risks we're willing to take financially. In facing the decision, you learn what it's like to be an entrepreneur, that you have to know everything or learn everything, that you have to be willing to do it all, and that you have to sacrifice time that would otherwise go to other, often personal, things. You can easily lose a part of yourself."

"It would be easy, in growing as much as we have, for some people to feel desperate," Ummel continues, "where you get to the point where you have so many people asking for your services, and you need extra people to provide the services. But it's never a good idea to grow just because you're desperate, where you're hiring people who may not be right for your environment. It's better sometimes to call and reschedule clients so that when they do come in, they get the quality service that your reputation has been built on."

Creating a Personal Definition for Growth

In reviewing these stories, and others, about the choices business owners make regarding growth, we can see that there are advantages and disadvantages in staying compact and concentrated or choosing the path of expansion. Ultimately, the choice depends heavily on the vision and preferences of the business owner: what's most important to him, personally? What does she want her role to be? What's motivating him to add employees, clients, or space in the first place? What's most important about the business? What differentiates it from others? What's the relationship between the size of the business and its products or services?

The answers to these questions may evolve, too, with the business itself. At one point, it may be appropriate to contain the business's growth. Two years later, in response to new opportunities to add products or services, increased size may be required. Perhaps the most important action a business owner can take regarding growth is to free himself from the limitation of thinking that there's only one way and one time to grow and to adopt instead an appreciation for the evolutionary nature of the business and himself.

The rest of this book provides forays into three avenues for qualitative growth—vision, right relationship, and wisdom and mastery—that a big-vision small-business owner pursues to enhance the meaning and value of her journey and distinguish herself from both large-company and small-business peers.

注释：

[1]Susan Greco, "I Was Seduced by the New Economy," Inc. Magazine, February 1999, p. 34.

[2]U.S. Small Business Administration, Washington, D.C., December 2000 (www.sbaonline.sba.gov).

[3]Working Solo, Inc. (www.workingsolo.com).

[4]Europa—European Commission, "Definition of Small and Medium Sized Enterprises" (

[5]U.S. Census Bureau, "Statistics About Business Size" (

[6]U.S. Small Business Administration Office of Advocacy, "State of Small Business Report," 1998.

[7]National Small Business United, "Small Business Statistics," Washington, D.C., December 2000 (www.nsbu.org); Seattle Chamber of Commerce, "National Small Business Statistics," Seattle, WA, December 2000 (www.seattlechamber.com); U.S. Small Business Administration, "Small Business Vital Statistics," Washington, D.C., December 2000 (www.sbaonline.sba.gov); Working Solo, Inc., "SOHO Statistics" (www.workingsolo.com); TheManager.org"Small Business—Size as a Chance or Handicap" (www.themanager.org).

[8]U.S. Small Business Administration study conducted by University of Oregon professor of accounting Pat Frishkoff.

[9]Alex Salkever, "Special Report: The Future of Apple," BusinessWeek Online; January 18, 2002 (www.businessweek.com).

[10]Sarah van Gelder, in dialogue with David Korten and Paul Hawken, "Corporate Futures," Yes! A Journal of Positive Futures, Summer 1999 (www.futurenet.org).

[11]Craig Savoye, "Vanilla Suburbs Seek an Identity: Small ‘Edge Cities' Are Building Downtowns in a Brick-and-Mortar Quest for a Sense of Community and Character," Christian Science Monitor, December 30, 1999, pp. 1-3 (www.csmonitor.com).

[12]Stewart L. Tubbs, A Systems Approach to Small Group Interaction, 4th ed. (McGraw-Hill, 1992), pp. 104-105.

[13]Dagmar Recklies, "Small Business—Size as a Chance or Handicap," TheManager.orgMarch 10, 2001 (www.themanager.org); Hon. Ahmad Kamal, Pakistani Ambassador to the United Nations and professor, New York University, International Studies: Lesson 9: Role of the Private Sector and Civil Society (

[14]Noel Tichy, "The Growth Imperative," Leader to Leader, no. 14, Fall 1999, p. 24.

[15]Larry Greiner, "Evolution and Revolution as Organizations Grow," Harvard Business Review, July-August 1972 (reprint no. 72407).

[16]Paul Geroski, "The Corporate Growth Puzzle," The Economist, July 17, 1999, p. 70.

[17]John Peterman, "The Rise and Fall of the J. Peterman Company," Harvard Business Review, September-October 1999, pp. 59-66 (reprint no. 99507); Greco, "I Was Seduced by the New Economy," p. 57; Shira J. Boss, "A Cowboy Clothier Mounts a Comeback," Christian Science Monitor, December 11, 2000.

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