Why we Choose Profit over Rapid Growth


profit vs growth for architects, engineers and contractors via archisnapper

When it comes to owning and running a business, there is a common and prevalent idea that bigger is always better.

One of the most common questions I’m asked by friends and family is, “How many work for you now?” I bet the same is true for you.

As a society, the number of people working in your office is often used as a metric of how successful your business is. But it’s not always a good metric. Growth doesn’t need to be the default.

For me personally, growing the number of people in my business is not a goal.

Not even remotely.

We will probably hire some more people over the next years, sure, but only in a controlled manner, and only when we really need those extra resources. Only when it hurts.

We are focusing on profitability, we’re focusing on having a good balance between work and personal life, and we’re focusing on trying to have as much fun— and as less stress, as possible at work.

These are the 3 things that are of most value to us.

Why we choose profit over rapid growth

Profit, not size, is important to us.

If we aren’t profitable we’d have to borrow money to support the business (in the form of debt or equity). Once we do that, the people we’ve borrowed from would own a part of business, and therefore our time, and we’d lose our freedom.

We don’t want that to happen. So we choose to focus on our profit, not size.

We see the benefit in a small, simple, and profitable business.

We like working with fewer people, spending less overhead, having fewer meetings, and fewer deadlines.

We enjoy our freedom and flexibility.

What’s wrong with putting your ego aside and doing what will make YOU happy?

the importance of freedom and flexibility via archisnapper blog

I’m not saying it’s bad to grow your business.

But it should be just that: a decision, not an automatic goal.

Every business owner should think about their own personal goals in life, and from there actively choose what kind of business he or she wants to run.

Is it your goal and ambition to grow your business by landing more deals, serving more customers and working with more people?

Is it your goal to have 20 to 30 people working for you?

Is it your goal to have more impact?

That’s perfectly fine.

Just be aware that growing a business fast comes with challenges and risks, and it may have consequences on your personal life if you don’t do it correctly.

Focus on rapid growth will almost certainly steamroll you into two often costly mistakes.

Mistake No.1: You will not vet your clients carefully enough

The burden of needing to close $100K or $200K in deals every month in order to make payroll (and other expenses) is huge.

As a result, when you focus on growth and you’re working in the service industry (for example, as an architect, engineer, designer, contractor, or writer), you will become less selective about which customers you choose to work for.

You will be tempted to accept bad, or even toxic, projects: projects for stingy clients, for clients who see you as a cost but don’t appreciate the value you’re delivering.

Clients who negotiate your margins down, customers who call you late at night, and who change their mind a thousand times… you know what I’m talking about.

When you start accepting projects just for the revenue they bring in, to finance your accelerated growth, that’s when you risk accepting the wrong projects with the wrong clients.

Working for the wrong clients can be poison for your business: it brings down profits and morale.

On the other hand, when your goal is not to grow, but to run a small, stable, and profitable business, you have the freedom to be more selective about which projects to work on, since you don’t have to finance that rapid growth.

Business owners who actively chose for the small/stable/profitable option very often site “quality of life” as the main driver behind that choice.

They want to enjoy their work, and they don’t want work for stressful, demanding and disrespectful clients—even if they bring in a lot of revenue.

Mistake No.2: Your quality of work may suffer

A second risk that comes with rapid growth is that the quality of your work will most likely decrease.

When you grow quickly, you’ll need to bring in help faster than you would if you grow slowly. Just as rapid growth affects your decisions regarding customers, it can also affects your hiring decisions.

You may end up being less selective, because you’ll need more people as soon as possible.

That can end up being a costly mistake.

When you work with low-quality people, you have to micromanage, jump in, or even do the work yourself to keep the quality level up to your standards.

Your constant intervention might be required. This can become exhausting.

If you thought things through and you came to the conclusion that you want to have more impact, land more deals, and manage a bigger team… as long as it’s not just for the ego and the money, go for it!

But make sure to take these three crucial things into account:

  1. Hire the right people. Hire managers of one.
  2. Work on your business, not in your business.
  3. Work for the right clients, and work at a high rate.

But again …

Your freedom is priceless: A small business can be a beautiful thing.

Running a small, stable and profitable business means less stuff to worry about:

  • less office space to rent,
  • less cash flow management,
  • less overhead,
  • fewer meetings,
  • fewer proposals,
  • fewer negotiations,
  • fewer customers to manage and please,
  • less cash flow management,
  • fewer employees to recruit, manage and retain,
  • fewer quality issues,
  • fewer “managers,” fewer consultants
  • … fewer headaches.

It’ll just be you— and maybe a few other carefully-selected people— doing what you love: working on good projects for good customers, ones who appreciate your work and respect you for it.

You’ll be able to take the time to do your work according to your quality standards and deliver something both you and your customer can be proud of.

Running a small business can offer you the freedom to live life on your own terms: work when you want, from where you want and for the customers you want.

live on your own terms via archisnapper blog

To me—and to many other business owners I know—this freedom is priceless.

It’s a freedom that I would never want to give up.

Lastly, “small” doesn’t always necessarily mean “less profitable.”

I know lots of solo entrepreneurs and small agencies that make LOTS of money and have a great work/life balance.

These “small” entrepreneurs love their craft and always offer great quality, and— equally importantly—they’ve found the the right way to sell and charge for their services.

There’s nothing wrong with charging (very) high prices if you have the quality to back it up.

On the contrary: instead of hiring people to do more projects, raising your rates will directly increase your bottom line and will be way (way) less stressful.

Whatever choice you make, just make sure it’s an active choice. Don’t allow growth to become the default. Don’t just stumble into it. Don’t let society’s mantra that bigger is better influence you. Think for yourself, independent of all the noise out there, and then go for it.

Good luck!

To end this article, I’d like to leave you with two thoughts:

Here’s a great testimonial on this topic, by James Sudakow. “I remember saying to my wife at the end of the two years that I was never doing it [growing a business as quickly as possible] again. It wasn’t worth it, even with the huge revenue and profit numbers.”

And here’s a great episode on the Hubstaff podcast, with Ryan Waggoner on earning $250,000+ a year as a freelancer. “Instead of immediately expanding your team when you get more work than you can handle, you can also just charge more. In fact, Ryan suggests raising your prices after every project until you can’t find anybody to pay it.”