Is Bigger Really Better?

I was actually reading one of the headlines under the Forbes.com widget to the right of this blog page (scroll down a little) and the headline is "When Bigger Isn't Better" by Melanie Lindner. Ms. Lindner writes about Russ Hamm's Rainbow Broadband which he planned to take national with credit cards and angel capital. "But then something happened that every entrepreneur would be wise to take note: When it came to making money, Hamm and company realized that bigger wasn't necessarily better."

In my fourteen years of banking, this is one thing that I have certainly learned . . . bigger isn't necessarily better. I have seen very successful businesses turn into unsuccessful businesses as a result of growth. Stop. I know you're thinking, "Well, it must have been poorly managed growth." In some cases you are right, in some, the growth put the company into a different arena than it had been in and the companies began to lose their identity, the employees weren't sure who the company was anymore, etc. You're still thinking - poorly managed - aren't you?

I've had the opportunity to work with several entrepreneurs who were smart enough to realize the growth (in their case) was a mistake and they and the Company did better at the lower sales volumes with higher profit margins. Profits were better, there were fewer headaches, fewer employees to deal with, etc. Life was just better. These entrepreneurs altered their plans and began scaling the company back to the more profitable times and reduced staffing through attrition, etc., and returned the companies to the levels of earlier days.

This is not say growth is bad. My point is simply that growth for some people is not as glorious as you might think. By the way, this is coming from a guy who grew to be 5'4" with shoes on. So take it for what it is worth.