I’ve been a strong proponent of the idea that most businesses have an optimal size. This flies in the face of the traditional wisdom that businesses must “grow or die.”

That’s true for some industries and business models, but the vast majority don’t need to follow that.

In fact, for many organizations, “grow or die” can lead to frustration and lousy quality of life. For you, your employees, and customers.

This became clear to me when I worked for an international public company in Australia, but observed the multitude of Mom & Pop shops in my neighborhood. Many of them had been in the family for multiple generations, stable and well respected in the community.

  • My barber was two guys in a shop.
  • My milk bar was one owner with four employees.
  • The newsie was one owner with two employees.

They were of a particular size, with owners who were happy to spend their entire careers doing the same thing. Rarely was there a desire to expand just because others thought it was necessary.

The more I look around, the more I see this back here in the States. My accountant. My financial advisor. My barber. The religious gift shop. Almost every coach I know.

What makes the ideal size? It’s not complicated:

  • You serve a readily identified set of loyal customers.
  • You get enough revenue to reliably pay yourself and your employees a fair wage.
  • You have a culture which encourages employees to stick with you long term.
  • You reliably delivery a quality product or service.

Each of these statements has to be adapted to the specific situation. For instance, “quality” might seem adequate to one audience but cheap to another. “Loyal” customers might mean one purchase a week or one a year. The number of customers might be 10, 100, 1000, or even more.

The point is that you’ve achieved a model which is stable enough to last for many years. Perhaps generations.

It’s beautiful when you can create this. And a whole lot easier, honestly, than trying to create a billion dollar business.