Avoiding the Growth Trap

Growth is a particularly easy trap to fall into in Western cultures, where phrases like “Protestant work ethic,” “American dream,” and “rags to riches” hammer home the notion that there is only one acceptable direction in all facets of life: up. I am a firm believer that you should always aim for better, but that means different things to different people, and also varies depending on your circumstances.

There are plenty of great reasons to chase growth:

• You’re planning on selling but need to hit a certain size
• You enjoy the thrill of constant change and problem solving
• You love managing a large team (and you’re good at it)
• You’ve got a big ego that you need to feed (kidding but not really)

In and of itself, growth is not bad. But it’s not always good, either. Growth is neutral, meaning that it should be in service of something more important. If growth helps you achieve your goals (like one of the above), it’s great. But don’t fall into the trap of making growth your end goal. By its nature, growth doesn’t have an end.

Be honest with yourself as you look back on this last year. Did your professional path get you closer to achieving your personal goals? If your answer is “no” or “I’m not sure,” it’s probably time to revisit why you started a company in the first place.

Likely, when you were just starting out, you had some pretty clear reasons why you were going out on your own. These might have included:

• The flexibility of not having a boss
• Being able to make the decisions
• The money
• Working with people you love
• Work/life balance

As your firm grew, overhead expenses grew, and so did the responsibility of feeding that machine with more sales. It can be easy to forget the “why” once you’re in this growth cycle. Not the “why” for the business, but the “why” for you. Without a “why,” you end up blindly fighting for growth and can make decisions that might take you even further away from personal happiness. For example:

• You add a position to relieve stress on you and your team, but now you need to bring in even more work to pay for that position
• You don’t fire a toxic client because the money’s too good or it would mean having to downsize your staff
• You let a mediocre employee coast for too long because the P&L can absorb it, but you end up hurting your company’s culture long-term

I have an ever-evolving document I keep on my computer titled “What I Want Out Of The Business Personally.” The title needs some workshopping, but I’ll open it up about once a year and make sure my business goals are aligning with my personal goals. If they aren’t, it’s time to course correct.

From running other businesses, one thing I’ve learned is that decisions around “growth” come at inflection points, usually tied to employee count, not revenues. To that end, it’s particularly important to reevaluate your personal goals before making big hiring decisions.

In most businesses, there are certain inflection points as team size increases. The first is between 10-20 employees. At that point, you realize that you can no longer stay aligned with your team via osmosis. You have too many employees spending too little time with you as an owner for them to read your mind, so you need to start setting up processes and expectations.

The next inflection point will come at around 25 employees. It’s at this point that you really need to evaluate your end goals, because you’re going to need a layer of middle management to support a staff any larger. Middle management is not bad. It’s necessary once you reach a certain size, but it does mean you have higher overhead and your overall productivity per person might go down. This is when charging hourly can start to get you in trouble as well, as overall utilization dips.

Another inflection point happens at around 50 employees, which coincidentally is when FMLA (for our US readers) starts to kick in. At this point you’ll need to have processes for pretty much everything, including hiring, onboarding, and training, because you’ll find it harder to retain employees indefinitely. Again, this is not bad. This is simply reality.

You will soon be closing the books on another full year, and it’s natural to pull out the ol’ measuring stick. Agency and marketing firm owners, like all entrepreneurs, are a competitive bunch. Just make sure you’re competing in the right race—where the finish line aligns with your personal goals and not the perceived (or real) expectations from others.