The Problem With Thinking Too Big About Your Business
Big picture. On the business, not in it. 30,000 foot view.
As an entrepreneur, it’s drilled into your head that you own your company’s vision—and that means thinking about the future more often than thinking about where you are today.
This philosophy is right about 90% of the time. The other 10% of the time, it’s dangerous.
You can’t think bigger than where the business actually needs to be.
You can—and should—map out where you want to be 1, 3, and even 10 years from now.
But what you have to know is the difference between planning for the next 3 years and trying to build your future business today.
If you try to build tomorrow’s business too soon, you will end up spending big…way too big.
A $2M Mistake
Like most of my business wisdom, I learned this lesson the hard way.
If you know me personally, you know I’m the kind of person who will use a shotgun—or maybe a cannon—to kill a fly. I love thinking big. If you can 10x results, why not 100x?
But two decades ago, I grew a company too big, too fast. We grew to $8M in two years. I hired full-time senior leaders we couldn’t really afford and probably paid them too much.
We lost $1M in a year. Twice. It took me 10 years to dig out from that business mistake.
As you might imagine, this lesson has been drilled into my head. I’m vigilant about overspending in my own companies and on my clients’ behalf.
That’s why I’m constantly asking these questions when it comes to spending:
What is the most I can grow with the fewest amount of resources?
What is the least I can spend to get where I want to go?
Thinking Big vs Spending Big
The answers to these questions change depending on your business model, your growth trajectory, and, all importantly, your cash flow.
Example 1: A client in the SaaS industry is growing like gangbusters. They’re losing money every single month, but they’re also funded. They’re spending what they need to grow their business as big as they need to—and they’ve got the resources to do it at a loss right now.
Example 2: A small professional services company wants to grow by 50% next year. They aren’t funded and can’t afford to operate at a loss—this is the owner’s day job. They can’t hire super senior resources full-time, but they do bring in some resources on a fractional basis to make sure they can continue to grow without breaking the bank.
“Big” is relative to where your business is today.
When it comes down to it, most entrepreneurs are scrappy enough to make things happen without a lot of capital. We saw that happen during the height of the COVID-19 pandemic, when many companies realized they could run much leaner operations and get the same results.
Your business needs you to think big. And sometimes, that means spending big, too. But make sure you never confuse your plan for the future with where you are (and what you can afford) today.
P.S. Want to avoid this problem? Make sure you have a clear vision and a multi-year budget that are closely aligned. Contact us to see how Growth can help you do exactly that.