Are you chasing Growth or Success?
In business it’s easy to focus on growth as the only measure that really matters. It’s easy to measure (especially top line revenue or number of customers) and it just feels good.
But is that really the best thing to focus on?
*Spoiler alert – probably not…! 😉
I’m currently reading the book Company of One by Paul Jarvis (thanks to Brent Taylor KCCFO.com for the recommendation). Great book so far and as the title suggests it’s a different perspective on how to look at business. In one of the early chapters, author Jarvis cites studies from the Start-up Genome Project and the Kauffmann Foundation on the impact of high growth.
The Start-up Genome project looked at 3200 high growth tech start-ups and found that 74% of those businesses failed because they scaled up too quickly (too much growth). In the Kauffman study, they looked at a list of the fastest growing 5000 companies in the US over time – 5 to 8 years later 2/3rds of those companies had either gone out of business, had massive layoffs or had been sold below their market value.
High growth is not a sure thing or the sign of a healthy business. As we’ve talked about before – Profit is a much better indicator of business health.
But above and beyond the financial or technical challenges of focusing on growth as your main thing, there’s an even bigger challenge of whether or not growth even leads to what you really want out of your business.
The Mexican Fisherman Parable
There’s a pretty good chance that you’ve run across some variation of the Mexican fisherman parable – but if not, here’s a quick retelling.
An American investment banker (usually depicted as a Harvard MBA) is spending some time in a small fishing village in Mexico – beautiful, serene setting with the ocean and countryside, quaint village and happy people.
One morning this investment banker is down at the local pier and sees a small fishing boat with just one person in it coming in with a beautiful catch of Yellowfin Tuna. The man compliments the fisherman on his catch and starts up a conversation.
“Beautiful fish – how long did it take you to catch them?”
The fisherman responds, “Thank you, it was a great morning, I was only out a few hours today.” He then went on to explain that he generally only catches what he needs to cover his expenses plus a bit more.
“Wow” the banker responds, “what do you do with the rest of your time?”
“Well I play with my kids in the afternoons, spend time with my wife and then hang out with friends and family most evenings playing music, drinking wine and helping people out with whatever projects they might have. I have a great and full life.”
Suddenly the investment banker is struck with an idea – “I work with a lot of great companies and you’ve got a fantastic business opportunity here. With some extra effort and a loan or an investment, you could buy a few more boats and dramatically increase your catch. Then, with that money over time, we could build or partner you up with a canning and shipping plant and really build this thing up to be a major player in the fishing industry. Of course you’d have to relocate to a big city and you’d be responsible for making everything run, but it could be a really big deal.”
The fisherman looked at the investment banker with a blank look and asked, “And how long would all of that take?”
The banker gave it some thought and said, “Probably 15 to 20 years – that would give you plenty of opportunities to build it into a real powerhouse!”
“And what would happen then?” asked the fisherman.
“That’s the best part” exclaimed the banker, “at that point your business will be big enough to sell for a serious multiple – you would be able to sell it for millions of dollars.”
“And then what?”
“Then you could retire, move to a beautiful coastal village, spend time with your wife and family, hang out with your friends, drink wine, play some music and enjoy life…!”
Focus on your definition of Success
The parable is a not subtle way to question the value of growth but it also asks the question: “How do you define success?”
When I was first starting Aspire, a mentor / coach I was working with made a great statement that’s stayed with me all of these years:
“The purpose of your business is to help you get what you want out of life – now you just need to figure out what you want.”
It’s all too easy to get caught up in a perceived societal view of success – where it’s all about high growth and money. But your view of success might revolve around a flexible schedule, or the kind of work that you love to do, or who you work with, or how you help others.
There aren’t any right or wrong answers, but it is something you have to decide for yourself (and likely revisit over time since things will change).
Far too many business owners are unhappy, frustrated, exhausted or just burned out because they feel like they have to keep chasing growth when what they really want is more time with their family… or to just enjoy solving problems and helping people… not all of the bureaucratic, administrative things they’re currently struggling with.
What about you?
How do you define success for your business and for your life?
Is your business delivering that to you? If not, what would it take to make that happen?
We’d love to hear your thoughts – had your seen the Mexican Fisherman parable before? Does this get you to thinking? Leave us a comment and let us know.
Shawn Kinkade Kansas City Business Coach