Not everyone has to scale

images-1I have been having this conversation about scale with investors and founders around many verticals.  Bottom line is scaling is different for everyone.  Investors want to invest in companies that plan on scaling to a certain level depending on each investors thesis.  Not everyone has to scale.

There has been this rising tide over the past decade that all businesses must scale….and that everyone should raise capital for their business.  I get business plans from people who are building agencies or building out PR firms.  Since when did those companies raise money from investors?  The company is as good as the person running it.

Years ago (many many years) people went to the bank for a loan to help them build their business.  Even the art dealer, Paula Cooper, got a loan from the bank when she opened her gallery in 1996.

I have been working with a company who has decided that by scaling, aka raising money to do that, they were miserable. They had already built a solid business with a small business loan.   The small business loans unfortunately take advantage of the people who they support but that is for another post.  These women are going to do almost half a million in revenues this year and they love what they do.  They came to the realization that they don’t have to scale.  They can bring in a few investors who want to support entrepreneurs like themselves…and they are good entrepreneurs.  In a few years the business could end doing a few million in profitable dollars.  They could end up being able to grow in other directions with the capital they have built.  At the end of the day they get to wake up and do what they love to do and enjoy the business they have built…a pretty good concept.

Scaling changes businesses.  For some it is great and for others it is a mistake.  You do have to figure out how to have a consistent profitable business year after year when you aren’t scaling.  That is harder in certain verticals.  There will be many more businesses in the years to come.  With technology we are able to start businesses with very little capital.  Many of these businesses don’t need to scale.  Perhaps they would be better off not scaling but building a business without raising capital with a price tag on it.  Scaling doesn’t always work.

We might be seeing more of these businesses in the years to come.  These businesses are reinventing the old school businesses that our country is built on.  That’s a very good thing.