View Full Version : Should we grow or stay as we are.

12-18-2008, 09:08 PM
We’re your typical small web development agency, we’ve been around for years and we have a steady stream of new clients that seek us out and come to us... life is good for the main part although we don’t earn mega bucks.

This week I was approached (came via a referral) by a large International company that are seeking a partner company to provide web services... all sounds ideal until you consider the volume... this company currently has over 150 stores with numerous employees in each and it has hundreds of thousands of existing customers.

Now, even being conservative we can assume that each store can sell one website per month, thus we could have 150 new website orders per month... and it is this that worries, me... given that we are all happy doing what we are doing... should we expand to take advantage of this opportunity should we secure it, or should we simply decline at this stage and carry on as we are.

What would you do if you had a similar dilemma?

12-18-2008, 09:46 PM
Hi Steve,

I think that it really depends on what the expectation of the potential partner is. If they are expecting that they may be able to sell one fully customized website per month per store. Then yes that is an absolutely massive undertaking. Even if you assume a minimum of 2 days per site, that would mean that you would need a minimum of 10 people dedicated to this per month.

Depending on what your current staff level is this could be double triple, or more then what you already have or it may be just a small addition.

On the other hand if they are just looking to be able to sell a website, and have the client select a number of options, then you may be able to create something that will allow this, and require a kind of minimal extra time, from your perspective. So i suppose on option may be to create a fully customized back-end either a new one that offers just what you want them to offer, or using an existing platform. You could create a form for the customer to choose the options, and then add the styling options they choose.

In reality an automated/semi automated system to generate website's has been done before, some people succeed and some don't, however i think that in this case you have the advantage that all you have to do is provide the system someone else is going to do the selling of the sites for you.

I would say go ahead if you can develop a system that would require maybe 1 or 2 extra people maybe even 3 or 4 to provide the service, if you were recovering this cost and making money. However if you are going to have to add a lot of extra staff and may only recover a small profit after expenses it may not really be worth it.

12-18-2008, 09:51 PM
Sounds very interesting. I may have more ideas later as I think about this, but my first reaction now is look at case histories. That's a significant change over a very short period of time. I'd be looking at who has done this, were very many successful, how were they succesful, and what was involved in making it work? For those who have failed, I'd want to know why so I could avoid the same things, or at least decide if I was prepared to avoid those pitfalls. It's deifinitely a situation requiring due diligence.

12-19-2008, 12:14 AM
Interesting question and one obviously you'll inevitably have to decide on your own. I guess the question is what do you want your company to be.

If you do want to grow and partner with this company I would think you could continue to hire more staff until you reach the point where you could handle the workload. You could let the company know you'll need to hire and train more staff to be able to meet their demand and work out something with them where they slowly build up the volume they eventually plan to send. Assuming they agree it would give you time to hire and train staff and adjust to the new workload.

If it were me I'd probably turn them down. I'm not looking for my business to grow along the lines of hiring more and more employees. I'd prefer to partner with some others and work on my own projects as a way to grow and scale my business. While I do want to see my business grow I see it growing in a different way. That's more my preference inline with my personality. I'm not one that wants to manage an office of people. I'd rather work with several people in similar situations and manage projects we can work on.

Steve from what I've learned about you over the years I think this would be the type of opportunity that would suit you. Just a hunch on my part of course, but I can see it working for you. How to handle the sudden increase in volume is naturally the tricky part.

Do you think this company would be willing to change the sudden to a slower increase in volume to allow you to adjust? Do you know one or two other firms similar to yours that could take on some of the workload? Maybe if two or three of you took on the additional work you could all grow without being overwhelmed.

Even better do you know a few companies that you could outsource some of the work to? You could pick the sites you want to build and outsource the rest until such a point where you could do all the work in house if you want. Or you could continue to outsource and have your company be there to check the work before it goes out the international company.

12-19-2008, 06:00 AM
Its hard to offer a suggestion Steve without knowing what sort of volume you are doing now. If you are already producing a large volume I think you will adapt to the extra 150 orders easier than if say you were only producing 30 or less orders a month.

As joel said you will need to take on a lot of new staff. If you are already running a business with a lot of employees the systems (procedures), heirachy, and management ability that is already in place will allow new staff to be more productive within a shorter period. If however your business is staffed with only a couple of people I think you will find it difficult to manage and train so many new people in such a short period. Even if they are experienced web designers/developers they will stil need to be trained in your procedures otherwise you will find that your employees will just do it any way they know how which isnt always the way you want it done (if that makes sense).

I would also offer the suggestion (keep in mind I know nothing of the client or level of negotiation you have done with them) dont get too excited about big companies offering you huge amounts of work. It happens all the time. 8 times out of 10 it will be their way of forcing your price down and then once a deal is struck and the orders start coming through the volume is nowhere near what was expected. It may not be the case with this company of course but I would be careful as I have had this happen to me quite a few times from some really big companies.

PS whats life like in Perth (is that where you are) I have always wondered what it would be like to live there...

12-19-2008, 09:15 AM
I'd only do something like that if your ultimate goal is to sell and retire or start a new company. If they are that big, you will probably loose control of your company. Different industry and situation, but something similar happened to my brother. He got bought out by Xerox. Middle managers micromanaged my brother for several years and it was pretty miserable, but he couldn't leave. He eventually got out and is retired.

12-19-2008, 10:53 AM
It really depends on what your goals are. From what you've said, your company is doing well and your fairly happy with how things are going. You also sound mostly satisfied with current financial set-up.

Taking on more work will mean changes. You may have to work more hours. You may have to hire more staff. You might have additional people to whom you are accountable. There may also be increased financial benefits.

You have to weigh the benefits against what you might lose. If you like your current schedule and the aren't too thrilled about having to manage additional people this might not be for you. If you're looking to take your company to the next level, this could be an ideal opportunity.

Everything is a trade-off. I don't know of anyone who finds an ideal situation.

12-19-2008, 12:01 PM
This doesn't look like a buyout the way you described it, but I would carefully consider the level of control you would still have if I were faced with the same situation. Just as the others here have commented, the "clout" this company is bringing in may very well lead to concessions that are best avoided. That does still depend on your vision for your company, so the good or bad of it is up to you.

Bill's comment reminded me of an almost exact same thing I witnessed. This one did involve a buyout. The owner sold the company and was being managed so he became more of an employee. They later sold it again and he retired. His kids left long ago for other jobs, and most of the old staff is long gone too.

12-19-2008, 04:39 PM
Thank you for your comments... and I share many of them... I guess it comes down to, am I happy going along as I am or do I want to grow much, much larger.... and when it comes down to it, my nature is to go for it... however I will take the weekend to think about it more.

I just wondered what most people would do if a similar situation presented itself to them in their business... my mentor and close friend said to me that only I could decide however if it were him, he is happy as he is and would turn it down... but I am not him as he pointed out.

12-19-2008, 08:00 PM
Something told me you might want to go for this. Definitely one of those situations each person or business ultimately has to make on their own based on where they want their business and life to go. It is an interesting dilemma with no real right or wrong answer.

Do share what you decide to do.

12-19-2008, 08:25 PM
I just wondered what most people would do if a similar situation presented itself to them in their business... my mentor and close friend said to me that only I could decide however if it were him, he is happy as he is and would turn it down... but I am not him as he pointed out.

Many small businesses care comfortable with where they are and don't look to grow beyond a certain level. Not every entrepreneur wants to have several offices to manage, several employees to lead, and added responsibilities than what they're comfortable with in the present.

I'd accept the offer (I like risk) knowing it'd allow for me to grow significantly, but only if I'd seek out other "large" clients. But proceed with caution, this one "client" will be the soul to your thriving business. You are vested in their success if you want to remain in business yourself. Think about why so many people want the three automakers to survive. Their failure extends beyond the three automakers -- it's all of their suppliers who depend on them. This puts you in a unique situation should something ever happen with this business. Just another "risk" to keep in mind.

12-19-2008, 08:38 PM
Evan in my case I do want to see my business grow, but I think there are different ways to grow. I went into business for myself for a variety of reasons, one of which was to get away from the typical corporate politics and BS. In my business I choose to work with the smallest of small businesses for the most part.

I think picking up the big corporate client, while certainly lucrative and something that can take your business to a new level, also brings you closer to that corporate world that I was happy to leave behind.

That doesn't mean I don't want my business to grow to the next level. I'd be perfectly happy to simply make a nice living according to my own rules and if that's as far as my business gets I'll look back and consider it a great success. Where I'd like to see it grow though is through developing my own products and developing a variety of sites that can each bring in revenue. That kind of work would sooner fit with my personality and the lifestyle I want to maintain.

This really is an interesting topic. It's a "what do we see as success for our business" sort of thing. Some of us might be happy just making a living in order to maintain a certain lifestyle. Others might see success in the bottom line of their business. For me it's increasing the bottom line as much as possible within the confines of a lifestyle and workstyle of my choosing.

That, of course, is me. Others may not mind the corporate world as much and there's nothing specifically wrong with that. Just not me.

12-19-2008, 08:48 PM
Steve -- That question is fundamental. If you were a web hosting provider, you may not want to be the next Yahoo, 1&1, or GoDaddy. You may like running things out of your house without this big "office". If that's the best you want to do, your growth can be limited. But that doesn't mean you can't live comfortably and do well. It just means, as you said, your "bottom line" will never be a huge number. But it'll work for your needs.

Others aspire to be at the level of 1&1 or Yahoo. And it isn't always an easy track to reach that level. Plus once you get to that level, there are a lot more issues you face. Obviously more people will be involved in the business, but often times entrepreneurs end up "out" of the business and more involved with management than doing what you've done all along -- which was all of the operations.

12-19-2008, 10:03 PM
It is a fundamental question. We're so conditioned to think that success = money and the more money the more successful, but for most people that's not really true. Material wealth is definitely part of the picture for most, but not the whole picture.

I think it's a really interesting question. I'm sure many of us here would describe success in different ways, though we'd likely see many of the same themes in each definition. I think the topic had been started several times on the old forum and maybe it would be a good topic to discuss again here.

12-19-2008, 11:36 PM
I am still contemplating this... however I believe I'm reasonally successful... I earn enough money to pay for everything I need to pay for and to then have some left over... I support local businesses and I even help a charity raise money for children... and basically I have a good and rewarding life.

In a previous time, when I travelled the work chasing the mightly dollar I controlled companies with hundreds of employees... that turned over hundreds of millions of dollars... however I didn't have the quality of life then that I have now, even though I earnt more money.

So... to me success is doing what I love to do and to be able to pay my way and help others... whilst having a pretty good lifestyle... success does not equal large amounts of money to me...

12-20-2008, 01:52 AM
to me success is doing what I love to do and to be able to pay my way and help others... whilst having a pretty good lifestyle

I think that's why a lot of us choose to go into business for ourselves. I'm sure I could be making more money right now if I was working for someone else, but I'd be giving up far too much in the process.

12-20-2008, 12:29 PM
In a previous time, when I travelled the work chasing the mightly dollar I controlled companies with hundreds of employees... that turned over hundreds of millions of dollars... however I didn't have the quality of life then that I have now, even though I earnt more money.

So... to me success is doing what I love to do and to be able to pay my way and help others... whilst having a pretty good lifestyle... success does not equal large amounts of money to me...

You may not wish to accept this client then. It may very well force you to work towards becoming what you "hated" previously. Especially when you take that "big client" issue without having multiple. You never want the majority of your income to be from just one client if you can "diversify" at all.

12-20-2008, 11:03 PM
what i would look at is how it would affect your day...would it push you into a role you wouldnt like? would it push out the things that keep you interested? would you be good at the new business? whats the risk?
it sounds great in a way .
..the ideal to me is the right amount of money and letting me still do the parts i like best.... bad to me would be falling for imagined big time money and huge hassles discovered too late....hopefuly you can imagine managing all this and what it would mean to your life...
it sounds good that you arent totally bowled over by the biggness of it, and automatically going to jump in...so thats good......
good luck....

12-22-2008, 04:56 PM
I would like to thank everyone who contributed to this thread... the last few days I’ve had all sorts of thoughts and emotions. I’ve gone through wanting to grow the business to a tremendous size through to wanting to stay as we are, or grow at a more modest rate. I’ve even though another contact found another large company that would potentially buy us if we secured such a contract... so as you can imagine it’s been a strange few days.

I’ve actually decided not to move forward with this project and to stay as we are and to grow organically as the need arises... and not in one fell swoop based on one contract, which would leave us vulnerable to the whims and wishes of this company... and well, I have decided that my current lifestyle is pretty much what I want.

12-22-2008, 07:46 PM
I'm glad you were able to think it through and reach a decision you felt most comfortable with. Personally, I think that was a good decision. If I were in the same situation, I wouldn't want to make myself that vulnerable to someone else's whims either.

12-22-2008, 07:54 PM
Thanks for letting us know Steve. I can imagine you had a log going through your mind the last few days. If I was going to bet I would have thought you would have taken the opportunity. Good thing I'm not a gambler.

I completely understand your reasons too. I would have done the same thing. Glad we could help too.

12-22-2008, 08:52 PM
Something else... It's never easy is it... I just turned this down by speaking with the head guy in charge of making the decision and he obviously likes what we have to offer and so he has extended the deadline for us, until the middle of January. Which now means I have a lot more time to consider my options... and given a decent amount of time, now I can plan how we are going to do this... because now I think we will go for it, however we will only move forward on our terms and not theres... so I am perhaps wasting my time... time I guess will tell.

And lifestyle is perhaps the most important thing to me... I love going to work and being happy all day long... and best of all, people pay me for doing this... it's a crazy world at times...

And everyone here has helped tremendously...

12-22-2008, 09:02 PM
The plot thickens. I think there are some ways you can make this work for you on your terms like you say. It sounds like you do have a good bargaining position since the offer was extended.

I'll be interested to know what you come up with to make this work for you and what eventually happens.

12-29-2008, 12:56 PM
I was wondering what had happened with this.

I think you're in good shape SteveC. It appears you have a good handle on what your goals are and on what you personally need to be happy. It also sounds like you're only willing to take on this new opportunity if it fits in with your goals and requirements. I'm guessing, whatever you decide, you'll be successful.

Do keep us updated though. I always love to know how these stories turn out.

01-03-2009, 09:23 AM
i would hire however many employees you will need to cover this customer....i would take the money while its there...if it lasts forever great!....if it lasts 1 year so be it...when the relationship ends i will get rid of the same # of employees...to be conservative about it i would consider those employees temp and just for that customer..customer goes=they go...

ive thought about that when it comes to large home builders for me...i dont want them, but if i get one who overnight triples my business id go for it...id consider it temp and rent the vehicle, keep stock and tools to a bare bones....the day the builder said good bye is the day those employees get laid off and the vehicles get turned in....

that way you make money while the gettings good....and cut your losses before they become much of a loss.

01-03-2009, 09:46 AM
While to some extent i agree with you here huggy, it really does depend on just how much the client impacts your business. For example if i was going to have an increase of maybe 50-60% on current workload and had to add 3 more staff for this, i would go for it. But if the business was going to be 200-300% or more increase and had to add 10-15 or more new employees in a short space of time i would tend to step back and think is this what i really want.

Now either situation i mentioned above would be great money wise, i am sure that the second would provide a massive increase to revenue and profit initially, however the amount of work to grow a business that much quickly can cause it to fail not to far down the track if that growth is not properly and successfully managed. This is not to say that i would not go ahead if i could see a way to manage this sort of growth, however i believe that many business owners could not manage to grow their business at a rate of maybe more then 200% per year, without missing something and inevitably failing.