Should we grow or stay as we are.

[SteveC]

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?

[orion_joel]

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.

[cbscreative]

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.

[vangogh]

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.

[lav]

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...

[billbenson]

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.

[KristineS]

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.

[cbscreative]

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.

[SteveC]

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.

[vangogh]

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.