Big is Beautiful
by Margaret Heffernan

Adrian Guglielmo is like a lot of entrepreneurs: she started with nothing but an idea and a passion. Her idea was that the deaf and disabled represented a market and her passion was to change the 80% unemployment rate in the deaf community. She founded a marketing business, employing the deaf to produce marketing products. When she got her first big customer meeting, she had no executive outfit and her babysitter let her down. Wearing ill matched clothes, she dragged her 2 year old along to her meeting with American Express. Ten, male, besuited executives sat and listened to her pitch as her son crawled amidst legs and briefcases under the board room table. One man took pity on her and put the boy on his lap, giving him pencil and paper and keeping him occupied while Adrian finished her presentation. She walked out of the meeting with her first sale - for $20,000 dollars worth of mouse pads. She didn't know what mouse pads were but she felt sure she could produce them.

It's a typical entrepreneur's story: all about nerve, determination, overcoming obstacles. And she made all the typical mistakes - borrowed from everyone she knew, financed the business with her mortgage, destroyed her personal credit rating. But what I like best about Adrian's story is that while she started small, she didn't stay small. She took her idea and her passion and, so far, has built a $40 million business with them - and she's not stopping there. Adrian plans to grow Diversity Products to a $100 million business, when she will either be acquired or become the first woman-owned business to go public in the United States. Adrian doesn't think small. Why should she? She knows that the bigger her success, the bigger the change she is making in the corporate environment for people with disabilities. An unabashed capitalist, she understands that the more her company grows, the more good she can do.

I wish British entrepreneurs were so confident. But of the nearly 4m small businesses, 88% have an average turnover of under £100,000, employing no more than four people. When a TV producer sent me a proposal for a series of shows about business, not a single company he proposed was a real business: none was designed to build assets, none was designed for growth, none had recurring revenue streams. Nothing scaled. These weren't businesses; they were lifestyles.

More ambitious British companies often go to America seeking finance, but even these set their sights low. Asked what their goals are, they'd say they wanted to be able to sell out for a million pounds and retire to Spain. Such companies rarely find big strategic partners; investors want growth plans not retirement plans.

In the nine years that I ran businesses in America, the growth of British entrepreneurialism has been dazzling. I'm thrilled to see my own village sprouting TV aerial companies, upholsterers and wedding car companies. It's exhilarating to watch people seizing control of their own destiny rather than whinging about the stupidity of their bosses. But these aren't businesses. Their owner-managers aren't thinking about growth or assets and none of the companies will survive their founder. They're not bad companies -- but they generate no substantial benefit beyond their owners' salaries.

What's wrong with growth? It's difficult to manage, involves a lot of change and can be traumatic. But entrepreneurs don't flinch at difficulty. Size gives a company more leverage in negotiation; it can produce economies of scale which make growth easier to achieve and maintain. Size creates a career path so your best people don't have to leave to grow. Size creates jobs - not just for employees but for suppliers who expand in turn. Size makes companies sustainable, creating assets that build value while you're sleeping or after you're gone.

Why don't we aim higher? There are no systemic barriers to growth: we have great ideas, employees, craftspeople, designers, engineers, inventors. What holds us back? Fear of failure? Every entrepreneur will tell you that mistakes are their MBA. Lack of funding? It's a circular argument: money follows ambition which makes money. Fear of success? You don't know til you try.

Finding capital to fund growth is always tough but it's also a great training ground and, when you succeed, a fundamental validation. Yes, I've seen companies corrupted by too much funding - but not nearly as many as I've seen suffocated by under-capitalization. When I see a great little company, I get ambitious for it. I want to see more customers appreciate its products and investors give it capital and confidence. I want to see its founders prosper and I want to see that prosperity spread throughout a larger workforce. I want to see the suppliers flourish and the benefits of growth proliferate. Nelson Mandela wasn't a businessman, but he could have been when he said, " Playing small does not serve the world. As we let our own light shine, we give other people permission to do the same."

This article was originally published in Real Business magazine

© Margaret Heffernan, 2003

TOP